Automobile industry 2024: suppliers are fighting for survival!

Automobile industry 2024: suppliers are fighting for survival!

China - The automotive industry is facing a critical turn. According to an analysis of berylls, global suppliers have come under great pressure while their sales are stagnating. In 2024, the top 25 suppliers worldwide recorded sales of 407 billion euros, which is a sudden turning turn after years of growth. The decline in operational margins is particularly alarming; These dropped a decline from 8.9 to 7.2 percent for suppliers from 5.9 to 5.5 percent, while the large car manufacturers, also called OEMs. This is particularly worrying, since about 70 percent of the OEMs and 60 percent of the suppliers have to struggle with falling profits, as production.de

challenges from the Chinese market and e-mobility

Another crucial factor is the competition from China, which not only urges the market share of European manufacturers, but also increases the pressure on the suppliers. Many German car manufacturers have lost over five percent market share of local Chinese competitors since 2018. The problem is reinforced by the continued challenges of electrification, since new CO₂ standards from 2025 force suppliers to invest more in the production of battery-electric vehicles (BEVS). In order to achieve the new CO₂ goals, the proportion of these electric vehicles in the total sales must increase from currently 20 to 25 percent. However, this transformation brings with it a significant cost pressure, such as Automobil Industry explained.

In addition to sales and margin problems, many suppliers face existential financial risks. The Altman Z-Score, which evaluates bankruptcy risks, shows that four suppliers of the Berylls Top 25 are considered insolvency prone. The increasing financing costs and the pressure of margins can only be expected for moderate growth prospects for 2025. In the industry, fundamental structural adjustments are necessary to exist in a market that is changing rapidly and is characterized by strong competition. In view of these risks, it is essential that companies take proactive measures to secure their financing ability.