German car suppliers must be more flexible to remain competitive – consultancy
Clean Energy Wire
German car suppliers are losing market share internationally and need to be more flexible and innovative to remain competitive amid the shift towards electric vehicles, a report by consultancy PwC found. Flexibility would help them adapt to uncertain sales forecasts, while innovation could become a competitive advantage if suppliers were more entrepreneurial and prepared to take risks, as Chinese EV suppliers have done, according to the report. "Future-proof and innovative automotive suppliers are needed to defend the German automotive sector and the industrial location as a whole against new and established competitors," the summary reads. "It is high time for German suppliers to say goodbye to old patterns and formulate strategies for the new automotive competition."
The global market share for German suppliers fell from 27 to 25 percent between 2020 and 2023, according to an analysis of key balance sheet figures of 84 of the top 100 international automotive suppliers. China's share grew from five to 10 percent in the same period. German car suppliers should therefore aim for technological leadership in the electromobility sector and scale their entrepreneurial thinking to succeed among changing mobility requirements, the authors said.
Germany’s car industry is struggling with high investment costs and low demand for electric cars. The automotive industry is a central pillar of the German economy and directly employs hundreds of thousands of people in the country. The shift to electric mobility is shaking up longstanding industry networks and production practices centred on combustion engines. This is exacerbated by German carmakers’ late decision to significantly ramp up their investments in EVs and battery technology, where they face fierce international competition and lag behind in key fields.