The gap between suppliers and car manufacturers in Germany grew last year. Overall, the German automotive industry saw its sales increase by 23 percent to a record 506.2 billion euros, according to a recent study by consulting firm Ernst & Young (EY). According to the study, however, manufacturers, with an increase of 28 percent, grew significantly faster than suppliers, whose sales only increased by 6 percent.
According to EY, the number of employees in the automotive industry declined for the fourth time in a row in 2022. The numbers fell by 1.5 percent from 786,000 to 774,000. While employment among manufacturers grew slightly by 1 percent, it declined by 6 percent among suppliers.
"While carmakers are currently earning extremely well despite the crisis, many suppliers have their backs to the wall," Constantin Gall, head of the mobility division for Western Europe at EY, said, according to the statement. Automakers are taking the production of batteries and electric motors into their own hands, entering into partnerships with battery companies, and relying less on their veteran suppliers, Gall said. On top of that, he said, there are bitter disputes over terms, supply volumes, and price adjustments. "In view of the transformation toward electromobility, a distribution battle has broken out between manufacturers and suppliers, in which the suppliers often hold the worse cards," Gall said.
Despite the recent positive profit trend, the German automotive industry is currently making cuts across the board, said EY industry consultant Peter Fuß. For the current year, he expected at best a stable employment trend among manufacturers and further job cuts among suppliers. The need for investment is enormous, while at the same time companies are doing all they can to continue to generate high margins. Only a profitable business creates sufficient financial scope to be able to invest in new technologies and products, Fuß added.
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