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The Growing Gap Between German Automakers And Suppliers

  • Written by : Ashton G. Curran
  • Date Published : 2023-04-09
  • Date Updated : 2023-04-09
  • Category / Tag : articles
The Growing Gap Between German Automakers And Suppliers
According to a recent study by Ernst & Young (EY), the German automotive industry was able to increase its sales by 23 percent, reaching a record high of 506.2 billion euros. However, the study also revealed a growing gap between manufacturers and suppliers. While the manufacturers experienced a significant increase of 28 percent in sales, the suppliers' sales only grew by six percent....

This gap highlights the challenges faced by the suppliers in the automotive industry.

The number of employees in the automotive industry has decreased for the fourth consecutive year, falling by 1.5 percent from 786,000 to 774,000.

While employment at manufacturers increased slightly by one percent, it decreased by six percent at suppliers.

This trend is likely to continue, and the suppliers are the ones bearing the brunt of the job losses.

One of the reasons for the growing gap between manufacturers and suppliers is the manufacturers' increasing focus on battery and electric motor production.

They are partnering with battery companies and relying less on their veteran suppliers.

This shift is causing a bitter dispute between the two parties over conditions, delivery quantities, and price adjustments.

This situation has led to a distribution battle, and the suppliers are often at a disadvantage.

Despite the recent positive earnings trend, the German auto industry is facing cuts across the board, according to EY industry consultant Peter Fuss.

For the current year, he expects, at best, a stable employment development at the manufacturers and further job cuts at the suppliers.

The need for investment in new technologies and products is enormous, and the companies are doing everything they can to generate high margins to create sufficient financial leeway for investment.

The production of electric cars is less labour-intensive, and this trend is likely to continue.

The electric drive will inevitably replace the combustion engine, leading to lower employment in Germany, according to Fuss.