Article

In contrast to other major industries, automotive has been hit by the Corona pandemic of 2020 while already steering in choppy waters. Even before the global outbreak in the first quarter of 2020, vehicle sales worldwide had taken a considerable dive. Declining demand in the Chinese market, global “trade wars” involving the United States, China, and Europe, as well as the transformation process set in motion by stricter CO2 emission regulations and customers’ rising environmental consciousness showed their negative effects. As a result, the decline in global vehicle sales observed in 2019 has in fact been even more severe than after the global financial crisis of 2008.  

Suppliers Are Hit Particularly Hard

The structural changes in the automotive industry are having a particular impact on suppliers, and the adverse economic effects resulting from the demand dips of 2019 and early 2020 are not making life any easier for suppliers’ CEOs. Market shares per drive system will change significantly by 2030. Important investments in research and development are still required to adapt product portfolios to these shifts, and innovation is vital to discover and develop future-proof profit pools. All that needs to happen while OEMs are – unsurprisingly – increasing cost and margin pressure on their suppliers.    

Consequent Strategy Execution as a Chance to Gain and Secure Leading Positions 

In pre-Corona times, many automotive suppliers had already developed their transformation strategies and initiated implementation. Corona now poses a unique opportunity to rigorously execute these strategies with adequate adaptations and to emerge from the crisis in a stronger competitive position. In our professional opinion based on numerous projects in the automotive supplier industry, strategies executed now must particularly address two strategic directions and six fields of action. 

Perform: Secure Financing and Know-How 

• Seize the chance to cut unprofitable and add future-oriented business through strategic portfolio optimization 
• Use the window of opportunity to minimize structures that are not systematically relevant and fundamentally rethink your organizational setup 
• Continue cost scrutineering to maximize global cost competitiveness in the long run 

Transform: Drive towards Future and Cultural Change 

• Leverage experience and mindset developed during Corona and implement the digital enterprise as the new standard 
• Seize the opportunity to drive market consolidation and acquire relevant competencies through targeted mergers & acquisitions or strategic cooperation 
• Get ahead of your competition by turning the innovative Corona momentum into an enduring mindset of fast market innovation 

Our white paper “Leading the Race After Corona: Consequent Strategy Execution is Key” elaborates further on these issues and explains how automotive suppliers can emerge from the crisis in “pole position.” The paper draws on our extensive project experience, discusses proven project approaches and case studies. Download a peek preview here and get in touch with our automotive industry experts to discuss the full insights in a personal meeting or call.

Brauchle, A. / Gaydoul, R. / Sohl, M.