Press Releases

Bräunig: Change in mobility offers good prospects for suppliers

Berlin, 19 July 2016

German suppliers become ever more international / Now more than 2,200 foreign bases worldwide / With 4 billion euros United Kingdom is largest export market in Europe for German automotive suppliers

“The automotive industry is facing the greatest transformation since the invention of the automobile. Electrification and automation are the name of the game”, said Klaus Bräunig, Managing Director of the VDA presenting the Commerzbank’s corporate sector report on automotive suppliers in Stuttgart. “When suppliers develop key technologies, they can be indispensable technology partners for established and new players. Without suppliers nothing is possible – they will then play a central role in this transformation”. Bräunig continued, “Internal combustion engines and personal driving will continue to dominate the streets in the coming years as well. Yet it is simply a question of time when the market for vehicles with alternative powertrains, above all for electric mobility, will take off. In the same way, automated driving will come. Step by step. The suppliers realise that we have to equip ourselves for this transformation.” He explained that this was why speed and flexibility in research and development needed to be stepped up further. Companies were already increasingly turning to innovation teams outside the traditional R&D organisation, some of which were operating like start-ups, and both would complement each other in future.

German suppliers have been forging ahead with internationalisation in the past years. Bräunig: “With more than 2,200 bases abroad, these companies are present on the ground worldwide in almost 80 countries. The number of foreign locations has increased steeply once again since 2010 – by 42 per cent in just five years.” He continued that altogether around 650 new bases had been established outside Germany. These figures were evident from the new VDA location survey. Internationalisation had long been just as strategically important for medium-sized suppliers as for the already globally operating corporate groups. Cooperation with the vehicle manufacturers was also becoming increasingly more international and global today. Up to a few years ago, German suppliers had largely cooperated chiefly with German manufacturers – in fact in 80 per cent of their cooperation arrangements. Bräunig: “Today, our suppliers frequently work far more often with foreign OEMs.” Backing this up he pointed out that between 2011 and 2014 – in growing markets – the share of cooperation arrangements with German OEMs had dropped to 57 per cent. “German suppliers are now working more frequently with US American manufacturers in particular. They are becoming key partners for the entire international automotive industry”, said the VDA Managing Director.

Bräunig considers the consequences of the EU Referendum in the United Kingdom to be just as relevant for suppliers as for OEMs. “The United Kingdom is the third largest export market for German suppliers worldwide and the most important in Europe. Exports are worth almost 4 billion euros.” He pointed out that more products were delivered only to China (8.1 billion euros) and the USA (5.9 billion euros). Furthermore, German supplier companies were active in the United Kingdom, with around 100 bases there. “Suppliers alone have opened 20 new bases there since 2010. Even after the vote, nobody on either side of the English Channel can be interested in preventing movements of goods or making them more expensive by erecting customs barriers between the United Kingdom and the mainland. At the same time policy-makers in the United Kingdom must know that full access to the single market is only possible with the four basic freedoms”, said Bräunig.

Bräunig continued that the automotive industry, including the supplier segment, remained a key driver of jobs and the economy in Germany. Since 2010 the overall automotive industry in Germany had created around 100,000 new jobs, over 25,000 of these with the automotive suppliers. This encouraging development gave no grounds for complacency, stressed Bräunig. “There is need for action in Germany’s economic policy.” The tax conditions for research and development needed improving and he welcomed the understanding reached by the coalition government on temporary work and service contracts. “It is a positive sign that we are now moving away from rigid regulation of service contracts. This needs to be institutionalised in legislation as well. Service contracts are an elementary component for flexibility and efficiency in our automotive value chain.”

Eckehart Rotter
Eckehart Rotter Speaker

Tel: +49 30 897842-128 Fax: +49 30 897842-603
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