Suppliers and SMEs

    Transition in the automotive industry: What suppliers now need to consider

    The pressure from change to the automotive value chain is challenging suppliers most of all and demands huge investment.

    The pressure from change to the automotive value chain is challenging suppliers most of all and demands huge investment.

    Financing the supplier industry

    The automotive industry is focusing on three trends: Electromobility, autonomous driving, and digitization. The drivers for the shift toward electromobility are the industry's commitment to climate protection and the regulations in the area of emissions standards. These requirements are leading to a shift in the drive mix in vehicles in favor of electric power trains, and are presenting those suppliers doing business in the field of classic combustion engines with enormous challenges, not only technologically, but also in terms of corporate structures and financing. The reasons for this include an often poorly differentiated product portfolio, little global presence, high pressure on profit margins, and limited financial clout. The demand for change throughout the automotive value chain weighs particularly heavily on suppliers, but transformation requires a high level of capital investment. The Finance Committee of Manufacturers Group III at the VDA, which includes finance managers from larger and medium-sized suppliers, is discussing, among other things, new forms of financing that could represent an alternative to traditional financing models – especially for small and medium-sized suppliers.

    In addition to financing issues, the companies have other current financial issues relevant for the committee meetings: Examples include such topics as requirements for non-financial reporting, the use of new technologies in finance (e.g., blockchain), changes in accounting regulations, or requirements for IT organization.

    André Kunkel
    Contact person

    André Kunkel

    SME Policy and Value Chains

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