Suppliers and SMEs

    Keeping German suppliers globally competitive

    The German automotive industry employs more than 300,000 people. The right political conditions could strengthen their competitiveness.

    The German automotive industry employs more than 300,000 people. The right political conditions could strengthen their competitiveness.

    Variety and performance

    With its 300,000 employees, the German automotive supplier industry stands for an innovative spirit, global presence, and performance more than almost any other sector. Yet, the industry is anything but homogeneous. Family businesses and SMEs mix with global corporations, chip manufacturers with steel processors, and companies with dozens of global locations with specialists working on the future of mobility with 100 employees. Any solutions for the future of these companies need to be just as individual as the companies. And yet, they do have some things in common.

    At home in Germany and abroad

    This applies above all to Germany as a location: It is and remains the home of suppliers, and also a focus of manufacturing and development. Nevertheless, the answer to the question of location is no longer a given. These days, most parts used by vehicle manufacturers in German plants are imported. Any sensible economic policy must, therefore, take into account that while the “Mittelstand” (SMEs) may form the backbone of the German automotive industry, global competitiveness must be maintained.

    Internationalization is essential for manufacturers and suppliers. German manufacturers are increasingly coming up against international suppliers, especially at their production sites abroad. To ensure economic success and secure Germany as a manufacturing location, it is, therefore, essential that SMEs also expand into new markets. With over 3,000 locations worldwide, the automotive supplier industry is as international as the manufacturers it supplies. In recent years alone, around 700 foreign locations have been added, and VDA member companies now manufacture in nearly 80 countries.

    Pave the way for global competitiveness

    The VDA advocates political conditions that secure and further the competitiveness of manufacturers and suppliers. Because not only in Germany, but also worldwide, conditions that are conducive to investment and innovation are a decisive factor in the competitiveness and sustainable success of companies. This applies above all to labor costs, but also to the asset bases of family businesses and the “Mittelstand” companies in Germany. They need a fair and sustainable taxation of assets, and less bureaucracy, if they are to remain globally competitive despite the high costs. 

    During the current transformation within the automotive industry in particular, from combustion engines to new powertrains, and due to the digitalization of mobility at all levels, there is a need for many suppliers to reposition themselves. This includes restructuring, corporate succession, and location changes that require major investments. High taxes on assets, inheritances, and departures hinder these investments and weaken suppliers in managing and shaping the transformation.

    In addition to the general economic conditions, powerful digital infrastructures for transport in rural and suburban areas are an important prerequisite for the sustainable success of the German supplier industry. The economic performance of the regions in Germany depends to a considerable extent on the prosperity of the companies located there, which form innovative regional value-added networks, secure and create jobs, and form the basis for desirable places to live.

    Family businesses and SMEs educate and train many people, greatly contributing to the overall high level of education in Germany. This makes it all the more important to have a good school education, as well as technical colleges and universities that, with a practical focus and in cooperation with the business community, create the conditions for a sufficient supply of young, skilled workers.

    Last but not least, the success of German automotive suppliers and manufacturers also depends on fair trade relations. This is why the VDA advocates free trade and good conditions for investment worldwide.

    The automotive “Mittelstand” in Germany, characterized by its numerous family-owned companies and foundations, acts with foresight. The entrepreneurial activities of these companies are geared toward future generations as well as safeguarding jobs, locations, and whole regions. This is what the VDA is committed to.

    Contact Person

    Sebastian Brunkow

    Head of SME Policy and Value Chains Division

    Read on