Suppliers and SMEs

    Epochal change to the supplier industry

    Alternative drives – especially electrification – but also digitization, as well as connected and automated driving, are fundamentally changing the concept of the automobile. This poses game-changing challenges for suppliers in particular. The VDA is accompanying them on this path.

    Alternative drives – especially electrification – but also digitization, as well as connected and automated driving, are fundamentally changing the concept of the automobile. This poses game-changing challenges for suppliers in particular. The VDA is accompanying them on this path.

    Multidimensional transformation within the supplier industry

    It has been over 130 years since Bertha Benz drove the patented motor car from Mannheim to Pforzheim. Since then, it has always been clear that every automobile runs independently, is steered by a human being, and, with a few exceptions, is powered by an internal combustion engine. But now a new age of mobility is dawning: Autonomous and connected driving, as well as alternative drives, have fundamentally altered this concept within the past few years, and, consequentially, the entire automotive industry. Added to this are new providers – especially from Asia – and a basic change in customer behavior. In conurbations in industrialized countries, people increasingly want to use mobility as a service when and how they need it. By contrast, there are other parts of the world that are just reaching the point where having your own car can mean economic advancement. In this highly complex transitional phase, the German automotive industry must provide its own answers to different needs and challenges around the world arising from the many different mobility requirements and various transport infrastructures in existence.

    The VDA is accompanying its member companies on this path. Their representatives regularly exchange ideas in the various committees, each with a different focus. They analyze markets, follow legislative changes, and adopt the scientific view of transformation. In addition, the VDA conducts its own surveys and studies among its members to regularly determine the current stage of transformation, as well as the general situation within our industry. This information serves as the basis for recommendations to companies as well as to politicians and society. The aim is to create the conditions, by way of political and social discussion, that optimally support companies on their transitional journey toward climate-neutral and even more customer-oriented mobility.

    To date, around half of the employees in the German automotive industry work in the power train sector. For the VDA, therefore, the successful transformation to climate-neutral power trains is a core concern, since considerably fewer working hours are required to manufacture an electric vehicle than a similar one with an internal combustion engine. Although there will be a decline in the number of employees in the automotive industry over the next few years due to demographic reasons, there will be a need to retrain and further train employees. Nor will this always be in the area of power trains alone: New business fields are constantly emerging in other areas of transformation, as is the subsequent potential for value creation. In the years to come, for example, new forms of employment will emerge within the automotive industry in the software sector, as well as in the services sector, relating to mobility as a service.

    For the supplier industry, the transformation is an epochal upheaval in a special way. For decades, the German supplier landscape has been characterized by many SMEs that are highly specialized in their individual components and that are also often global market leaders in their fields. These hidden champions are usually located in rural areas and thus form the backbone of Germany's broad industrial base. For these companies in particular, however, transformation often means that they have to rethink their entire product portfolio within the space of a few years. This requires huge investments that the companies can only make on their own with extreme effort – the coronavirus pandemic in 2020, with the resultant collapse in demand worldwide, hit these companies at the worst possible time. Not all of them have been able to prevent cash flow problems, and as a result the crisis could lead to more mergers and even business closures if companies do not receive unbureaucratic support in overcoming the crisis.

    It was thus right for the German government to help the predominantly SME supplier industry with its economic stimulus package at the height of the crisis, and to provide funds to support the transition to even more sustainable and climate-friendly mobility. There are already many success stories within the supplier industry whose chapters are still being written. For example, more than half of the companies are already actively involved in the ramp-up of electromobility, and German suppliers are also doing pioneering work in autonomous and connected driving. This is repeatedly reflected in the number of patents registered by German suppliers – making Germany the world champion in this area, and paving the way for the industry's success in the future.

    Sebastian Brunkow
    Contact Person

    Sebastian Brunkow

    Head of SME Policy and Value Chains Division

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