Survey: Two thirds of German automotive suppliers anticipate a market shakeout

German automotive suppliers fear existential cuts in their industry, according to a survey by international consulting and auditing firm Baker Tilly. According to the survey, 67 percent of the managers surveyed expect a significant number of competitors to go out of business within two years. The majority of German automotive suppliers assume that new competitors from China (65 percent) and Europe (55 percent) will enter the market. Around a third expect new competition from the USA (35%). “Our survey underlines the high pressure to transform in a geopolitically tense situation,” says Jannik Bayat, automotive expert and partner at Baker Tilly. “The majority of German companies recognize the high need for investment, but at the same time see cost pressure as the greatest risk.”

Demand from automotive suppliers: reduce energy and production costs

The study shows that the new government is now faced with the task of reducing energy and production costs in particular – this is what 73% of the suppliers surveyed are demanding. They also expect tax relief (68%), a reduction in bureaucracy and faster approvals (62%) as well as the promotion of future technologies such as electromobility or hydrogen (59%). These measures are also seen as key to ensuring a more level playing field with China and the USA.

Job cuts and falling sales figures determine the industry’s reality. However, the survey also reveals a surprisingly optimistic self-perception in the midst of times of crisis. When asked about their own economic situation, 78% of decision-makers responded with “rather good” or “very good”. While many companies consider themselves to be stable, the assessment of the industry is gloomy: 79% consider the situation of German automotive suppliers to be poor overall. “There is a drastic gap in perception,” says Bayat. “The industry seems to recognize the risks, but does not seem to be tackling them decisively enough within their own company.”

The survey shows that competitiveness in the face of international competition is at stake. Only 6% currently see themselves as “pioneers” in the global supplier industry. In contrast, 28 percent consider themselves to be “lagging behind” in international comparison. 51% believe the competition from Asia has an “unassailable lead in key technologies”.

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An encouraging sign: 75% of those surveyed consider their business model to be “largely independent of the transformation of drive technology”. The reason: the components they manufacture are needed in e-cars just as much as in combustion models. Furthermore, 55% of respondents see a realistic opportunity to secure their competitiveness by shifting to other sectors. 86 percent state that they have a clear vision of which future technologies will dominate their own core business.

“We can see that the transformation needs to pick up speed,” says Bayat. When looking ahead to the next five years, 55% of those surveyed stated that the window of opportunity for transformation is closing faster than expected. And yet only 23 percent of those surveyed consider the pace of their own transformation to be too slow.

New business models, cooperation and increased efficiency to secure competitivenes

Suppliers expect more competitiveness from new business models and products (89%), securing skilled workers and recruiting (81%) and investing in new technologies and innovations (81%). What is striking is that 76% see cooperation and partnerships as a way of ensuring their own company’s competitiveness. 71% say that one key lies in increasing efficiency in production and processes. 23% of respondents also cite site closures as a means of becoming more competitive. The spinning off of business units is just as frequently considered. "We are seeing that carve-outs have established themselves as a stabilizing element. The industry is using carve-outs as an active strategic instrument to respond to the many challenges and to position itself sustainably and future-proof," says Bayat.

17% of automotive suppliers also consider the relocation of sites abroad to be important and necessary. However, the survey also shows that the striving for internationalization is increasingly limited to Europe in times of growing geopolitical risks. Only 36 percent of suppliers currently consider themselves to be well positioned globally. The majority remain fixated on their proven regular customers. For example, 49 percent are focused on European vehicle manufacturers (OEMs). Only a minority also supply Chinese (18%) and US (17%) car manufacturers. The influence of Chinese brands is growing. For Bayat, this leads to only one conclusion: “We continue to think too locally and at best regionally, while other suppliers are attacking globally.”

About the survey
Baker Tilly surveyed 100 top decision-makers from the first and second management levels of the German automotive supplier industry on their competitiveness and the need for investment and transformation in Germany. The survey period was March and April 2025.