German, Japanese automotive suppliers lose ground to Chinese ones

German, Japanese automotive suppliers lose ground to Chinese ones

Market news |
By Christoph Hammerschmidt

As part of its Top 100 suppliers study, consulting and market research firm Berylls Strategy Advisors analyzed the world’s 100 largest automotive suppliers for the eleventh year in a row. Not unlike 2020, which was impacted by the special effect of Corona, 2021 was also massively affected by the ongoing pandemic, the chip crisis, which is also ongoing, and the aggravated situation on the raw materials markets. Nevertheless, many suppliers will again be able to report significant increases in sales and profits in fiscal 2021. Step by step they are approaching pre-pandemic levels. Large-scale cost optimization programs are playing their part. For example, sales of the world’s 100 largest automotive suppliers in 2021, at €899 billion (+13.4% compared with 2020), are well above the level of the previous year, which was dominated by Covid-19, but only just under 2% below the strongest year to date in 2019. Profitability can also be increased significantly again to 6.3%, on a par with 2018/2019. The group of German suppliers is also participating in this positive development, albeit to a lesser extent than their Chinese competitors.

Bosch defends its first place in the global lineup of the 100 largest automotive suppliers for the seventh year in a row; overall, there is no movement among the top 5. As in the previous year, two other German companies are ranked 3rd (Continental) and 4th (ZF Friedrichshafen). Magna holds its own in 5th place. 2021 also went well for tire manufacturers Michelin and Bridgestone, who retain their rankings and thus 8th and 9th places.

The Chinese supplier Weichai Power caused a sensation in 2020. The company was the first Chinese supplier ever to break into the top 10. However, the company, which evolved from a manufacturer of diesel engines and is now active in the truck and car software segment, is unable to maintain its position in the top segment, slipping to a still very respectable 12th place in 2021.

Nevertheless, CATL, a Chinese company, continues to be represented in the top 10. The battery manufacturer jumps into the top group for the first time with a sales growth of 184% compared to the previous year and thus writes a remarkable success story within the top 50. Berylls partner and supplier expert Alexander Timmer: “That a battery manufacturer would move into the top 10 is hardly surprising. After all, even in the difficult year of 2021, the demand for batteries was so great that CATL was one of the very big winners as a logical consequence. In any case, the Chinese group is a good acquaintance within the top 100. In the 2018 ranking, CATL was still in 71st place, but has since shown impressive development.”

But China’s suppliers aren’t just strong in new powertrain technologies, as Citic Dicastal’s performance demonstrates. The company, whose core products are alloy wheels for cars and trucks, shot up an impressive 26 positions in the Top 100 ranking and finds itself in a strong 62nd place in this year’s overview. In total, nine Chinese suppliers made it into the Top 100. The cluster of Chinese suppliers can benefit greatly from local and national industrial policies, which are designed to strengthen the Chinese domestic market on the one hand and fuel expansion into leading international markets on the other.

Thus, the contribution of Chinese suppliers to international sales development is growing steadily. In 2018, it was still 5%; in 2021, the Chinese can already claim a 9% share. The growth is coming at the expense of German and Japanese suppliers. Germany accounted for 23% of total sales in 2018, while Japan contributed 27%. Both nations have since recorded painful declines. German suppliers now account for only 21% of the industry’s total global sales, while the Japanese contribute 24%.

In Covid’s 2020 lockdown year, suppliers and OEMs suffered harsh sales and profitability declines. In fact, no more than eight of the companies listed in the top 100 overview were able to show any sales growth at all in 2020 compared to 2019. Last year, the picture practically turned completely around. Only ten of the world’s 100 largest suppliers were unable to increase their sales. These low-performers include: Yazaki, Panasonic, Mitsubishi Electric, GKN, Thyssen Krupp Automotive, NSK Group, NHK Spring, NGK Spark Plug and TS-Tech. Seven of them belong to the Japanese supplier cluster.

The fact that 2021 was a successful year for the industry is also reflected in the fact that 58 suppliers have already returned to higher sales in 2021 than before the outbreak of the pandemic. Compared to 2020, average profitability has more than doubled from 2.6% to 6.3%.

However, the success is not equally distributed across the industry. It mainly affects companies in the semiconductor industry. Paradoxical as it may sound, the semiconductor shortage has played a major role in the positive overall market development. What led to cutbacks in production at OEMs and fully parked logistics areas with unfinished vehicles enabled chip suppliers to set sales, revenue and profit records in 2021. Semiconductor manufacturers, for example, increased their automotive sales disproportionately by an average of 34%. They achieved margins of 19%, while the Top 100 average was a rather meager 6.3%, even below that of the OEMs, whose focus on the premium segment enabled them to achieve a ten-year high of 7.4%.

With the end of the global lockdowns, the economy recovered rapidly and developed an unprecedented hunger for raw materials. As a result, prices for various metals and plastics reached record highs in 2021, spoiling business for the industry. It was not only the metals important for battery and electric vehicle production, such as nickel, cobalt and lithium, that were affected. Prices of common industrial metals and plastics also rose significantly from 2020 to 2021: copper +23.5%, steel +66.7%, aluminum +37.8%, magnesium +130.5%, brass +34.3% and polypropylene +94.4%. The high raw material prices hit suppliers so hard because they were largely unable to pass them on to their customers. The situation is not expected to change in the short term; on the contrary, prices are expected to rise further, partly due to the war in Ukraine. The embargo against Russia cuts the industry off from its most important supplier for palladium and nickel, and at the same time Ukraine drops out at least partially as a supplier for the noble gas neon, it is an important component in semiconductor production.

E-mobility is now fully occupying the industry. Bosch’s activities in this area, for example, are expected to grow by 500% by 2025. Currently, the world’s largest supplier claims to have generated €1 billion in sales in this sector last year. ZF can secure an order volume of €14 billion in 2021, further expanding its position in electric components. Many major suppliers for electric driveline and autonomous driving components come from Germany. In addition to the aforementioned companies Bosch and ZF, Continental, Dräxlmaier and Leoni are also able to improve their positions in an international comparison and realize average sales increases in the double-digit percentage range compared to the previous year. The fact that e-mobility, as well as autonomous driving and ADAS systems, are growth drivers can be seen in comparison to the industry average: manufacturers from these segments are generating a twelve-percent increase in sales on average. But the road to success remains rocky, because at the same time the transformation demands high development expenditures with payback periods of several years. This depresses profitability in the early years with low production volumes; it is 6% below the 2021 average.

Related articles:

Bosch expands fuel cell activities in China

Tier ones at Auto Shanghai: New HPC generation, dovetailing with the cloud

Automotive tier ones discover the Smart City

China sees boost in e-mobility innovation rankings

Continental expands electromobility activities in China

Valeo and Continental got off with a black eye

Vitesco establishes R&D center in China

If you enjoyed this article, you will like the following ones: don't miss them by subscribing to :    eeNews on Google News


Linked Articles