AutoBeta(AutoBeta.net)07/24 Report--

According to the latest figures released by German consulting firm Falkensteg, 20 German auto parts suppliers with annual revenues of more than 10 million euros filed for bankruptcy in the first half of 2024, an increase of 60 per cent year-on-year. It is understood that in the business sector, including the automobile industry, a total of 162 companies with annual revenues of more than 10 million euros filed for bankruptcy in Germany in the first half of the year, an increase of 41 percent over the same period last year, with real estate, automobile supply chain and machinery manufacturing being the hardest hit.

The electrification transformation of automobile industry has a great impact on traditional automobile enterprises and supply chain. Electric car parts research and development requires a lot of money, while some European companies need to maintain a leading position in the field of traditional fuel vehicles, which means double investment in two sets of technology platforms. In Europe, however, overall car sales are still at an all-time low because of the slow popularity of electric vehicles. In addition, the profit margins of traditional auto parts suppliers are also declining, making it difficult for companies to achieve revenue and profit growth. Due to fierce market competition and difficult electrification transformation, multinational parts giants will carefully consider every expenditure.

In the outside world, due to the impact of multiple factors, such as the weak European economy, high inflation, and the surge in costs brought about by the transformation of electric intelligence, these traditional auto parts supply giants are facing a sharp increase in operating pressure. there is an urgent need to reduce costs, especially after 2024, German auto parts giants have taken more frequent layoffs and more and more head suppliers have joined the wave of layoffs.

In January, the German auto parts maker Bosch announced plans to cut 1200 jobs by 2026, of which 950 are in Germany, mainly in the Intelligent driving and Control Systems Division (XC). This is not the first time Bosch has announced layoffs. Back in December 2023, Bosch said up to 1500 jobs would be cut at its Feuerbach and Schweber Dingen plants in southwestern Germany by 2025 as part of a plan to save 400m a year from 2025.

In February, Bosch, the world's largest auto parts supplier, announced that it would cut up to 1200 jobs in its software and electronics divisions by the end of 2026 as high inflation and rising raw materials and energy costs were increasing "necessary spending" and slowing the industry's transition to electric vehicles.

Coincidentally, auto parts suppliers including Zaifu, Schaeffler and Valeo have also announced corresponding measures.

According to German local media reports, ZF is accelerating the pace of labor cost cuts, and the 2900 job cuts originally scheduled to be completed by 2030 are expected to be completed as early as 2026. The layoffs focus on ZF's Saarbrucken plant in Germany, which employs about 9000 people. As the most important production base of automatic transmission for passenger cars, Saarbrucken is facing the transformation of electrification in recent years. But several studies have shown that it takes only about half the manpower of a traditional transmission to build an electric drive.

After announcing layoffs at the beginning of the year, Valeo, a French-based parts giant, began to consider selling its production base. Valeo is reportedly looking for buyers for two French auto parts factories and an R & D center, a decision that will affect about 1000 jobs. It is understood that at the beginning of this year, Valeo announced that it would cut 1150 jobs worldwide, including 235 in France and 735 in Europe. Valeo said that the purpose of the layoffs is to improve the competitiveness and efficiency of the group in the context of car electrification, and hopes to enhance competitiveness by establishing a more flexible, coherent and complete organization.

Most of the auto parts manufacturers mentioned above are Germany's long-standing and large-scale head companies in various vertical fields, and life is even more difficult for some smaller auto parts manufacturers. Bankruptcy or restructuring may have become common. For example, Germany's Allgaier filed for bankruptcy in July 2023, and its customers include Porsche. Eissmann, a German car parts supplier, also filed for bankruptcy at the end of February, a move that could endanger about 5000 jobs around the world, including 1000 employees in Germany.

There is no doubt that all large parts suppliers need to face the transformation of electrification and intelligence, which is very expensive. At the same time, the initial profit of the electric vehicle business is far from that of the traditional fuel business, and orders will decrease as the trend of electrification in Europe slows. Based on this, some industry insiders predict that the number of bankruptcies of German car suppliers may further increase in the second half of the year, due to the decline or postponement of demand for internal combustion engine technology, as well as the pressure brought by factors such as energy price surcharge and inflation compensation. Traditional drive technologies are facing greater challenges.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat