Record sales and slightly more employment: At first glance, the year 2023 went well for the automotive industry in Germany. But a new study also shows problems.
Despite record sales, the gap between auto suppliers and manufacturers in Germany has continued to widen, according to a new study. Thanks in part to overcoming production bottlenecks, the industry increased its sales in this country last year by 10 percent to 558 billion euros – more than ever before. This is shown by a current analysis by the consulting and auditing company EY.
However, with growth of eleven percent, the car manufacturers once again performed better than the suppliers, who recorded a sales increase of nine percent. The ten-year comparison in particular shows the gap between the two groups: “Since 2014, suppliers’ sales in Germany have increased by 25 percent, while manufacturers have increased more than twice as much – by 59 percent,” it said Study.
EY expert: Suppliers with their backs to the wall
EY market expert Constantin Gall said: “At first glance, the past year was not bad for the German auto industry.” However, the record sales are also a result of high inflation and sharp increases in purchasing and material prices. The bottom line is that high energy costs and increased wage costs resulted in declining margins for many companies. “This applies especially to suppliers, for whom the air is becoming increasingly rarefied.”
Gall sees many of them with their backs to the wall: “If you want to be future-proof as a supplier, you have to invest massively in new technologies,” he said. However, the ramp-up of electromobility is not gaining momentum and the expected and required quantities are far from being achieved. This is currently costing the industry a lot of money and causing uncertainty. Gall therefore expected further consolidation among suppliers.
There is also a gap in employment
However, the employment situation in Germany as a car location has hardly improved after 2023. The negative trend of recent years has been halted; the number of employees in the industry rose by 0.7 percent to around 780,000. However, employment was still well below the peak of 834,000 from 2018.
The gap between manufacturers and suppliers is also evident here: for the latter, employment fell again in 2023 – by 0.2 percent. Manufacturers recorded an increase of 1.2 percent. Over the past ten years, the number of employees at suppliers in Germany has fallen by 7.5 percent, while the number at manufacturers has increased by 4.3 percent.
Forecast: job cuts in the current year
Given the many uncertainties, Gall expects a reduction in employment this year. “Employment has recently increased slightly, which is mainly due to the development of software skills,” he said. However, the long-term trend is clearly pointing downwards: “Most large industry companies are relying on cost-cutting programs.” In addition, artificial intelligence will ensure that there will be fewer jobs in indirect areas such as IT, human resources, marketing and finance and accounting.
“Companies are increasingly relying on hiring freezes and reducing management levels,” said Gall. The ramp-up of e-mobility will inevitably lead to lower employment in Germany. This is because the production of electric vehicles is less labor-intensive than that of combustion engines.
EY evaluated figures from the Federal Statistical Office and the Federal Employment Agency to analyze employment and sales development. The subject of the investigation were companies in Germany with at least 50 employees.
Source: Stern
