Germany's automotive industry faces painful consolidation. Our study examines the pressures reshaping the sector and how a profitable core can survive.
Automotive Industry – Mobility in Motion
Standing still in automotive means falling behind. Are you at risk?
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The automotive industry is undergoing profound structural change. In Germany, many jobs have already been lost, and further adjustments are unavoidable. Stagnating vehicle production, excess capacity, and intensifying competitive pressure are shaping the industry on the one hand. On the other, Chinese manufacturers are setting new standards through significant cost and speed advantages, increasingly expanding into new markets with their products and production facilities. At the same time, artificial intelligence is fundamentally changing how organizations are structured and how processes are designed.
Our Senior Partners Norbert Dressler and Felix Mogge highlight the seriousness of the situation in their interview. Norbert Dressler warns that the structural adjustments in Germany's automotive industry are far from complete and that further job losses are unavoidable. Felix Mogge takes a broader view of the global competitive environment: European suppliers still have strong capabilities, but Chinese competitors are setting new benchmarks with significantly shorter development cycles and strict cost discipline.
In the latest issue of Mobility in Motion, which we produced together with Automobilwoche for IZB in Wolfsburg, we examine the strategic dimensions driving this transformation.
Key insights from this study:
• European production networks must be restructured in response to structurally lower volumes.
• Successful suppliers demonstrate which approaches are viable in practice.
• Mid-sized companies face the challenge of securing access to finance in a tighter capital market.
• The growing advantage of Chinese manufacturers in terms of speed and cost is putting pressure on Europe, and Germany in particular.
• Artificial intelligence (AI) is challenging the way companies are organized and how their entire operating model is designed.
Driving change in automotive
The automotive industry has long been in crisis mode. The priority now is to draw the right conclusions. Companies that succeed in this highly competitive environment will benefit in the future, while those that fail to act will disappear from the market. In Europe, automotive suppliers will succeed if they balance innovation with efficiency, simplify their portfolios, and focus on profitable core capabilities. Diversification can create additional opportunities, but it should build on existing strengths and must not distract from fixing the core business. At the same time, companies need to adapt their production networks to lower volumes, reduce excess capacity, and secure funding through a balanced mix of traditional and alternative financing instruments.
Further growth opportunities are emerging from new technologies, the localization of Chinese OEMs in Europe, and fields such as software-defined vehicles, autonomous driving, robotics, and defense. Western suppliers can learn from Chinese strengths, including shorter development cycles, closer collaboration across functions, and a greater willingness to take calculated risks. Artificial intelligence offers significant efficiency gains, particularly in indirect functions, bidding processes, simulations, quality control, and predictive maintenance. However, successful implementation requires more than technical solutions. It also calls for new organizational structures, clear responsibilities, appropriate governance, and employee training.
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