Automotive Industry:Europe: Difference between revisions

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 * EVs are generally less part-intensive than ICE cars. Total value of the OEM supplier market is likely to fall as the market shifts to EVs.
 * Decline of battery prices could give EVs the cost edge
+* OEMs should start prioritizing EV-component suppliers, particularly as more traditional suppliers struggle to innovate and remain relevant.
+* It’s anticipated that the relative proportions of labor and material will reverse dramatically (Figure 8), forcing OEMs to start moving away from decades of focus on efficiency gains. Instead, the leaders should be focusing on restructuring their existing capabilities and reorganizing their supply networks to remain competitive in the long-run.
+[[File:Screenshot 2023-09-14 115642.png|center|thumb|472x472px|https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/02/the-european-automotive-industry.pdf]]
+'''The financial health of suppliers is deteriorating rapidly'''
+Lower production volumes coupled with a forced shift into a lower-value market can put significant pressure on suppliers as they struggle with an uphill battle against revenue decline
+* Research suggests the resulting negative free cash flows will lead to a spike in indebtedness.Since 2017, the proportion of suppliers in a ‘bad’ liquidity position rose by 9 percent
+* The most recent data shows that about a third of suppliers are in the ‘distress zone’, with a further 34 percent in the ‘grey zone’ of improvement potential.
+* The average automotive supplier debt portfolio includes around 49 percent short-term debt (with less than 2 years maturity), 31 percent medium-term debt (maturing in 2–5 years), and around 20 percent long-term debt
 == References ==