(Image from the Automobile-industrie report)
Things are still a mess: Trump continued to call out unfair trade practices against Germany, China, and Japan last year; the impact of Brexit on the U.K. and European automotive industries is still lingering; even China, which always has double-digit growth in car sales, saw a Even China, where car sales have always grown at double-digit rates, saw a lull last year; and the debate over emissions - particulates, nitrogen oxides, sustainability, diesel scandals - continues to unsettle consumers. In short, the auto industry's problems persist.
Despite all the difficulties, the top 100 suppliers increased their sales by 4.3% in 2019 (+ 6.4% in the previous year). Sixty-four companies experienced sales growth compared to the previous year. But the sales growth in 2019 is mainly attributable to acquisitions and mergers of large companies:
The turnover of the last-placed company in this list in 2019 amounted to 2.7 billion euros, which fell to the level of 2017; in 2018 it was 2.9 billion euros.The total value of production of the world's top 100 automotive suppliers in 2019 amounted to 918 billion euros.
The 27 Japanese suppliers in the top 100 saw a small increase of 2.8%, with a total turnover of €246 billion. Germany accounted for 18 of the top 100 with a total turnover of €205 billion, a 0.5% decrease compared to 2018. In third place was the United States, which accounted for 19 of the top 100, with a total turnover of €134 billion, an increase of 2.6% These 19 U.S. companies grew at a rate of + 2.6%, with a total of €134 billion in sales, placing them in third place. They were followed by suppliers in the six countries of France (75.8 billion euros, up 4.9%), South Korea (54.1 billion euros, up 19.4%) and China (47.6 billion euros, up 12.5%). Acquisitions and restructuring are the main reasons for the strong growth of the supplier share in these three countries.
The transformation of the automotive industry accelerated significantly in 2019 and is beginning to reveal how it will fundamentally change the industry.CASE (Connected Automotive, Autonomous Driving, ****Helpful Mobility, and Electric Mobility) is already on the minds of many suppliers and their top executives in the strategic divisions. The fight for company break-ups and liquidation of old technologies around future core technologies will not stop, and it is now clear that many technologies that are no longer needed are still being developed at full speed. Continental's powertrain split into Vitesco, the reorganization of Thyssen Krupp's automotive business, Borg Warner's planned acquisition of Delphi Technologies, Tenneco's acquisition of Federal Mogul, ZF Friedrichshafen and Knorr-Bremse's long-running takeover battle at Wabco, the spin-off by Johnson Controls and its subsequent dissolution-all point to changes in the next few years.
In the last three years, Germany's five main automotive suppliers alone, Bosch, Continental, ZF, Mahle, and Schaeffler, have acquired or provided venture capital for more than 40 startups and high-tech companies: Aimotive, Here Technologies, Fair.com, Splitting Fares, Digi Lens, E.Go Moove, Paravan Technologie, Deep Map, Ceres Power, Haptronik, Inspekto, Graphcore, Auto AI Technology, Ubitricity, " 2getthere", Xtronic, Teralytics, Cartica, Nikola, Power Cell and others. Acquiring and investing in high-tech companies in this way is like matching the ingredients of a cooking recipe to ensure the future of the automotive industry: motion control systems and actuator components for automation, flash LIDAR technology, ITS solutions, electrified micromobility, charging networks for electric vehicles, driverless electric shuttles, big data analysts, GNSS positioning services, parking applications, e-roaming platforms for charging electric cars, and e-roaming platforms for charging, IT security for vehicles, holographic projection technology for augmented and virtual reality, solid oxide fuel cell technology, autonomous machine image processing, machine learning for object recognition, 3-D ultrasonic sensors, laser-based 3-D sensors, and more.
A fact : the gap between large suppliers and mid-sized companies is widening. Today mid-sized companies no longer have the opportunity to catch up in key areas of innovation. High-net-worth technologies, software development capabilities, R&D centers around the world, and the ability to collaborate with large high-tech companies such as Samsung, Apple, Microsoft, etc. are only available to the top 100 companies.
The corporate earnings piece is in evidence in 2019 when the economy slows. Vendors can feel the changes in the industry, both in terms of pricing pressure from OEMs and the rising cost of CASE technology. Among the top 100 suppliers, there are 73 suppliers that have declared profitability. Of those 73 suppliers, 56 were much less profitable. The number of companies with declining revenues increased further compared to 2018 (48 out of 71, or 68%).Overall profitability declined by an average of 1.5 percentage points in 2019.Sales margins were 6.0% in 2019 compared to 7.5% in 2018. At the peak in previous years, the top 100 could reach 8.7 percent. Some individual suppliers have seen their profits fall sharply. Continental, Panasonic or American Axle lost 5 to 10 percentage points in profits compared to 2018.
Among the top three supplier companies in Germany, it was a real "disaster year", especially for Continental, which ended with stagnant sales and losses. The Bosch Group was able to roughly maintain its overall sales as well as those in the automotive sector, but lost 43 percent of its revenues, but did not disclose the exact number of losses in the automotive sector, which was the main contributor to the losses. The two largest suppliers in the top 100 are examples of the industry's dramatic changes, as both companies posted 2018 EBITDA of more than $7 billion. ZF Friedrichshafen also had to contend with a -1.1 percent drop in sales in the automotive sector.
Rounding out the top 100 suppliers, South Korean suppliers, mainly Hanon Systems and LG Electronics, also saw total sales increase by more than 19% due to currency exchange rates: Hanon Systems through the acquisition of Fluid Pressure & Controls from Magna and LG Electronics through strong sales of infotainment systems and other electric vehicle components. Suppliers from China, notably CATL, still achieved average sales growth of more than 12 percent. After 2018, CATL was able to build on its success (+ 55% sales, + 25th position, now ranked 43rd). At the end of 2019, CATL set a new record with 50% of the total battery capacity in China. More Chinese automotive suppliers are ready to be among the top 100 by 2020. Ten years ago, the only Chinese supplier in the top 100 was Weichai Power.
The bright spot in the U.S. is that Tenneco ) is now No. 14 through its 2018 acquisition of Federal-Mogul and its 2019 acquisition of ?hlins Acquisition. (+ 52% sales, + 10 spots, now #14). And Hitachi Automotive Systems from Japan reinforced its positive sales development with the acquisition of Chassis Brakes International from KPS Capital Partners (+ 31% sales, + 4 spots, now #25).
Despite the turbulent times, the top 10 suppliers remain unchanged The 74 classic automotive suppliers in the top 100 grew their market capitalization by + 30.4% in 2019. Michelin Michelin follows Bridgestone Bridgestone and is expected to overtake this year. Based on the current situation, any change in the ordering in 2020 would not be surprising. Nonetheless, the growth in 2019 can also be interpreted as a positive signal for the capital markets, a sign of confidence in the automotive industry, which is in turmoil, and in the future. Let's take this as a positive conclusion and look with confidence at the difficult task of "structural change in the supplier industry".
Everyone knows that 2020 will be a disastrous year. Will there be bankruptcy? Of course! Will it be the top 100 German suppliers? Berylls predicts a 20 to 25 percent drop in sales for the global supplier industry. There are fears that only a small percentage of profits will be generated. The management consultancy also predicts that 90% of the top 100 companies will slip into the loss-making zone. Only Chinese suppliers will grow.
Originally published at https://www.automobil-industrie.vogel.de/top-100-automobilzulieferer-2019-rare-lichtblicke-a-945705/
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