The year 2019 promises to be a challenging year for many European automotive suppliers. The global economy is slowing down, most pertinently in China and Europe. Global trade tensions are aggravating matters. And the new EU CO2 emission targets, which are causing dramatic shifts in the vehicle manufacturers’ new-car portfolios, are beginning to bite hard at many a supplier’s side too.
in CLEPA, by Sigrid de Vries, CLEPA Secretary General, 31-01-2019
Certainly: alternative powertrain solutions offer chances for new business as well – there is a lot of European technology in a Tesla. But the volumes aren’t yet there to match the drawback in other areas. A similar story can be told of the, in itself highly-promising and increasingly sought-after, new-mobility solutions for connected and automated driving. The march is definitely on, but investment precedes revenue as volumes are still developing.
This doesn’t mean sentiment is bad. Automotive suppliers are champions in adjusting to new product- and market opportunities. They are at the forefront of new technology and mobility developments, and dealing with cyclical economic developments as well as ‘uncertainty’ is ingrained in their DNA. Automotive suppliers always strive for new openings and opportiunities.
Yet, some of the forces currently at play, do cause concern. Take the global trade disputes and Brexit: here’s a marked disruption of the integrated value-chain that has helped the automotive supply industry be the innovators and technology leaders they are today. The effects are potentially long-lasting. Many of the relocation and investment decisions taken by customers and suppliers in recent time will be irreversible, no matter the actual outcomes on the global stage.
Or, take the new CO2 emissions reduction targets set for cars and vans. It’s not that the direction wasn’t clear, or the technology unavailable. Automotive suppliers have in fact been advocating ambitious reform. But the timing, volumes and preferences that shape a new market were unclear – and still are, to a large extent, in the absence of charging infrastructure and knowledge of how consumers will respond.
Now, however, the suppliers’ first and foremost customers (read: car manufacturers) are responding. And they do not merely ‘shift’ their production plans; it’s in many cases more like a rupture: sudden and vast. The ‘disruption’ that this signifies, might be applauded from a need-for-change perspective – leaving aside the admittedly rhetoric question if ‘electric’ truly is the only solution to decarbonising transport and mobility.
But the disruption this causes, is painful at economic and societal level, exactly because of the fact that a rupture in demand for one and the dramatic ramp-up of production of another solution is an enormous challenge to manage without any damage: a negative impact in terms of costs, job losses, skills shortages and investment write-offs that would be avoided by going the more harmonious path of a transformation, without necessarily giving up on ambition.
So what does this mean for 2019? Adjustments by and in the industry. Close coordination with customers and societal stakeholders. Competition for new markets, both in Europe and in other geographies. Beating the macro trends with targeted strategy; building on key competencies, innovative power and a deep understanding of the longer-term direction that mobility of people and goods will take.
In Brussels, it’s going to be a transition year moving from one Commission and Parliament to another. Industry still hopes to make as much progress as possible with pending files – General Safety regulation, Heavy-duty CO2 emissions, Multi-annual Financial Framework, to name just a few – before the European elections in May. At so-called working level, the shaping of policies for pollutant emissions reduction and access to data will surely continue. In Geneva, UN-ECE will progress its important work on highly-automated vehicles.
CLEPA, the association, celebrates its 60st anniversary in 2019, and will launch a ‘white book’ on the future of mobility to mark that feat. Sixty years of shaping our automotive landscape and now driving the transformation to new mobility. What bright future is in stock? What does the automotive supply community have on offer? Watch this space!