Vehicle production volumes will not recover during the first part of 2022, and it is not clear that they will do so in the second half of next year, so it is not expected that the profitability projections for 2021, according to the “Pulse Check” survey of the European Suppliers Association (Clepa).
This situation is due to the semiconductor crisis, the price increases of raw materials and the rapid technological transformation that is putting pressure on automotive suppliers.
“Supply shortages threaten thousands of chains and the millions of jobs that depend on them. Transparency, collaboration and flexibility are needed to mitigate and prevent future interruptions in the supply chain ”, explained Sigrid de Vries, General Secretary of Clepa.
SOnly 27% of suppliers surveyed show a positive outlook for the industry, up from 8% at the start of Covid-19. However, 73% still have a notably negative opinion, which is considerably higher than in pre-pandemic times.
Survey data reveals providers are adapting, focusing on developing strategic changes for security of supply.
70% of respondents said they are adapting the supply chain and their sourcing strategy, with a greater focus on dual sourcing, closer relationships with semiconductor suppliers, and longer-term sourcing contracts.
In addition, 53% of respondents believe in a greater importance of cash management in the next 12 months. In the same way, when asked about improvement opportunities for companies, 55% of suppliers expressed inventory optimization.
Another planned strategic adaptation is the increase in mergers and acquisitions. 39% of suppliers expect to increase their M&A activities in the next 12 months, and the majority of activities (80%) are between industry players. Given the anticipated strategic changes, many industry players are rethinking their future portfolios as they try to identify new growth opportunities.