Short Term Commodity Outlook: Aluminum & Zinc

Short Term Commodity Outlook: Aluminum & Zinc

YIZUMI Die Casting Cell Solutions for Motor housing Industry

GF Casting Solutions Partners up with Open Innovation Platform STARTUP AUTOBAHN Powered by Plug and Play

SJM Presents Itself for the First Time in Europe at EUROGUSS

Light Metal Foundry at the BMW Group Plant in Landshut Relies on Innovative Multi-Plate Mold Technology for Chassis Casting Parts

Yxlon Sets a New Benchmark in Computed Tomography

Greater Efficiency and Sustainability with the Right Release Agent

"InCeight Casting C8" Calls for Paper Submissions by May 15

European Foundries are Ending the Second of the Pandemic With Mixed Feelings

"Intelligent Die Casting Has a Key Role to Play in Improving Sustainability in Our Industry."

Leading Space Company Orders Two 3D Printers From SLM Solutions

Time-Consuming Handling and Risk of Injury: Installation of Shredder on Zinc Die Casting Machine Minimizes Space Requirements and Logistics Costs

Revolution in Die Casting: 10 Years of HERA™ Release Agents

Tailor-made Joint Dimensioning for Direct Fastening into Light Metal

Despite the triumph of electric cars, there is a long way back to success for the German automotive sector. The prospects in this segment remain good, but this will not compensate for the losses in other segments. According to a study by the credit insurer Euler Hermes, car dealers and automotive suppliers are particularly at risk.

"There are lights and shadows in the German automotive industry," says Ron van het Hof, CEO of Euler Hermes in Germany, Austria and Switzerland. "Electric cars have been experiencing a real boom and record market shares since the fall thanks to purchase incentives. However, this is unlikely to be enough to compensate for the slump in the rest of the sector. China also gives cause for hope. For automotive suppliers and car dealers, however, things are currently looking rather bleak."

Electromobility - Rheinmetall Group Receives Major Order

"In the first nine months of the year, we counted more than twice as many cases in the automotive industry, with ten major insolvencies, compared with four major bankruptcies in the same period last year," says Van het Hof. "There were also three times as many in the metals sector as in the same period last year, with nine major insolvencies. This shows very clearly that the sector was already facing major challenges in some areas before the COVID-19 pandemic. In some areas, this has now worsened dramatically - but as everywhere, there are winners and losers."

The engine at automotive suppliers is noticeably sputtering at the moment. In total, the more than 1,000 supplier companies with cumulative sales of EUR90 billion and 300,000 employees are responsible for 75 % of the value added in the automotive sector.

"Around 18 % of small and medium-sized supplier companies in Germany are currently at risk, according to our assessment," says Van het Hof. "That's significantly more than among automotive manufacturers (about 12 %) or than in other industries. Conversely, however, this also means that 82 % of the companies are relatively well positioned. That's positive news in the current crisis."

Tier 2 and Tier 3 suppliers - especially those not involved in electromobility - as well as smaller companies, are particularly in the firing line, especially in southern Germany.

"They are still heavily dependent on conventional powertrains and do not have sufficient financial resources to manage a reorientation with competitive products in the new world of electric vehicles," said Maxime Lemerle, automotive expert and head of industry risk analysis at Euler Hermes Group. "Tier 1 suppliers are, on average, in a stronger financial position to cope with the shift from combustion to electric powertrains. However, we expect more pressure from automakers and the need for a global presence. The automakers themselves are not immune either: companies would be at risk if their dependence on Asian batteries were to increase, or more generally, if they failed to adapt their business models to the new trends."

Politics, Markets, and Digitization in the Focus of German Casters

In addition to the suppliers, the study also sees particularly high risks at the car dealers: even before the crisis, they recorded only very low margins of between 0 and 1 %. With the closure of car dealers, showrooms, car fairs, registration offices and factories, the situation became even more precarious and even after the end of the first lockdown, their sales have only partially improved compared to pre-crisis levels.

"Car dealers are still suffering from high inventories of diesel vehicles and are also competing with the automakers themselves with new online marketing concepts," Lemerle says. "They have hardly any 'crumple zone' left in some cases due to the overall low margins and increasing competition."

The German market, the largest in Europe, is expected to end 2020 with a -22 % decline in new registrations of passenger cars and commercial vehicles to 3.1 million units per year, down from 4.0 million in 2019. Car purchases are a low priority for the majority of German households. This is especially true when the outlook in terms of employment and wages is uncertain or remains unfavorable - even if consumers' increasing desire for "greener" mobility is supporting the upswing in e-vehicles. The latter already reached a record market share of 15.6 % in September. The recovery of the German market expected in 2021 (+14 % year-on-year) could only partially compensate for the downturn in 2020 and would be short-lived: the market is unlikely to return to its pre-crisis record level and will remain below 3.6 million units per year in the coming years.

Chinese Market and the Light Metals Industry

In addition to the domestic market, the development of export markets is of crucial importance for automotive manufacturers and suppliers: the export share of the German automotive industry averaged 64.5 % between 2015 and 2019.

"In Europe and the U.S., we expect continued fierce (price) competition, as both are expected to contract in the current year and fall well short of pre-crisis levels even with the expected growth next year," says Lemerle. "The outlook is more favorable in China. For one thing, mobility restrictions have been lifted earlier there, and for another, there are many first-time buyers who have switched from public transportation or shared mobility to owning a car in the wake of the pandemic."

The Chinese market saw eight consecutive months of recovery from April to November 2020 and is expected to end the year down -2 % before rising +12 % to 28.3 million units sold in 2021.

"German automakers are well positioned to benefit from this recovery trend," says Lemerle "This is because it is also playing out in the premium segment, and most German manufacturers have a relatively high share of their sales in China. That's a real bright spot for the industry."

Estimates of German Al Castings Demand from 2020 to 2025

However, COVID-19 has left significant skid marks in the automotive sector. The first nine months of the year were marked by a massive slump in sales and margins, despite an improvement in Q3: OEM manufacturers lost around 18 % of sales, suppliers -20 %, the tire industry -18 % and car rental even -43 %. This also had a negative impact on operating profit in all divisions: EBITDA slumped by around a third at OEMs (-34 %), by half at suppliers (-50 %), -29 % at the tire industry and most dramatically at -87 % in the car rental industry.

Companies are resorting to means such as reducing inventories, which has a positive effect in the short term, as well as introducing new models more quickly after production resumes. However, the sale of low-emission vehicles has so far resulted in lower margins compared to vehicles with internal combustion engines.

"All of this is forcing companies to downsize and cut jobs, adjust their portfolios and production capacities, both in products and brands and in sales markets," Van het Hof says. "Added to this is the 'fine-tuning' of their investment plans. It's a balancing act: on the one hand, the goal is to protect their liquidity and put the brakes on spending, and on the other hand, to secure a good starting position with targeted investments and step on the gas for the slow and bumpy road back to success."

Casting Production 2025: Will the Recovery be Sustainable?

Machinery Exports Converging Towards Pre-Crisis Level

Cookie-Manager Imprint Media General Terms & Conditions Privacy Help

Copyright © 2022 Vogel Communications Group

This portal is a brand of Vogel Communications Group. You will find our complete range of products and services on www.vogel.com

Automobil Industrie; Rheinmetall Automotive; gemeinfrei; https://portal.handtmann.org/sites/Geschaeftsbereiche/Konzern/Holding/Marketing/Logo/Forms/Thumbnails.aspx?useFiltersInViewXml=1&FilterField1=FileType&FilterValue1=jpg&FilterType1=Computed&id=%2Fsites%2FGeschaeftsbereiche%2FKonzern%2FHolding%2FMarketing%2FLogo%2FLogo%20Englisch%2Ejpg&parent=%2Fsites%2FGeschaeftsbereiche%2FKonzern%2FHolding%2FMarketing%2FLogo; http://promove.ch/de/content/fondarex-sa; Company; Guangdong Yizumi Precision Machinery Co., Ltd.; GF Casting Solutions; BMW Group; Quaker Houghton; SLM Solutions; Erdwich Zerkleinerungs-Systeme GmbH; EJOT SE & Co. KG