Horváth Study: Automotive sector implements transformation path, fights its way out of the crisis by optimizing revenues and costs

In view of rising material and energy costs as well as supply chain bottlenecks, optimizing cost and revenue structures is high on the agenda of top managers in the automotive industry. Forty-five percent of respondents currently view this as very important, 18 percent as important. These are the results of a recent industry survey by the management consultancy firm Horváth. "Automakers are benefiting massively from the enforcement of high sales prices, while profit margins at suppliers are under extreme pressure," says Frank Göller, a Horváth partner and automotive expert. However, the study also reveals that companies in the automotive sector are continuing to work at full speed on the industry's megatrends such as eMobility, the digital transformation, and environmental sustainability – with good prospects of success.

The automotive industry aims to overcome the current challenges as quickly as it did the pandemic. While the coronavirus crisis hit automotive companies hard, they subsequently managed to recover quickly: In 2021, sales increased by an above-average 15.5 percent (average across all sectors: 9.9 percent). At present, manufacturers and suppliers are being severely hampered by the consequences of supply bottlenecks for key components – especially semiconductors – which are significantly limiting potential sales. For 2022, the respondents therefore forecast only five percent sales growth, which is less than the average across all sectors (8.1 percent). In the coming year, however, sales in the automotive industry are expected to rise again by 7.5 percent, exceeding the forecast for other sectors. "The high demand for new and used vehicles, regardless of the powertrain, makes this outlook seem realistic, provided that the supply bottlenecks ease," says Horváth's in-house expert Frank Göller. "However, it will take suppliers a little longer to overcome the significantly reduced volumes and high material and energy costs that they are currently tackling. To cushion the financial impact, companies should pursue ongoing cost optimizations and conduct strict price negotiations with automakers."

Focusing on electromobility – with autonomous vehicles as a disruptive future trend

The transformation to electromobility is in full swing and is the dominant trend in the automotive industry. Seventy-one percent of the surveyed board members anticipate a major impact on their company. "Strategically, many new approaches have been put in place at OEMs and suppliers – now their competence and the speed at which they can implement the changes will determine their success in the market," says Göller.

Autonomous vehicles are emerging as a highly relevant topic for the future, especially as an enabler for new business models. Currently, 50 percent of respondents consider autonomous vehicles to be extremely important for their company; OEMs significantly more so than suppliers.

About the study

The industry survey is based on interviews with a representative sample of board members at automotive companies as part of the large-scale Horváth study "CxO Priorities 2022 – Managing Overlapping Crises", for which a total of 280 top managers were surveyed.