GLOBALAUTOMOTIVESUPPLIERSTUDY2022The industry went into the third consecutive year withvolumesbelowpre-pandemiclevels-Automotivesuppliersattheedge?LAZARDBerger ContentsCOVID-I9SEMICONDUCTORSHORTAGES.ENERGYCRISISANDAStartingwiththeCoviD-19 pandemic,theautomotiveindustryisgoing intothethird consecutivecrisisyearwithanaboveaveragefinancialburdenespeciallyfortraditionalautomotivesuppliersSUSTAINABILITY,NEWTECHNOLOGIES AND CHANGING INDUSTRYBDYNAMICS ASMID-AND LONG-TERM TASKTheshort-termimplicationshaveaddedchallengesontheautomotivesupplieragendabutnotchangedthelong-termtasksfrombefore-ImpactonsuppliersvariesbasedontheirarchetypeSUPPLIERCEOAGENDA-SETTINGTHEDIRECTIONFORCLASTING SUCCESSMainlytraditionalsuppliersareunderpressure,but all playersmustdefinetheirsetofstrategicactionstoensurefuturesuccessinavolatilemarketenvironmentDYOUR CONTACTS TO DISCUSSTHEINSIGHTSRolandBergerandLazardAutomotiveteams Global crisishavebrought growth to a halt but not changed the overarchingtechnologytrendsandthefuturechallengesforautomotivesuppliersExecutivesummaryDuetoCovid-19,semi-conductorandraw-material shortages,UkrainewarandCovid-19relapsesinChinain2o22,global automotiveproductionvolumeswillreachpre-crisislevelsonlyinthemid-termAlthoughthegrowthoftheglobalautomotivesuppliermarketshascometoahalt,averagesuppliermarginscamebackto2019levels in2021However,marginpressurefromcostinflation expectedtofurtherincreaseProfitsareallocated across thesupplierlandscapeveryselectively.Whilemosttraditionalautomotivesuppliershavedifficulties,many electronicssoftware andaftermarket players are realizing aboveaveragemarginsOverall, theuncertaintyabout thedevelopment in the near-to mid-term futurehas never been as high as today-From a global recession or acollapsingofchipsupplieswithfurthervolumedeclinestoasteadyvolumerecoveryeverythingispossibleOn thebackofsubstantiallyrising interest rates,financing willbecomemuch more challengingforautomotive suppliersThe crises in2020-2022have pushedgeneralautomotivetrends into thebackground.Nevertheless,digitalization,automated driving,powertrainelectrification ora changing E/Earchitecturearethetop challengesforautomotive suppliers inthemid-termPrice inflation,volatileproduction volumes and unevenly distributed profit levels indicate,that thegeneral market dynamics needs to changeGlobal pandemics and geopolitical conflicts drive the necessityto de-globalize supplierfootprints and the interconnected supply chains toincreasecrisisresilienceinthefuture A.CoViD-19,SemiconductorcrisisandUkrainewarasoperational short-termchallenges Theautomotivesupplierindustryisfacing anotherdifficultyear withvolatilevolumesandhigh uncertaintyTheanticipatedvolumerecovery afterCOViD-19andthesemiconductorcrisisin2021failedtomaterialize.Instead,theWarinUkraineandCOViD-19relapsesin Chinaput ongoingburdens onthemarketNevertheless,somesupplierse.g.,aftermarketplayers,electronicssuppliersorprocessdrivenspecialistsfromAsia,couldoutperformthemarketspushingtheoverall industrytoaweighted averagemarginof5.3%in2021Froman overall perspective,short-noticevolume volatilitiesare challengingforautomotive suppliersmaking efficientshop-flooroperationsand theuseofcost-reductionlevers,suchasshort-timeworkorsupply-chainmanagement,difficultWith anincreasingfearofrecession,thefurtherdevelopmentofthe industrydepends especially on the inflation monetary policies as wellas the cost andsecurityof supplyofenergythroughoutWesternEuropeSource:RolandBerger/Lazard The automotivebusinessbecomesmore and morevolatile withoperationalandstrategicchallengesalternatingEconomiccyclesoftheautomotiveindustryIproductionvolume,#ml89.081.677.274.376.970.667.6Direction74.6unclear59.5TelematicsGlobalChipshortage,trend,BRICeconomic&rawmaterialDot-comcountries&financialGrowthinDieselCOVID-crisis&warinbubblelow-costcarcrisisChinagate19crisisUkraineStrategicchallengesOperationalchallenges Suppliershave manydifferentchallengeswhichimpactdailybusinessandrequirealotofmanagementattentionSupplierCEOradarscreen-ShorttermimplicationsCompetitionVehicleLegislationmanufacturersUnderutilizedcapacitiesPublicPriceLogisticsefficiencysustainabilitytransparencyEndpushReducedSupply chainSupply chainRaw materialcustomersICEshareresilienceDiversitytraceabilityImportanceofand laborFuelefficiencySoftwareandRelevanceofAlternativemarketsElectronicsTier3/4EmissionsourcessuppliersregulationDigitalNewEnergycostEnvironmentalfeaturescollaborationNewincreasesCovid-19awarenessRawmaterialmodelscompetitorscostincreasesLogisticcostUncertaintycontainmentCostChipincreasesaboutinflationCostRussiaLaborcostandrecessionclaimingrecoverysanctionsshortages increasesGeo-Re-financingWillingnessEnergypoliticalNewPriceabilityCapitalDeclining relevanceshortagesofCISstatestopayStableXEVwarsWorkforceAttractivenessCISdivestmentsmarketsenvironmentTradedemandOEMSscarcityofequitystorywarsCost of industryGlobalRising interestGeneraltransformationuncertaintyFlaminguppandemicsratesStateM&AR&DcapitalUS-China tensionsF/XrateUkrainewarfundingop