Allensbach study on the automotive industry: Suppliers want to expand into these sectors / Cooperation with Chinese OEMs not an option for the majority

• 83 percent consider cooperation with Chinese OEMs to be at least difficult, with almost half (47 percent) considering it to be very difficult
• Two-thirds (64 percent) of the companies surveyed are directly affected by the decline in the combustion engine market
• 28 percent of respondents report increasingly difficult access to credit

“We are experiencing a profound structural shift,” says Ralf Winzer, Managing Director and Partner at FTI-Andersch, FTI Consulting's consulting unit specializing in restructuring, business transformation, and transactions. “Many automotive suppliers are turning to new industries because they no longer see sufficient prospects in their own sector.”

In fact, the survey shows that three out of four German automotive suppliers (75 percent) who say they are affected by structural change in their industry are already building up their business outside their own sector, particularly in areas with high technical requirements, such as the defense industry (25 percent), the energy sector (16 percent), and aviation, medical technology, and rail (nine percent each).

“In these fields, suppliers can leverage their existing strengths: precision, quality assurance, and regulatory experience,” says Ralf Winzer. "But it's not an easy path: new approval procedures, different product cycles, and unfamiliar customer expectations present many companies with operational and cultural hurdles. Those who take this step nevertheless usually do so out of necessity, not convenience. It is noteworthy that many automotive suppliers apparently consider it more promising to gain a foothold in a new industry than to adapt to the increasingly relevant OEMs from China."

The majority of suppliers are unable to establish relationships with Chinese OEMs – and are thus missing out on new sales opportunities

Chinese manufacturers are rapidly entering the European market, presenting the local supplier industry with a double challenge. On the one hand, imported vehicles from China are increasingly displacing locally produced models, leading to growing sales declines for European OEMs and their suppliers. On the other hand, Chinese manufacturers bring with them their own well-established supplier network – cost-effective, efficient, and well-connected.

However, only a minority are currently targeting these potential new customers. Four out of five German automotive suppliers (83 percent) consider cooperation with Chinese OEMs to be difficult at best, with almost half (47 percent) considering it to be very difficult. Twenty-five percent are specifically establishing or planning to establish sales structures for Chinese manufacturers in Europe. One in five suppliers (19 percent) is developing or planning products that are tailored to the technical requirements of Chinese manufacturers. The majority, 57 percent, are not even entering into competition for Chinese manufacturers – and are thus largely ruling out future cooperation.

Some companies are responding with alternative strategies: 47 percent want to become less dependent on national OEMs, 34 percent are avoiding exclusive agreements, and 26 percent are seeking new partnerships, mostly with Western technology companies, in order to reduce dependencies and share or acquire know-how.

“Many suppliers currently see the market entry of Chinese OEMs primarily as a threat, not an opportunity,” says Ralf Winzer. "And that's understandable: the new competitors bring with them well-established supply networks and significant cost advantages. But those who fail to act now will drastically reduce their future prospects in their own industry. Chinese OEMs will have a decisive influence on the global market, especially in the field of electromobility. Those who do not try to connect to this market today will be completely left behind in a few years."

Decline in the combustion engine market forces companies to make strategic decisions

The industry is now very clear about another problem: the combustion engine market is shrinking – and with it the traditional business of many suppliers. Sixty-four percent worldwide expect a sustained decline and are directly affected by it, more than a third (34 percent) strongly or very strongly. Of those affected, 27 percent want to withdraw from products and services related to combustion engines, while more than half (55 percent) do not want to or cannot do so.

As the Allensbach study shows, companies are responding in different ways: 54 percent have already relocated production capacities or are planning to do so, 52 percent are investing in future technologies, and 27 percent are looking for investments in start-ups or technology-oriented companies. It is striking that an equally high proportion have not yet taken any of these measures.

Many companies are also not yet using artificial intelligence as a sufficient strategic lever. Although 89 percent of automotive suppliers already use AI, it is mainly in generative applications – such as text, image, or presentation creation. AI is less commonly used in industrial applications: 51 percent of companies use it in quality assurance, and around 32 percent in predictive maintenance. Overall, the industrial use of AI remains limited to a small part of the industry. Fifty-seven percent expect AI to significantly change the structures and processes of the industry in the coming years.

“Many companies are responding to the decline in the combustion engine market with a mix of relocation, diversification, and technological transformation,” says Ralf Winzer. “AI could be a potential lever for increasing efficiency and productivity. But we see that an active minority is taking action, while the majority is waiting – or focusing its resources on entering other industries.”

Financing pressure and insourcing are exacerbating structural change

In addition to the familiar location factors, two other developments will have a noticeable impact on the industry in 2025: more difficult financing and increasing insourcing. Twenty-eight percent of companies report more difficult access to credit – the highest figure of all industrial companies surveyed by Allensbach. Where financing is a problem, 92 percent are postponing investments, and two-thirds (62 percent) have already cut jobs.

At the same time, many manufacturers are bringing selected components back into their own production: 17 percent of suppliers already report noticeable insourcing, and another 38 percent expect this trend to continue to strengthen in the future.

“The Allensbach study highlights the complexity of the problems currently affecting German suppliers,” says Ralf Winzer. “The key now is to clearly define your own position – and derive a strategic direction from it. The pressure to consolidate will increase, and not all companies will be able to successfully enter new industries. However, those who realistically assess their strengths, set priorities early on, and focus their efforts have the opportunity to use this change as a new beginning – rather than an end point.”

Methodology

For the German Economic Pulse 2025 – State of German Industry, the Allensbach Institute for Public Opinion Research conducted a telephone survey of a total of 169 German industrial companies in late summer 2025 on behalf of the management consultancy FTI-Andersch. The focus was on the energy-intensive industry (64 companies), mechanical and plant engineering (58), and automotive suppliers (47). The sample includes both medium-sized companies (67 with sales < €100 million) and corporations (102 with sales > €100 million). Around 80 percent of the interviews were conducted with board members or managing directors, the rest with heads of finance, strategy, and sales who are responsible for budgets – the results thus reflect the assessments of top management.

About FTI-Andersch

FTI-Andersch is a management consultancy that supports its clients in the development and implementation of sustainable future, performance, and restructuring concepts. FTI-Andersch actively supports companies that are facing strategic, operational, or financial challenges and change processes – or that want to align their business model, organization, and processes for the future at an early stage. Its clients include, in particular, medium-sized companies and corporations that operate internationally. FTI-Andersch is part of the FTI Consulting Group (NYSE: FCN) with more than 7,900 employees worldwide.