U’s export success story is not over (yet)
Will the EU remain the epicenter of the automotive industry?
The EU automotive supply ecosystem continues to perform well in terms of global exports, foreign direct investment, revenues and value creation. Comparing how the EU sector fares against its regional competitors in North America and Asia, shows a resilient sector that will have to continue to be innovative to maintain its strong position as the epicenter of the automotive industry, which is increasingly shifting to Asia.
The year 2019, with the outbreak of the COVID-19 pandemic and other subsequent crises, is shaping up to be a watershed date for automotive suppliers. Since then, the industry has faced unprecedented pressures, which could affect the future ability to invest in innovation, especially for SMEs.
1 – EU is still the leader in car parts export, while industry in China is gaining ground
The European automotive supply industry remains the leader in global exports, while feeling the heat from China. Since 2018, China’s sales of automotive components abroad surpassed those of the US and Japan, ranking second after the EU.
As of the first quarter of 2022, EU and the US have overtaken China and Japan as preferred destinations for Foreign Direct Investment in the automotive components industry. Chinese automotive supply industry revenues see continued growth path post-COVID, while EU, US and Japan stagnate.
2 – EU industry shows resilience to challenges in Chinese markets but is hovering in North America and Mexico
Despite China’s growing competitiveness, EU suppliers have defended their global export market share, for now.
China, US and Mexico are the three biggest importers of auto components in the world, excluding the European Union, which is by far the biggest supplier to China, a position that has even expanded since 2018. In the first quarter of 2022, 50% of Chinese imports of auto parts came from the EU. In both Mexico and the US, EU auto parts are under pressure and hovering around 10%, with China becoming increasingly competitive on the Mexican market.
3 – EU value add is under growing pressure
16% of the world’s value creation in the automotive supply industry happened in the EU in 2021, a significant fall compared to the 23% record in 2008. The decrease is mostly driven by the growing significance of Asia to the global economy. The EU’s share of GDP fell in the same time from just above 20% in 2008 to just below 15% in 2021. Automotive components and automotive as a whole continue to slightly outperform the manufacturing sector as whole, but the sector is under growing pressure since 2019.
4 – Japan and South Korea increasingly invest in China and the US