Automotive: supply chain seeking to restart

Amid innovation, attempts at relaunching the sector and fear of the future due to global geopolitical turmoil, the automotive supply chain is in a spin. Looking at the swarm of data coming from various stakeholders, the picture provided by the 2022 edition of the Observatory on Italian Automotive Components, a survey conducted by the Turin Chamber of Commerce and Anfia and presented at the Mauto Convention Centre, deserves special attention. According to the analysis, there are more than 2,200 companies in the Italian component supply chain, that have experienced a recovery in terms of business volumes and turnover in 2021 (+16.7 percent) and the sector is now ready to embrace electric and hybrid technologies. On the other hand, the sector's demands in the face of the current international scenario are reduction of energy costs, a significant drive towards digitization and innovation as well as registration incentives and a significant increase in the number of recharging stations. In the first months of 2022, economic activity showed widespread deceleration among major countries. The Russia/Ukraine crisis amplified already existing issues: inflation, obstacles to the correct functioning of the supply chains, increased financial volatility, and further increases in energy commodity prices. All of this makes up a rather complex scenario; 2021 ended with a slight albeit encouraging recovery, but today, companies in the automotive supply chain are faced with multiple challenges: high energy and raw material costs, international crisis, and ecological transition.  Companies are looking for solutions by selling more abroad, investing in product innovation and searching the labour market for new skills, which are often hard to find. Caution and prudence characterize the outlook for the current year. Export of automotive components also experienced a sharp recovery in 2021 (+15.4 percent), which slowed down in the second half of the year due to the lingering shortage of microchips and ongoing difficulties in sourcing raw materials and logistics issues.  Global demand for motor vehicles in 2021 stood at 83 million units, 5 percent higher than in 2020, but 9 percent lower than in 2019 (91 million vehicles). Global sales performance was influenced by a slight growth in Europe (+0.4 percent in Eu27, Efta and the UK), North America (+4 percent) and China (+4 percent). The Bric region accounted for 41% of the global demand for motor vehicles with 34 million units, thanks mainly to growth in China, which, despite being the first country to be affected by the Covid-19 outbreak, experienced a lower contraction in 2020 compared to other reference markets, while in 2021 it grew by 4% with 26.3 million registered cars and a 32% share of the world market. Overall, demand for motor vehicles in Italy closed last year with a 6.7 percent increase, but if we compare the figure with 2019, the decline is 21.8 percent: 463 thousand fewer vehicles than pre-Covid volumes. Conversely, the logistics sector experienced soaring investments +53% in the first 9 months of 2022 with a record 2.7 billion euro since January 2022, more than 50% compared to the same period last year. This is according to the latest analysis by Jll Group, which shows that in terms of leases, the sector is experiencing the highest growth in the last 10 years: Milan leads the market with 963 thousand square metres of take-up and 54 transactions. And in the first nine months of the year, the logistics sector was confirmed as a most attractive asset class, with a new record of investments reaching 2.7 billion euro (+53% year-on-year). Specifically, 51 transactions were concluded during the period analysed, the average value of which was around 53 million euro, with the Milan area as the preferred location for investors, although interest is growing in other areas including Turin, Bologna and the Veneto region.  In the rental market, 115 transactions were recorded, for a total area of about 2 million sq. m. (+29% year on year), with significant interest in large premises (44% of the deals related to areas above 15 thousand sq. m.). Thirty-four percent of the leases involved assets under 10 thousand sq. m., confirming the high interest in urban logistics solutions.  Demand for leased assets focused mainly on grade A assets (92 percent). E-commerce operators slowed their uptake (5 percent), while the retail sector increased its presence in the market, closing deals for 21 percent of leased space.