The uncertainties of the Automotive components industry
Dwindling exports and the electric challenge: the supply chain needs suitable industrial policies
Dark clouds are looming on the horizon. A number of challenges are becoming ever more pressing and the sector, often poorly helped by the institutions, is in a turmoil. The greatest challenge facing the sector is electrification; according to Italian manufacturers, the components supply chain in particular must be supported by appropriate industrial policies aimed at enhancing existing skills and addressing new market areas. In the medium-long term, cars powered by traditional combustion engines will see their market shares drop in favour of hybrid and electric vehicles, and this means fewer components, fewer spare parts and less maintenance work. "A number of skills in our supply chain - explains Marco Stella, Chairman of the Ampia Components Group - are destined to progressively lose importance and eventually give way to new ones". Moreover, Stella continues "for the first time since 2014, and after a 2018 at +5%, exports related specifically to the Italian automotive components sector dropped in the first six months of 2019, affecting production (-6.5%) and turnover as orders for spare parts and accessories also fell". "Furthermore - concludes the representative of Anfia - the automotive components supply chain is forced to operate in a context that is becoming rather critical: if on the one hand, the demand for increasingly sustainable products and production methods requires significant investments, including training programs aimed at developing new skills, on the other, trade wars between global economic giants, are spawning uncertainties and additional costs". According to the latest Istat data available, the total turnover index of the automotive components sector recorded a 6.9% drop in the first seven months of 2019, with domestic sales down some 14.1%, while exports closed at +0.7%. The same applies to orders, which fell by 9.2% during the January-July period. These figures well describe the effects of the drop in car production in some European markets, particularly Germany, down by 10.8% in the first half of 2019 (in the UK, -20.2%, in Italy, -19.1% and in the EU as a whole, -6.8%, which means 600,000 cars less than in the first six months of 2018). Following was Anfia’s traditional “dossier Italia” which analyses components import-export for the January-June 2019 period. The document confirmed the difficulties already mentioned at the beginning: in the first half of 2019 the exports value recorded by the automotive components sector decreased by 2.1% compared to the same period in 2018 and amounted to 11.49 billion euro, while imports were worth 8 billion euro and grew slightly, +0.4%. The sector still manages to generate a positive trade balance of about 3.49 billion euro, but this is remarkably lower (-7.5%) than the 3.78 billion recorded in the same period last year. On a positive note, though, we have to note that exports grew towards countries such as Finland (+29.5% and 64 million euro), Hungary (+25.5% and 275 million euro), Portugal (+20.4% and 96 million euro), Austria (+9.8% and 377 million euro) and the United Kingdom (+9.4% and 938 million euro). Exports grew also in Italy’s main destination market, Germany, by 6.4%, with 2.42 billion euro in value and in Spain by 1.4% with 869 million euro, while they fell in France (-2.9% and 1.26 billion euro). In contrast, exports collapsed in markets outside the EU, with exports to the United States down 23% to 594 million euro. Same thing in Turkey (-26% and 458 million), China (-38% and 168 million) and India (-23% and 105 million). Slightly less serious, but still falling sharply, in Russia (-5% and 95 million), Japan (-1% and 142 million) and Mexico (-4.7% and 250 million).