Deloitte: Outlook for automotive suppliers in 2025

Automotive players are facing disruptive times. In the Automotive Value Chain (AVC) report, Deloitte has extensively researched and published current industry trends. Historic changes are not just affecting OEMs, and this research is going deeper into the value chain to try to shed light on the impact on the supplier market.

Overall material costs will increase slightly by 6% in Germany, NAFTA and China.

Fifteen of the 19 auto parts clusters are likely to see a decline in market capacity.

The biggest losers will be parts associated with traditional internal combustion engine vehicles, with sales set to fall 36% by 2025, including transmissions, exhaust and fuel systems.

The likely winners must be prepared to manage and meet growing demand of up to 15 times its current volume, such as suppliers with a stake in electric drivetrain and battery technology and in the development of autonomous driving functions.

Regional forecasts show that material costs in Germany are facing a general decline, while material costs in China will increase due to generally strong vehicle sales forecasts.

Deloitte believes that each vehicle component cluster must be viewed based on its scenario-specific forecasts, such as the growth rate for infotainment and communications scenarios ranging from 25% to a decline of -60%.

Transformation Path

Disruptive change will affect all players in the automotive value chain.

The results of Deloitte’s AVC industry model reveal a significant and, in some cases, urgent need for change. The modeling results trigger and support discussions on reprioritizing product portfolios and market risks. The automotive value chain study discusses six strategic action areas that every automotive supplier should evaluate to prepare for future industry shifts. As part of this – and because many suppliers are and will face large-scale transformation programs – Deloitte simulated a typical supplier’s profit and loss statement in the report and highlighted long-term challenges to profitability.