he supplier industry is losing its financial strength at the very moment when it needs to finance the most expensive transformation in its history.
nyone seeking to describe the situation facing automotive suppliers this year could point to a broad number of factors, such as declining revenue despite rising production volumes, delayed platform launches, or growing pressure from Asia. And all of that is true, but still misses the point. The crux of the matter is financial in nature – and more alarming than most public discussions would suggest.
The industry’s interest coverage ratio has been declining steadily since its post-COVID peak and is now at its lowest point since the onset of the electrification wave. After a brief recovery, the investment rate among the largest suppliers has fallen to its lowest level in at least eight years. Neither of these developments are a mere cyclical dip, but signalize a structural shift, the consequences of which are being underestimated. The supplier industry is losing its financial strength at precisely the moment when it needs to finance the most expensive transformation in its history.
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