VDA offers of support for automotive suppliers

The mobility ecosystem is changing, and German automotive suppliers are facing many challenges resulting from this process of transformation. The VDA is supporting them on this journey by providing macroeconomic data, accompanying public funding programs and assisting them in tapping into foreign markets and establishing new sites abroad.

Following the outbreak of the corona pandemic in 2020, it became clear that the transformation process of the automotive industry towards climate-neutral mobility could be seriously hampered if demand collapses almost completely in the short term. For small and medium-sized suppliers in particular, who have to reorganize their entire product portfolio as part of this transformation, a disruption of cash flow in such a critical phase could threaten their very existence.

The VDA immediately lobbied the German government for uncomplicated bridging finance from the KfW. In addition, financing offers were made by the federal states via state guarantee banks, especially for small and medium-sized companies. However, it was clear from the outset that loans and guarantees would only provide these companies with short-term liquidity. In the long term, the sales that would now be lost had been planned to finance the transformation process. The VDA therefore additionally campaigned for demand stimuli that would revive the market. This was achieved on the one hand by extending the electric car premium in Germany. In addition, the German government included the automotive supply industry in its economic stimulus program under Article 35c. With this program, over 1.5 billion euros are to be distributed over a period of four years to promote key investments in digitization and sustainable production. It also supports research and development, as well as regional innovation clusters.

The German automotive industry is one of the most internationalized sectors of the economy. Protectionism and cost advantages often favor a decision to manufacture locally, close to the sales markets. New production sites in emerging markets are often the most crucial prerequisite for gaining a share of the market. VDA member companies currently manufacture in almost 80 countries at over 2,500 locations. OEMs are often the pioneers in a region, and as a result their suppliers also benefit from the increasing rise in sales. For Tier 1 suppliers, an intact international manufacturing network has long been an integral part of their business strategy. In contrast, small and medium-sized suppliers are carefully weighing up whether to invest in foreign markets and set up new production sites. Ultimately, the risk of a poor investment has more serious consequences.

One way to test international markets is to exhibit at trade fairs. The VDA regularly informs its members about participation at the most important vehicle trade fairs in the growth regions. Under the motto "Made in Germany", SMEs from the supplier industry can present their company at the joint booth run by the Federal Republic at special conditions. The joint booths are sponsored by the Federal Ministry of Economics and Technology (BMWi) and organized in cooperation with the Association of the German Trade Fair Industry (AUMA). While the COVID pandemic is still ongoing, some countries are already offering trade fairs in adherence to special precautionary measures. In 2021, these are the car shows in Sao Paulo, Seoul, and Shanghai.

For a successful leap into new markets, solid financing is just as important as a reliable information base. Thus, in addition to conventional market data, the experience of other companies in these countries is therefore also valuable.

This is where the VDA's support comes in. In those key markets requiring a particularly high amount of investment, the VDA has installed round tables. The VDA organizes these information events in China and Mexico for its suppliers. At the events, which are held locally or, during the corona pandemic, also digitally, top management from suppliers are given the opportunity to discuss the extending cooperation and optimizing the value chain with local OEMs and responsible government representatives. Macroeconomic conditions and current country-specific trends are also examined. 

The VDA supplier portal automotive-collab.com portal connects partners within the automotive industry.

Entering new sales markets or cooperating with new business partners are central options for further corporate growth, and thus an integral part of securing a company's future. Collaborations are often concluded as strategic partnerships, but also, not invariably to gain the technological expertise that the company is lacking – instead of developing this at great expense themselves. 

The search for suitable cooperation partners is normally a major challenge. Which is why the VDA has set up a cooperation portal with an extensive supplier database for the automotive value chain.

In addition to the company database, www.automotive-collab.com includes a cooperation exchange and company news, while the supplier database allows extensive searching according to products and worldwide locations. 

The portal is open to all suppliers. With just a few clicks, companies can publicize and raise awareness of their own company activities. For example, a company's own Twitter channel can easily be integrated, or company news published, along with any events.