Whether it's the transformation to electric drives or the integration of more and more software, the German automotive industry is undergoing radical change - and at the same time still has to deal with its supply chains.

The relevance of the supply chain issue is reflected in this figure: 89% of the automotive decision-makers surveyed have at least one subsidiary abroad. 85% of the companies in the survey for the aforementioned study stated that they were still affected by post-pandemic effects or the ongoing war in Ukraine. In view of increasing global crisis situations and simultaneous macroeconomic pressure, companies are striving to reduce their costs: 44% of participants stated that they are looking for additional nearshoring or offshoring options.

Eastern European countries appear to be the most attractive for the German automotive industry (29%), followed by other Western European countries (27%). Asia and North America are both in third place (15%), and only 5% have plans for South America; multiple answers were possible here. A light at the end of the tunnel for Germany as a business location: 54% of companies have no plans to relocate work abroad; 2% have already done so completely.

Optimism thanks to smart manufacturing

In view of the scenario outlined above, companies are looking for further ways to improve their situation on site. One of the main tasks here is to optimize production facilities with regard to digitalization and automation in the sense of smart manufacturing: 89% of automotive companies have plans to do so. This is despite the fact that a significant proportion of manufacturers and suppliers are already using such technology to a greater or lesser extent. Where this is not yet the case, the majority (64%) are optimistic that they are fundamentally ready for this; 23% are undecided on this issue and only 13% do not consider themselves sufficiently prepared for smart manufacturing.

Accordingly, 55% of companies have already taken comprehensive or very comprehensive measures to monitor and optimize energy consumption; 45% would like to tackle this in 2024 or 2025 or focus more intensively on the topic. A further 31% consider this to be very likely. 47% of companies use digital twins extensively or very extensively; 67% will start doing so or at least have concrete plans to do so this year or next. And, of course, a significant number (65%) in this manufacturing-oriented sector use robots and robotic process automation (RPA) extensively or very extensively; three quarters will start or expand such activities by 2025 at the latest.

Skills shortage as a driver

The human factor also plays an important role in all of these considerations: 27% of companies consider the shortage of skilled workers to be a problem - a clear majority of 61% derive the potential from this that the lack of talent will be a driver for the further spread of smart manufacturing. Artificial intelligence tops the list of associated technologies with 56%, followed by robots and automation (52%) and RPA (44%). Augmented and virtual reality bring up the rear with 13%.

"The German automotive industry is undergoing a profound transformation: car manufacturers and suppliers have recognized that software is playing an increasingly important role in both cars and factories. In addition, new players are shaping the market, which is also being significantly changed by electromobility," says Stefan Smolka, Managing Director of Avanade Germany. "In view of all these challenges, the German automotive industry has initiated the necessary transformation to intelligent manufacturing. This transformation is underway, but in an overall fragile economic situation. Both manufacturers and suppliers are therefore only halfway to their goal, and Germany is still threatened by relocations. Nevertheless, we are optimistic that the local automotive industry will get back into the driver's seat."

Methodology of the study

To conduct the study, Statista was commissioned by Avanade to survey managers - CEOs as well as division, department and team leaders - from a total of 450 companies in Germany in the second half of 2023. Over half of the companies have a turnover of more than 100 million euros and employ over 500 people. Companies from the automotive, mechanical engineering, information technology, consumer goods and manufacturing sectors were selected for the sample.