Restart under pressure: Many suppliers are looking for alternatives to the automotive market

The automotive supply industry in Germany, and thus also the die-casting sector, is facing fundamental change. The study ‘German Economic Pulse 2025 – State of German Industry’ clearly shows how much pressure the industry is under. A total of 169 industrial companies were surveyed, including 47 suppliers to the automotive industry. For them, structural change has long had concrete consequences: declining sales, changing customer structures and the need to tap into new markets.

Decline in the combustion business and immediate consequences

The study is based on telephone surveys conducted in late summer 2025. FTI-Andersch commissions these surveys to gain an understanding of the mood and priorities within the industry. For automotive suppliers, the current survey provides a clear picture: structural change is affecting the industry broadly, deeply and simultaneously.

A key driver of the current uncertainty is the global decline in the market for combustion engine vehicles. 64 per cent of the suppliers surveyed say they are directly affected. Many companies have already taken action. More than half – 54 per cent – have relocated production or are planning to do so, while 52 per cent are actively investing in future technologies. The study makes it clear that this change is not seen as a temporary phase, but as a structural change that requires long-term adjustments.

Diversification as a survival strategy

The answer to the question about strategic alternatives is particularly revealing: 79 per cent of suppliers who feel directly affected by the change are now also focusing their business on other industries. The most frequently mentioned are defence (25 per cent), energy (16 per cent), aviation, medical technology and rail (9 per cent each).

 

Competition from China – passivity is not an option

Parallel to structural change, competitive pressure from Chinese OEMs is growing. The study paints a clear picture: 83 per cent of automotive suppliers consider cooperation with Chinese manufacturers to be at least difficult, with 47 per cent even considering it ‘very difficult.’ Only a quarter of suppliers are actively establishing sales structures in China, and even fewer are specifically adapting products for Chinese OEMs.

Winzer emphasises the strategic relevance of this development: ‘Many suppliers currently see the market entry of Chinese OEMs primarily as a threat, not an opportunity. And that is understandable: the new competitors bring with them well-established supply networks and significant cost advantages.’ At the same time, he warns against passivity: ‘Chinese OEMs will have a decisive influence on the global market, especially in the field of electromobility. Those who do not try to connect to this market today will be completely left behind in a few years.’

Hesitant use of AI

Another focus is on technological adaptations. Although 89 per cent of suppliers use AI applications, they are predominantly used in the area of generative tools such as text, image or presentation creation. There is reluctance when it comes to specific production-related applications: only 51 per cent use artificial intelligence in quality assurance, and only 32 per cent in predictive maintenance.

These figures highlight a discrepancy: while generative AI has already become established as a means of simplifying everyday administrative tasks, its use in value-adding processes lags behind its potential. This is remarkable for an industry that combines efficiency, precision and process reliability at the core of its activities.

Financial and structural burdens

In addition to market and technology issues, financial hurdles are also weighing on companies. 28 per cent report difficulties in accessing credit – the highest figure compared to the other industries surveyed. At the same time, there is a growing trend towards insourcing by OEMs: 17 per cent of suppliers are already affected, and a further 38 per cent expect this development in the future. For many companies, this means a double burden – structural change in the market and, at the same time, the risk of losing orders from existing customers.

For die casting foundries and their suppliers, whose business models are traditionally closely linked to the automotive structural tree, the study has two immediate implications: Firstly, it confirms the continuing decline in the classic combustion engine market. Secondly, it shows that many of the industries into which suppliers are expanding also require casting-intensive structural components. Whether in medical technology, the energy sector, aviation or rail transport, new fields of application are emerging that differ significantly from automotive cycles and requirements. This opens up new opportunities for the industry if the specific requirements are properly understood.