Global Automotive Supplier Study 2010 - Roland Berger

Global Automotive Supplier Study
Short version
September 2011

Management summary
> Driven by booming car sales, the global automotive supplier industry achieved record profitability in 2010
(6.2% EBIT margin on global average)
> However, financial performance of suppliers differs heavily depending on headquarter region, company
size and product focus.
– European suppliers achieved an EBIT margin of almost 7%, while North American and Japanese
suppliers remain below global average
– Small and medium-sized suppliers have significantly improved their profitability compared to precrisis
levels
– Chassis focused suppliers achieved the highest profitability, while Interior and Electric suppliers
remain below average
> Revenue outlooks for 2011 full-year and for 2012 are relatively stable. Also profitability is expected to stay
at a reasonable level, but drop below 6% EBIT margin on a global average
> Besides keeping profitability at a high level and ensuring real global delivery capability, suppliers need to
put an even stronger focus on product innovation. Only suppliers who can differentiate themselves from
competition via superior product functionality will be able to sustainably achieve EBIT margins in the range
of 6% and above. Most other suppliers will get further pushed into the commodity corner, where their profit
will be locked-in at a 3-4% level
Source: Roland Berger/Lazard
Global Automotive Supplier Study 2011_SHORT_final.pptx
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Driven by booming car sales, the global automotive supplier industry
achieved record profitability in 2010
Key supplier performance indicators 2000-2010 (n = ~600 suppliers)
Revenue growth [2000=100] EBIT margin 1) [%] ROCE 2) [%]
114
108
103
100
125
136
148
162
154
129
156
5.3
3.1
4.2
4.7
5.2
5.1
4.7
5.7
1.6
1.1
6.2
8.4
5.0
7.2
8.3
9.3
11.1
10.1
8.8
8.1
2.5
2.0
2000 2002 2004 2006 2008 2010
2000 2002 2004 2006 2008 2010
2000 2002 2004 2006 2008 2010
1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed
Source: Company information; Roland Berger/Lazard
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However, financial performance of suppliers differs heavily
depending on region, company size and product focus
Profitability trends in the global automotive supplier industry
REGION COMPANY SIZE PRODUCT FOCUS
1 2 3
> European suppliers improved
average EBIT margin to ~7%
> Chinese and Korean suppliers
achieved double-digit EBIT
margins
> Nafta suppliers improved, but
still have the lowest profitability
> Japanese suppliers also below
average
> Small/mid-sized suppliers
(below 1bn EUR revenues)
achieved highest profitability
> Suppliers with >10 bn EUR
revenues show lowest
profitability levels
> Chassis and Exterior focused
suppliers with strongest margin
improvements
> Powertrain and Tire suppliers
still above average
> Interior and Electric/
Infotainment suppliers
significantly below average
around the world
Source: Roland Berger/Lazard
Global Automotive Supplier Study 2011_SHORT_final.pptx
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1 REGION
European suppliers achieved an EBIT margin of almost 7%, while
North American and Japanese suppliers remain below global average
Supplier EBIT profitability by headquarter region 2010 vs. 2007
Europe NAFTA Japan China Korea Rest of Asia WORLD
Change 2010 vs.
2007 [%-pts.]
+0.4 +1.0
-0.4 +2.4
+3.0 +0.4 +0.5
9.1
11.5
8.8
9.5
9.9
EBIT 1)
margin
[%]
6.5
6.9
3.3
4.3
6.0
5.6
5.8
5.7
6.2
2007 2010
2007 2010
2007 2010
2007 2010
2007 2010
2007 2010
2007 2010
1) EBIT after restructuring items
Source: Company information; Roland Berger/Lazard
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2 SIZE
Small and medium-sized suppliers have significantly improved their
profitability compared to pre-crisis levels
Supplier EBIT profitability by company size 2010 vs. 2007
10.0 bn ALL
Change 2010 vs.
2007 [%-pts.]
+1.1 +2.2
+0.6 +0.6
+1.2 0.0 +0.5
5.1
6.2
5.1
7.3
6.5
5.9 6.1
5.5
5.5
6.7
5.9
5.9
5.7
6.2
EBIT 1)
margin
[%]
2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010
1) EBIT after restructuring items
Source: Company information; Roland Berger/Lazard
Global Automotive Supplier Study 2011_SHORT_final.pptx
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3 PRODUCT FOCUS
Chassis focused suppliers achieved the highest profitability, while
Interior and Electric suppliers remain below average
Supplier EBIT profitability by product focus 2010 vs. 2007
Powertrain Chassis Exterior Tires Interior Electric/info. ALL
Change 2010 vs.
2007 [%-pts.]
-0.3
+1.1 +2.3 -0.1 +0.6 -0.5
+0.5
EBIT 1)
margin
[%]
6.9
6.6
6.7
7.8
5.1
7.4
6.7
6.6
4.4
5.0
5.3
4.8
5.7
6.2
2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010
1) EBIT after restructuring items
Source: Company information; Roland Berger/Lazard
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The 2008/2009 crisis has further broadened the gap between Top
and Low performers in the supplier industry
Global supplier performance 2000-2010 1)
Revenue growth [2000=100] ROCE [%]
166
193
218
247
239
207
255
TOP
11.7
9.8
13.1
13.6
14.0
13.0
12.9
15.2
8.3
6.3
17.1
TOP
100
136
120
106
LOW
112
99 102 99
104
94 96
99
90
74
6.7
0.8
4.3
4.1
3.7
2.3
-0.2
2.9
-5.6
-1.5
LOW
2.7
2000 2001 2002 2003 2004 2005 2006 2007
2008
2009 2010
2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1) Top = Top quartile, Low = Bottom quartile
Industry average
Source: Company information; Roland Berger/Lazard
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Our forecast for 2011 full-year financial performance: global average
profitability is expected to drop below 6% EBIT
Key supplier performance indicators 2000-2011e
Revenue growth [2000=100] EBIT margin 1) [%] ROCE 2) [%]
114
108
103
100
125
136
162
154
148
129
~160
156
6.2
5.3
5.7
5.2 5.1
4.7
4.2 4.7 ~5.5
3.1
1.6
1.1
8.4
5.0
8.3
7.2
9.3
8.8
8.1
10.1
2.5
2.0
11.1
~10
00 01 02 03 04 05 06 07 08 09 10 11
00 01 02 03 04 05 06 07 08 09 10 11
00 01 02 03 04
05
06
07
08
09 10 11
Positive
drivers:
> Still very good sales in BRIC markets
> Stable mature markets
Negative
drivers:
> Cool-down in China
> OEM price pressure back to pre-crisis levels
> Increased raw material prices
1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed
Source: Company information; Roland Berger/Lazard
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The general industry framework for automotive suppliers will remain
challenging
Trends shaping the supplier industry in the future
Car buyers
OEMs
SUPPLIERS
Raw material markets
Regional shift
Price sensitivity
Reduced price level
Legislation
CO 2 reduction
Emission reduction
Safety regulations
Additional cost saving
measures
Localization of
production (to sales
markets)
Overcapacity/
restructuring (triad)
Increased price pressure
Increased technological
complexity
Further
increased
MARGIN
PRESSURE and
stronger need for
differentiation via
INNOVATION
Provider consolidation
Rising demand
(from other industries)
Increasing prices
Capital markets
High volatility of
capital markets
Loss of confidence
of investors
Additional cost
New opportunities
Increasing capital costs
Source: Roland Berger/Lazard
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