In order to understand how quickly times are changing in the German automotive and supplier industry, it is sometimes enough to scroll through an e-mail inbox. At the beginning of April, the invitation to the balance sheet press conference of Mahle, one of the five largest German automotive suppliers, landed there. A speech by Matthias Arleth, the CEO, who had been in office since the beginning of the year, was announced. But only three weeks later, someone else led through the numbers instead: Chief Financial Officer Michael Frick, who had to be the interim boss before. On Good Friday, Mahle announced that Arleth would be leaving his post at the end of April.
There were different views on the company’s future strategy, it is said as an explanation for the Mahle boss’s quick departure. And together with the again weak numbers that the company presented on Monday, Mahle is a prime example of how much the transformation from combustion engines to new drives with electricity and hydrogen threatens to tear the German supplier industry apart.
Everyone in Stuttgart has understood that they have to move away from parts for petrol and diesel engines. But Mahle, like other German suppliers, still disagrees about how quickly this business can be phased out in favor of new technologies relating to batteries, charging infrastructure and fuel cells. The perseverance of the combustion engine friends at “Kolben-Mahle”, as the company is also called because of its best-known product, is perhaps a little stronger than at Bosch or ZF. Their figures for the past year were at least significantly better than those of the Stuttgart foundation group.
Arleth came as an e-mobility and transformation specialist
Arleth’s quick departure also shows this inner conflict. When the ex-Webasto manager was announced as the new CEO last fall, Mahle explicitly emphasized his expertise in all aspects of electromobility. Now insiders say that Arleth, who is praised as a transformation expert, wanted to turn the group upside down too briskly, and that the board soon lacked the support for an even faster switch to electric and fuel cells. Jürgen Kalmbach, deputy head of the supervisory board and, until recently, head of the works council, described it in the FAZ as follows: “It was like a football team to which the coach has no access.”
After just three months, Matthias Arleth is history again as Mahle CEO – and the supplier is looking for a boss for the third time in almost four years.
(Photo: Wolfram Scheible; Mahle/Wolfram Scheible)
The figures show that there is still a long way to go for Mahle from the crisis, even if the balance sheet is not quite as bad as in the previous year. In 2021 the supplier made a loss of 108 million euros, in 2020 the minus was still 434 million euros. Sales rose by 11.9 percent to 10.9 billion euros, and the return on sales climbed to 1.5 percent, after minus two percent in 2020.
But whether the company can at least continue this small upswing is questionable. Interim boss Frick does not want to make a forecast for the current financial year: “The war in Ukraine and the increased supply chain problems as well as massive cost pressure will put great strain on our business in 2022, which cannot yet be estimated,” he said. If the general conditions stabilize, Mahle could make a profit again in 2023.
In four years, Mahle has reduced the number of employees by around ten percent
The Stuttgart-based company has been pursuing a rigid austerity course for some time. Four years ago, almost 80,000 people worked for the group worldwide, but last year the number fell again by 900 to the current 71,300. With so-called volunteer programs, Mahle tries to persuade employees to resign, for example through severance payments. That was “well received,” said personnel manager Anke Felder, without wanting to give exact figures. Areas will be closed at individual locations, for example the foundry in Zell south of Freiburg will close at the end of the year, around 50 employees will be affected there.
Mahle still does around forty percent of its business with parts for combustion engines, where it is the market leader for individual products. But: “The burner cake is getting smaller,” Frick also knows. At the same time, there is “a very high number of competitors who are pushing into this market” when it comes to e-mobility. And greater competition also means that the margins are not as high as in the classic combustion engine business. Although Mahle wants to make three quarters of its sales away from petrol and diesel engines by 2030, it remains to be seen whether that will be enough to make profits again in the long term.