Combustion end threatens automotive suppliers: The countdown is on for the industry

End of petrol and diesel engine
Combustion end threatens automotive suppliers: The countdown is on for the industry

Automotive suppliers have focused their business heavily on the combustion engine. But with the decision to end new combustion vehicles in the member states of the European Union, the industry is in a bad way. Because apart from vehicles powered by climate-neutral synthetic fuels – also known as e-fuels – no new cars with petrol or diesel engines may be sold in the EU from 2035 at the latest.

For example, the business of the automotive supplier Eberspächer from Esslingen near Stuttgart is heavily based on the combustion engine. This currently accounts for a good 50 percent. But the group has been barely profitable for years. Last year the loss was 94.4 million euros.

“For many automotive suppliers, the endgame is now beginning,” said restructuring expert Jonas Eckhardt from the consulting firm Falkensteg to the “Wirtschaftswoche”. The situation is particularly difficult for small companies. “With an annual turnover of 100 to 200 million euros, you can’t handle a transformation towards e-mobility,” says Eckhardt. The banks are also unlikely to be willing to grant new loans in view of the risks involved in restructuring.

The business has already become unpopular. “Automotive suppliers who depend on the combustion engine are currently almost unsaleable,” Eckhardt continued. According to the Falkensteg partner, companies now have to think carefully about how they can effectively use the remaining time until the ban on combustion engines comes into effect and control production.

Car experts expect the combustion engine to be phased out faster

So the countdown is on – and it may end before the EU deadline. Prof. Stefan Bratzel, Director of the Center of Automotive Management (CAM) in Bergisch Gladbach, assumes that the end will be faster than 2035. In his estimation, the last combustion cars in Germany “should roll off the assembly line in the early 1930s,” he was quoted as saying by the “Wirtschaftswoche”. He suspects: “Hardly any manufacturer will bring new generations of combustion engines onto the market in the future or develop old models further.”

And if car expert Ferdinand Dudenhöffer has his way, vehicles powered by e-fuels cannot keep up the business either. He doubts that combustion engines will be permitted in any relevant number after 2035 and argued with the high costs for the production of e-fuels and their “creepy energy balance”. After all, the production requires an extremely large amount of electricity.

There could be “quite niches in which this technology can live on,” said Bratzel. According to the experts, however, the main business of automotive suppliers will be eliminated. The “spare parts business and exports will not be able to compensate for the declines,” estimated Eckhardt.

Supplier Eberspächer relies on alternative markets

The Eberspächer Group, which can look back on almost 100 years of production history of car parts and is one of the major players in the car parts industry with around 10,000 employees at international locations, does not want to give up the combustion engine business right away. With regard to the exhaust gas division, company boss Martin Peters recently told the daily newspaper “FAZ”: “We don’t plan to get rid of it in the short term.” Because the combustion engine business is developing no worse than e-mobility, Peters told the “Wirtschaftswoche”. Rather, they want to expand their presence in markets where the combustion engine has played a longer role.

Sources: business weekFAZ, with material from the dpa

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