Car components, problems only grow

It may seem trivial to point this out, but we must never forget that, according to the most reliable estimates, 70-80% of a car's value is made up of components supplied by manufacturers outside the carmaker: only the remainder is produced internally, beyond the assembly phase. Naturally, the value of purchased components varies greatly: from a few cents of a euro for plastic pieces used to complete a vehicle's interior to the thousands and thousands of dollars required to purchase electric car batteries (the cost of which is still around $150 per kWh, meaning a 50 kWh battery requires $7,500, excluding transportation, installation, and software management costs). But car manufacturers also turn to specialized manufacturers to source other important components, from mechanical components (such as automatic transmissions , transmissions, differentials) to the countless electronic control units that are indispensable to cars today (several dozen now) and driver assistance devices (the ubiquitous ADAS ). In short, it's clear how essential the automotive components industry, though unknown to the general public, is to the survival of the automotive industry (as well as that of vans, trucks, and motorcycles). In Italy alone, for example, the sector comprises over 2,100 companies (concentrated primarily in Piedmont, Lombardy, and Emilia-Romagna), with approximately 170,000 employees and an estimated annual turnover of around €60 billion.

After years of expansion and good health, the automotive supply sector has plunged into a crisis that is taking on worrying proportions. Production levels prior to the forced shutdown due to the pandemic have no longer been reached, and countless announcements from major companies in crisis are being made, even in wealthy Germany, where, for example, Bosch and ZF, true giants in the sector, have announced plans to cut tens of thousands of jobs and implement significant cost cuts. The dynamics of the sector are clear: demand for new cars has dropped significantly across all markets , leading to a sharp contraction in component supplies to OEMs ( Original Equipment Manufacturers ). In 2023, global vehicle production (cars, light and heavy commercial vehicles, buses, and coaches; data source: OICA, International Organization of Motor Vehicle Manufacturers) totaled over 93.5 million units, down from 92.5 million last year . And for 2025, analysts' forecasts suggest a range of between 91 and 92 million. But the trend varies greatly depending on the geographical area: while in the United States, the value between 2019 and 2024 underwent only a modest decline (from 10.8 to 10.5 million units), in Europe over the same period there was a steep decline , with production falling from 21.2 to 17.2 million units (and for the current year, the potential, slight recovery has been jeopardized by the tariff war unleashed by Donald Trump).

Declining new car sales, however, also have a beneficial side effect for the industry: the overall vehicle fleet is aging due to the lack of replacement with new vehicles, so much so that in Italy it has reached an average age of 13 years (it was between 11 and 12 years before the pandemic). This inevitably leads to greater need for maintenance and spare parts. The beneficiary is the so-called aftermarket , the sector producing components not required for original equipment, but for replacement: original and non-original spare parts, of equivalent quality to the original, or sometimes lower, but at lower costs (not to mention counterfeits, a real and dangerous phenomenon). In Italy alone, the aftermarket sector generates a value of over 28 billion euros, with over 46% of its turnover coming from exports , and employing nearly 400,000 people. In short, it's a significant sector, one that is currently in suspense due to the many uncertainties weighing on the sector: the transition to electric mobility (which reduces supply needs, as vehicles are much simpler), the contraction in automakers' production and consumer demand, international geopolitical crises, the seesawing of American tariff policies, which jeopardizes exports to one of the richest markets, and the looming threat from Chinese manufacturers, which are turning to domestic suppliers to acquire many components.

Who are the world's largest manufacturers of vehicle components? Rankings drawn up by analysts and industry experts generally place Bosch in first place in 2024, with a turnover of 54.372 billion dollars, followed by Japan's Denso with 47.9 billion, Canada's Magna International in third with 42.836 billion, Germany's ZF in fourth (37.318 billion) and China's Catl , specializing in batteries for electric vehicles, in fifth (35.249 billion). Among other well-known names, it is worth mentioning, for example, Continental , known for its tires but also active in many other fields (ninth, with 26.475 billion dollars), Valeo (headlights, filters, ADAS, hybrid systems, with 19.650 billion), Mahle (known for its pistons, twenty-fourth with 12.64 billion). All these companies, according to available data, are showing a more or less significant decline compared to the previous year's revenues. And what about Italian companies? The only familiar name is Marelli , even though its ownership has long since ceased to be national, having been sold in May 2019 by FCA to CK Holdings, a subsidiary of the Japanese components supplier Calsonic Kanesi Corporation (controlled by the American fund KKR). In July, however, due to serious financial difficulties, the company was handed over to creditors, led by the UK-based fund Strategic Value Partners . In any case, in 2024, Marelli ranked 25th in the rankings, with revenues of $11.55 billion.

Understanding the trends of this industrial sector in such a turbulent time is not easy, but according to analysts, some trends are nevertheless identifiable. First, the revenue growth curve has not only stopped, but has reversed , for the reasons we have discussed. To this must be added, however, fierce competition from Chinese companies such as, in addition to the aforementioned CATL, Yangfeng and Desay SV , the former strong players in the fields of interior trim, instrumentation and safety devices, the latter in driver assistance, hardware and software. Moreover, the impalpable reign of electronics has also taken over the automotive industry , putting companies specializing in traditional mechanics (such as transmissions, gears or brakes) in crisis, which see their market shrink. Then, of course, battery manufacturers are gaining ground, mostly Chinese. Their success over the next five to ten years will depend on the rate at which electric vehicles gain market share globally and the evolution of their technologies (the messianic wait for solid-state batteries, capable of dramatically improving vehicle range, continues), but their business has already grown considerably compared to the recent past. Finally, after years of globalization, the opposite trend, namely localization , is becoming more pronounced: too many recent international shocks, from the pandemic to the microchip crisis, from the blockage of the Suez Canal to the war in Ukraine, from the skyrocketing cost of shipping containers to the chaos created by Trump's tariff policy, have taught manufacturers that it's better to have what they need produced not too far from home.