The automotive supply sector is facing tough times: Is an insolvency wave on the way? Or are we just seeing isolated cases? And who could be affected? It’s difficult to make any predictions as development depends on many factors. But as sad as it is: Clearance sales at companies who fail to make it can benefit all parties. Companies can buy well-kept second-hand machines for their production facilities at an affordable price, converting the insolvency into maximum profitability fairly quickly.
Although China has long since overtaken Europe, the automotive industry bears crucial significance for the local economy. It employs almost 14 million Europeans and thanks to its high political importance, it is considered crisis-proof. Yet a flood of insolvency threats looms – above all, among suppliers. Power-intensive industries such as metalworking are particularly affected. One man’s loss is another man’s gain: Buying machines from insolvent companies is an investment with an ideal cost/benefit ratio.
Energy cost and inflation scares
The lack of calculability regarding electricity and energy prices is adding to the fears of an insolvency wave. The extent of the price increases is still not clear for everyone. But not all electricity and gas providers have adjusted their contracts. However, rising production costs could end up being divided between end customers, automobile producers and suppliers.
Automobile producers have reaped in large incomes so far, as they opted to produce high-margin models during the crisis and were able to pass on any price increases to their customers. When it comes to post-contractual negotiations, automobile producers are well willing to talk to their suppliers. But if inflation really hits home, customers will find their purchasing power reduced. Alongside inflation, sales expectations of automobile producers for the USA and Europe will additionally be curbed by the interest rate turn-around, as this impairs financing conditions for buyers while further reducing their solvency.
In a survey conducted by the German VDA, ten percent of automotive suppliers already said they were experiencing financial difficulties. Another third expect continuing financial difficulties in the months to come. Some suppliers are already considering withdrawing from the automotive supply chain.
At any rate, gas is not the biggest factor in the automotive sector. It is only in the paintwork and casting areas that there is no alternative. Other branches of the industry are able to opt for more affordable energies. The shift to renewable energy is booming, once again demonstrating how the automotive sector is and remains a pioneer of technical advancement.
Who could be affected?
The biggest challenge right now is therefore the vast increase in energy prices, which is being felt particularly hard by steelworking and metalworking companies among automotive suppliers. The preliminary products in this sector have also become expensive and scarce. Steel and metal producers are currently slowing down production and increasing their prices immeasurably. A further insolvency aspect is the wide-spread company size of automotive suppliers. Most of them are medium-sized enterprises, and it is small and medium-sized enterprises in particular that the crisis is putting at risk.
Bankruptcy among precision parts suppliers
A renowned metalworking company in Baden-Württemberg, a further German stronghold in the automotive sector next to Bavaria, has also gone bankrupt. As a result, the over 1,100 machines and plant equipment are going up for sale. Surplex, an industrial auction house for second-hand machines, is supporting insolvency administrators and the banks involved. In selling the insolvency assets, the Düsseldorf-based company therefore provides an all-round service that includes global marketing and accounting, as well as dismantling, transport and customs. This means that insolvency proceedings can be concluded swiftly and successfully.
For automotive suppliers, the location’s closure means that some very well-kept machines are being offered on the second-hand machine market. They were part of the production for small- and large-series turning and milling parts and are designed for maximum precision and quality. The machines are high-grade, well-maintained and therefore offer a crisis-proof ROI. The machining systems are complemented by the adjoining post-treatment, surface processing and corresponding measuring technology plants.
Why does it pay off to buy a second-hand machine?
Even during tough times for automotive suppliers, investment opportunities are not to be forfeited. However, cost optimisation takes first priority here. Future investments are prioritised in such a way that they bring in profit as soon as possible. If an automotive supplier goes bankrupt, their machine inventory is therefore liquidised promptly. For every drawdown, there’s a benefit: Competitive automotive suppliers then have the opportunity to purchase second-hand machines. Compared to new machines, used machines are much cheaper and available straight away. Both are essential factors when planning investments.
Surplex is one of Europe’s leading industrial auction houses and trades worldwide in used machines and factory equipment. The 16-language Surplex.com auction platform is visited around 50 million times every year. We sell more than 55,000 industrial products per year in over 500 online auctions. The company is based in Düsseldorf and has offices in 15 European countries. Over 200 employees from 20 different nations generate an annual turnover of more than 100 million euros.