- 70% of suppliers expect profits below 5%, minimum needed to sustain investment.
- Half of suppliers plan to reduce production capacity in Western Europe within five years.
- 69% already face competition from Chinese imports, up 12 percentage points since spring.
“Persistently low profitability is driving the industry down a dangerous path. Without decisive
measures, parts manufacturing in Europe risks disappearing, as companies are forced to relocate or
shut down, jeopardising employment and expertise,” says Benjamin Krieger, Secretary General at
CLEPA. “The EU has strengths as a location for investment and manufacturing, but urgent action is
needed to boost competitiveness by reducing electricity costs, cutting red tape, and improving
financing conditions. In parallel, local content policies must ensure that critical know‑how remains in
Europe. A flexible, technology‑neutral framework will stimulate innovation and accelerate the
decarbonisation of road transport. Together, these measures can secure the transition and put
Europe’s automotive sector is back on a path of sustainable growth.”
Profitability forecast: Low margins put the transition at risk
Seven in ten suppliers expect profits below 5%, the minimum threshold required to sustain
investments in technology, skills, and production capacity. One‑third expects little to no profit at all,
threatening jobs, R&D activity, and future growth.
The problem is structural, not temporary: by 2026, 70% of suppliers still forecast profits below 5%.
With earnings stagnating, companies are deferring investments or shifting production to more
cost‑competitive regions, challenging Europe's ability to lead in next-generation mobility technologies.
Western Europe: Shrinking production footprint
Rising costs and slower demand growth are damaging Western Europe's automotive production
base.
Half of suppliers plan to reduce production capacity in Western Europe over the next five years, while
only 10% expect to expand. By contrast, 49% foresee growth in North America, 42% in Asia, and 35%
in China, clear evidence that investment is shifting to more competitive regions with more predictable
markets.
The sector’s priorities have shifted decisively. Competitiveness is now cited as the top challenge by
86% of suppliers, up 14 points from the last survey in spring. Declining demand and faster technology
adoption abroad are intensifying the pressure, leaving Europe’s industrial base increasingly fragile.
Chinese import pressure accelerates: Europe’s manufacturing footprint under threat
Competition from Chinese suppliers has rapidly accelerated. Supported by cost advantages,
substantial subsidies, and a strong domestic base, Chinese players are gaining ground across the EU.
Today, 69% of European suppliers already face competition from Chinese imports - a surge of 12 points since the spring survey. Three in four expect import pressure to increase further, up to 26 points more compared with the previous survey, raising concerns about Europe's future ability to maintain a robust automotive value chain.
About CLEPA
CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3,000
companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative
technology for safe, smart, and sustainable mobility, investing over €30 billion yearly in research and
development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.
