WDK warns German automotive suppliers ‘on edge of abyss’

Frankfurt – The German rubber industry is under pressure from the slowing car manufacturing industry and automotive suppliers are "on the brink of abyss", the industry association wdk has warned.

"If we do not find a different way of dealing with each other as quickly as possible, we will experience a wave of insolvency among small and medium-sized automotive suppliers by Christmas," said Boris Engelhardt, wdk managing director.

According to Engelhardt, wdk has been receiving reports from a wide variety of automotive supplier industries about liquidity bottlenecks.

Car manufacturers, he said, do not accept the parts they order, although suppliers have been producing the parts amid massive increases in raw material prices. 

“This is tearing the companies apart," Engelhardt added.

The industry official said that chip-shortage shutdowns at car manufacturers were publicly known, whereas “far less attention is paid to the worsening situation at the automotive suppliers.”

“The warehouses are full, the liquidity of the companies is thus bound. Banks currently show little willingness to grant further loans in the short term,” Engelhardt added. 

Citing experts close to the situation, Engelhardt warned that by the end of the year, there will be insolvencies and supply disruptions.

To address the issue, Engelhardt suggested that the purchasing departments of car manufacturers and their suppliers must communicate with each other very promptly and openly. 

"Orders must be bindingly determined several weeks in advance and actually retrieved,” he said. 

“Producing on stockpiles in the hope that the previous shutdowns will be compensated for in an uncertain future is a threat to our existence," he added.

The industry official warned that it was “urgently necessary” that car manufacturers support the liquidity of suppliers through partial payments.

Otherwise, he added, the current semiconductor shortage could be followed by further shortages in other areas. 

“Manufacturers and suppliers must strengthen cooperation as quickly as possible and find solutions to problems together. And now!" he concluded.