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7 Special features of the automotive industry

A production machine in a factory hall.

The automotive industry is of particular economic importance in Germany. But that's not the only thing that makes this industry special. Here we list the seven biggest features that characterize the automotive industry.

Table of contents

The automotive industry is important for German industry. In 2023, almost 800,000 people were employed in the automotive industry (manufacturers of motor vehicles and motor vehicle parts). In 2022, the total turnover of the automotive industry in Germany amounted to 506 billion euros. According to the Federal Statistical Office, the automotive industry accounts for 4% of all employees and a share of gross value added of around 4.7%.

Looking at the manufacturing sector, the automotive industry contributes directly to around 20% of gross value added, 12% of employment and 44% of internal research and development expenditure.

However, the special economic position of the automotive industry is not the only factor that makes this sector special.

We have collected seven special features here:

1. OEMs

OEMs, or original equipment manufacturers, are original equipment manufacturers in most industries. They manufacture products and components that they do not sell to end customers. In the automotive industry, however, an OEM is the car manufacturer. It assembles its goods from many individual products (from suppliers) and sells them under its own brand.

2. complex quality requirements and certifications:

Manufacturing companies in the automotive supply industry must meet the highest quality standards. This includes, for example, industry-specific certifications such as IATF 16949, a standard based on EN ISO 9001 that defines requirements for quality management systems in the automotive industry. Compliance with these standards ensures product quality and promotes the confidence of car manufacturers.

3. efficient logistics and production processes

Just in Time (JIT) and Just in Sequence (JIS) are key concepts in the automotive industry. These are types of delivery. Just in Time describes the delivery of the right quantity at the right time and Just in Sequence also involves delivery in the right order. For suppliers, these concepts require particularly efficient production and logistics processes. Close coordination with the OEMs is necessary to ensure punctual delivery without stockpiling.

4. innovation in electrification and environmental technologies:

Suppliers are not only dependent on the OEMs they supply, but also on social developments. The trend towards electrification requires suppliers to focus on the development and production of components for electric vehicles. At the same time, innovations in environmental technologies are needed to meet sustainability targets.

5. digitalization and automation in production

The introduction of Industry 4.0 technologies such as automation, IoT and artificial intelligence is essential for optimizing production processes and improving manufacturing efficiency. Automotive manufacturers are certainly pioneers in this area. At the same time, the pressure on suppliers is also great. In order to produce as quickly and cost-effectively as possible, automation and digitalization in production and logistics is an important competitive factor.

6. management of global supply chains

Globalization also requires suppliers in the automotive industry to manage complex international supply chains. In addition to customs regulations, they must therefore also deal with complex logistics processes and comply with and enforce global quality standards.

7. flexibility and adaptability to market dynamics:

Manufacturing companies must be flexible and adaptable in order to be able to react to market fluctuations, changing customer requirements and new technological developments. The pressure is particularly high in the automotive industry: the competitive situation between many suppliers and a few OEMs often forces suppliers to adapt quickly to changing situations and short-term changes in deliveries.

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