German Auto Suppliers Face Rising Debt and Financial Pressure, Study Finds
Financial Challenges and Competitive Landscape for German Auto Suppliers
Rising Debt and Interest Expenses
BERLIN, Aug 7 (Reuters) - German auto suppliers are more indebted and spend more on interest than their international rivals as competition from China intensifies, according to excerpts from an upcoming study seen by Reuters.
A financial analysis by Strategy&, PwC's German consulting arm, found that average interest expenses at Germany's leading auto suppliers rose for a fourth consecutive year in 2025 to 102% of operating earnings - far exceeding levels in the rest of Europe and China.
Industry Expert Insights
"Many companies in the German supplier industry are managing substantial debt loads," said Henning Rennert, partner at Strategy& Germany.
Equity Ratios and Financial Stress
The study, expected to be published later this month, also found that German companies had lower average equity ratios than their competitors, leaving them more exposed to financial stress.
Key Companies Analyzed
Strategy& looked at German suppliers like ZF, Continental and Schaeffler.
Market Shifts and Competitive Pressures
Business Overhauls and Industry Transformation
Those companies have overhauled their businesses in recent years as customers like Volkswagen and Mercedes-Benz grapple with the slow and costly shift to electric vehicles, steep tariffs and lost dominance in China.
Cost Gap with Chinese Suppliers
Suppliers themselves are under pressure to compete. Strategy& said the cost gap between German and Chinese suppliers widened between 2019 and 2025.
Efficiency Improvements Among Chinese Competitors
While German suppliers' overhead costs worsened during that period, Chinese competitors became more efficient, reducing both overhead and manufacturing costs as a share of revenue, according to the analysis.
(Reporting by Rachel MoreEditing by Ludwig Burger)
