Even before COVID-19 brought travel, tourism, hospitality and many other industries to a screeching halt, signals were emerging that the automotive industry was headed into a slowdown. After a decade of record sales and financial performance, global automotive sales hovered around 91 million units in both 2017 and 2018 and began sliding in 20191.
Other forces were also at play, signaling that the automotive value chain was undergoing a massive transformation of its technology and business model. Consequently, where value was created and how enterprise performance was driven were also shifting.
Automotive suppliers had enjoyed record volumes between 2010 and 2017 and steady returns against three key performance indicators (KPIs): Revenue growth, return on invested capital (ROIC) and earnings before interest, taxes, depreciation and amortization (EBITDA).
But according to an FTI Consulting (FTI) analysis of 404 auto suppliers, growth and financial performance declined in 2018-19 (Figure 1).