©Chaosamran Studio ©VINA – stock.adobe.com atreus_Website header A.lounge Automotive Restructure

©Chaosamran Studio ©VINA – stock.adobe.com atreus_Website teaser 4zu3 A.lounge Automotive Restructure

A·lounge Automotive & Mobility

Restructuring in the automotive industry

Causes, preventive measures and legal hurdles in the event of insolvency

The Atreus A.Lounge Automotive Mobility on February 28, 2025 explored a question of fate for the German economy: How can the automotive industry get back on track? Moderated by Stefan Randak and Petra Becker, industry experts and practitioners discussed the causes of this development, preventive measures and the specific areas of action and success factors in the event of (impending) insolvency.

Did you miss the event?

Watch the re-play with the most important findings (in German):

j

Event

February 28, 12:30 p.m. to 2:00 p.m.

Welcome and speaker introduction

Discussion with Joachim Herr, Journalist for the Börsen-Zeitung, Bernd Richter, Managing Director and Partner at Pluta Rechtsanwalts- und Managementgesellschaft [law firm and management company], and Günter Kiefer, Atreus Manager

Questions from the audience

l

Topic

Major manufacturers such as Volkswagen and Nissan, but also leading suppliers such as ZF and Bosch, are in the process of cutting thousands of jobs as part of the current challenges. Medium-sized companies often face even greater hurdles: While some, such as Schneider Automotive or Leoni, are taken over, others, such as WKW and Eissmann, slide into insolvency.

Under the moderation of Stefan Randak, Head of the Atreus Solution Group Automotive & Mobility, renowned experts and industry insiders will discuss key issues relating to this change:

Where does the imbalance in the supplier industry come from?
What preventive measures can companies take?
Impending insolvency – what factors need to be considered?
Insolvency under self-administration – how is it handled in practice?

k

Automotive und Mobility

Leading companies through difficult times requires resilient professionals with strength and tact.

We support you with challenges in the automotive sector:

Atreus Industry Automotive

Atreus Roundtable Digital

The most important findings in eight statements:

n

1. The German automotive industry has underestimated the market in China.

Joachim Herr, Börsen-Zeitung’s correspondent in Munich, makes it clear that China is by far the most important automotive market in the world – and at the same time represents the greatest challenge for German manufacturers. “In China, it’s no longer about a few horsepower more or less. Customers there expect special features, software integration and convenience functions such as karaoke systems.” Many German manufacturers achieve between 30 and 40 percent of their sales in China. However, they are suffering from the economic slowdown in China – particularly the real estate crisis – and falling sales figures. The declines in sales, turnover and EBIT are a clear signal: German manufacturers have relied too much on previous successes and failed to adapt to new customer expectations.

o

2. The uncertainty surrounding combustion engines and e-mobility is damaging the industry.

German manufacturers are also struggling with the uncertainty surrounding the future of the combustion engine. “The EU’s ban on combustion engines as of 2035 is on the brink, but the parallel production of combustion engines and e-cars means enormous additional costs for manufacturers. This two-pronged strategy is a burden on the entire industry,” says Joachim Herr. While government purchase incentives for electric cars are driving the market in China, there is a lack of comparable impetus in Germany following the sudden withdrawal of subsidies at the end of 2023. “German manufacturers are losing one percentage point of market share every month – and that’s just the beginning,” warns Atreus partner Stefan Randak.

n

3. Manufacturers and suppliers must act now: Adjust capacities, optimize processes, reduce costs.

The experts were unanimous: German automotive companies must react now in order to prepare for the future. Atreus Director Petra Becker outlines the four key areas of action:

Capacity: Adjust production capacities, close or relocate plants
Processes: Increase efficiency through standardization, digitalization and lean management
Costs: Optimize personnel expenses, warehousing and supplier contracts
Liquidity: Factoring, sale-and-lease-back models and close coordination with banks ensure financial stability

o

4. Automotive companies must constantly put themselves to the test.

“Every company should undergo a permanent fitness program,” says Atreus Director Petra Becker. The question should be: How lean, flexible and digital are we really? The supply chain in particular requires a robust yet agile strategy – because the days of stable global supply chains are over and companies need to prepare for alternative sources of supply and regional production. In particular, suppliers that are heavily dependent on individual customers urgently need to rethink their strategy. In addition, says Becker, manufacturers should concentrate on their core activities.

u

5. Bureaucratic hurdles and high production costs are jeopardizing Germany as an automotive location.

Production costs in Germany are no longer competitive. Börsen-Zeitung journalist Joachim Herr observes that many companies are increasingly questioning their locations in Germany. “Mercedes is relocating parts of its production to Hungary because manufacturing costs there are 70 percent lower than in Germany.” Bureaucratic hurdles are also a burden on the automotive industry. “Many SMEs are despairing of regulatory requirements that restrict their economic room for maneuver,” says Herr. An expandable battery-charging infrastructure and so-called range anxiety also remain obstacles.

k

6. Insolvency doesn’t have to mean ruin – strategic restructuring can save companies.

Bernd Richter, auditor and managing partner of PLUTA Rechtsanwalts GmbH, points out that more than 90 percent of all insolvencies in Germany are triggered by inability to pay. A rule of thumb: “If there are 100 euros in the cash register but liabilities of 110 euros are due, then the red line has been crossed. From this point, the company only has three weeks to find a solution – or it has to file for insolvency.” Many companies react too late in this critical phase. The so-called “twilight zone” is particularly dangerous: a period in which managing directors already know that their company is insolvent but are hesitant to file for insolvency. “There are personal liability risks at this stage. If you act too late, you risk delaying insolvency,” warns Richter.

j

7. The role of the CRO as a crisis controller is crucial.

In restructuring processes or insolvencies, the Chief Restructuring Officer (CRO) is often the decisive factor for a successful reorganization. Experienced CRO Günter Kiefer describes the challenges: “When insolvency becomes public, panic often breaks out. Employees are insecure, customers and suppliers are skeptical – and management is often overwhelmed.” This is where the CRO comes in: As an experienced, neutral crisis manager, he coordinates between the creditors’ committee, trustee, management, investors, employees and works councils in the event of insolvency, for example. “The CRO ensures transparency, clear communication and quick decisions. This is essential in order to maintain trust and keep the company capable of acting,” explains Kiefer.

r

8. If you act too late, you lose control – early restructuring is crucial.

The most important success factor for successful restructuring is early action. Many companies ignore the first signs of the crisis for too long. “If you talk to banks, investors and stakeholders at an early stage, you can often prevent or actively manage insolvency,” emphasizes Bernd Richter. The key is not to get lost in individual measures, but to develop a clear strategy – and to implement it consistently.