The automotive industry holds a significant yet discreet place in the Swiss economy. Anja Schulze, Director of the swiss Center for Automotive Research at the University of Zurich, analyzes the challenges and opportunities facing a sector in the midst of transformation.
Although Switzerland no longer manufactures automobiles in large volumes, it remains a key supplier of components to the foreign automotive industry. Today, nearly 578 Swiss companies operate in this sector, employing around 32,000 people and generating an estimated annual revenue of CHF 13 billion, according to the latest study led by Anja Schulze, a professor at the University of Zurich and director of the swiss Center for Automotive Research (Swiss CAR). However, the industry faces many challenges: economic pressures on European partners, U.S. protectionism, and the rise of Chinese manufacturers.
What are the main changes facing the Swiss automotive industry?
Anja Schulze: The electric vehicle market has continued to gain momentum. Furthermore, while Switzerland has a significant number of Tier 1 suppliers, there are also many Tier 2 and Tier 3 companies (which supply their products to other subcontractors rather than directly to manufacturers). This can complicate strategic shifts, for example, when major manufacturers face difficulties due to a lack of a comprehensive market view, and that further down the value creation chain, there is no transparency about the manufacturer who has finally assembled its own parts. Our study also shows an increase in the number of clients for these companies: where there used to be about ten manufacturers per subcontractor to whom the parts were delivered (sometimes via intermediate stages), now there are closer to eighteen.
Why isn’t the significance of this industry more widely recognized in Switzerland?
Schulze: Part of the reason is that Switzerland no longer has any major car manufacturers, which affects public perception. Additionally, most subcontractors produce components that go "under the hood", making them less visible. Moreover, many of these companies have diversified portfolios, often spanning industries like automotive and medtech, so their public image isn’t always tied directly to the automotive sector.
How do you see the industry evolving in the coming years?
Schulze: It will largely depend on the evolution of the car manufacturers. Our studies show that when the German automotive industry struggles, as it currently does, it also impacts Swiss suppliers. Another key factor is the transition to electric mobility and how well Swiss companies can position themselves as subcontractors for emerging clients.
What strategies can Swiss companies adopt to stay competitive in today’s global market?
Schulze: Innovation is the cornerstone of success. For Swiss SMEs, positioning themselves in the Chinese market will be particularly critical. Switzerland is a high-wage country. Companies cannot compete on price alone. They have to rely on innovative solutions to win over customers in China and elsewhere, for example by manufacturing materials or components that can meet specific, high-quality requirements. Reaching new customers as far afield as Asia is no small feat for an industry dominated by SMEs. While delivering just across the border from Schaffhausen might count as international trade on paper, it still benefits from close geographical and cultural ties.
What are the other challenges facing Swiss subcontractors today?
Schulze: High energy costs continue to be a major issue. The future of access to the U.S. market will also depend on the outcome of the upcoming presidential elections in November. Additionally, adapting to new technologies that power electric vehicles poses a significant challenge. It’s one thing if a company has always specialized in electronic components, but it's much more difficult for those focused on combustion engines. This shift also has a ripple effect on other specialized suppliers, whose parts are not directly mounted in or on the internal combustion engine. For example, electric vehicles require the use of other materials for the interior lining because of different acoustic requirements. On top of that, the electric vehicle market isn’t growing as fast as manufacturers had hoped, complicating the outlook for their subcontractors.
What opportunities can Swiss companies seize in this landscape?
Schulze: As new technologies emerge, so too does the potential for innovation, and innovation is an area in which many Swiss companies are well positioned. There will always be a need for vehicles, but the industry is now facing major upheavals in which it must find its way.
Biography
Anja Schulze is a professor at the University of Zurich, specializing in management, technology, and innovation. She also heads the swiss Center for Automotive Research, established in 2005, which conducts and publishes research on automotive suppliers in Switzerland.
Last modification 06.11.2024
