Key facts
- German auto suppliers' interest expenses reached 102% of operating earnings in 2025, up from previous years.
- German suppliers have lower average equity ratios compared to international competitors.
- The cost gap between German and Chinese auto suppliers widened between 2019 and 2025.
- Chinese competitors improved efficiency, reducing overhead and manufacturing costs.
German auto suppliers are facing increasing financial strain, with a study by Strategy&, PwC's German consulting arm, revealing that their average interest expenses have risen for four consecutive years, reaching 102% of operating earnings in 2025. This figure significantly exceeds that of their European and Chinese rivals.
The analysis, set to be published later this month, also indicated that German companies possess lower average equity ratios, making them more vulnerable to financial stress. The study examined prominent suppliers such as ZF, Continental, and Schaeffler.
These companies have been undergoing significant business overhauls as major customers like Volkswagen and Mercedes-Benz navigate the costly transition to electric vehicles, contend with tariffs, and face declining market share in China. The pressure extends to suppliers, who are challenged to remain competitive.
Strategy& highlighted that the cost disparity between German and Chinese suppliers widened between 2019 and 2025. During this period, while German suppliers saw their overhead costs increase, Chinese competitors enhanced their efficiency, successfully reducing both overhead and manufacturing costs as a proportion of revenue.