FRANKFURT, Aug. 29 (Xinhua) -- Revenues of the 600 leading automotive suppliers worldwide are likely to shrink by five percent this year, the German newspaper Handelsblatt reported on Thursday, citing a study carried out by investment banks Lazard and Roland Berger.
After seven years of high growth, revenues and profits of these automotive suppliers are collapsing for the first time, the article said.
Consultants from the two investment banks predicted that these companies' average margin before interest and taxes would fall from 7.2 percent last year to only 6.0 percent in 2019 at the worst. The return on sales, a ratio used to derive the proportion of profits generated from sales, could fall to the lowest value since 2012.
With a 6-percent margin, the suppliers will be "approaching a limit that makes both self-financing and refinancing in the capital market more difficult," according to the consultants.
The study attributed the problem to a decline in global car production and higher cost driven by overcapacity. Car manufacturers have passed the pressure on to their suppliers as a result of the sales decline, the article said.
In the first half of 2019, 46 million new cars were produced around the world, 2.4 million fewer than the same period last year, according to Handelsblatt.
