The future of the Italian automotive supply chain: how to stay competitive? | CDP

The future of the Italian automotive supply chain: how to stay competitive?

What will be the impact of the electric and digital transitions on the competitiveness of the European automotive industry? What role will the automotive supply chain play in the Italian economy? What are its strengths, areas of specialisation and critical issues? What are the main policy options to facilitate its technological and market repositioning?

The paper analyses the transformation taking place in the automotive sector, highlighting the European Union’s main competitive deficiencies with respect to its peers. It also delves into the structural strengths and weaknesses of the Italian supply chain and enumerates the main development options to facilitate its technological and market repositioning in light of the challenges posed by the transitions currently under way.

Read the study’s key findings and download the document for all the details.

  • The European automotive supply chain is undergoing two transformational phenomena that call into question its development prospects:
    • The transition to electric mobility, with the EU setting itself a target of zero emissions for new vehicles by 2035.
    • The digital transformation, with the rise of connectivity technologies and autonomous driving systems, which has prompted major IT companies to enter the sector.
    • These transformations make it increasingly important to control the supply of batteries, critical minerals and software to generate added value. In these areas, however, the EU suffers from a competitive disadvantage compared to China, the leading supplier of batteries and many critical minerals, and the United States, which is still the top developer of digital technologies.
  • Against this backdrop of increasing difficulties for the European automotive industry, Italy has dropped to sixth place as a continental producer of motor vehicles (19th globally), with volumes that are currently half what they were in the early 2000s.
  • However it retains a significant role in components, an area in which it boasts an important international leadership.
  • However, Italian suppliers tend to have a small size and therefore have less capacity to spend on investments than their international peers. They still depend heavily on orders from a few major manufacturers, and in 40% of the cases are specialised in traditional engines.
  • Despite the difficulties, the extended supply chain is still the third largest contributor to national employment and fourth largest contributor to GDP, with estimated values in both cases of around 6%.
  • The repositioning of the supply chain is therefore strategic for the entire Italian economy. This will require:
    • Attraction of new investments by manufacturers, linked to guarantees of employment and value creation in Italy.
    • Support for innovation throughout the supply chain, focusing on components, services and infrastructure for electrification and digitisation.
    • Diversification into other sectors and new regions.
    • Support for growth in the size of suppliers, including through alliances and collaborations.
    • Development of new training programmes to address emerging technology trends and new business models.
Read the brief
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