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Disrupted industries – the example of the automotive industry

Back to Closely Held and Growing Business Enterprises Committee publications

Virtual Entrepreneurship Conference

18–29 May 2020

Black Swan Ruling: entrepreneurship and the economy under and after the pandemic

Webinar presented by the Closely Held and Growing Businesses Committee

Wednesday 20 May 2020



Marco Rizzi Bratschi, Zurich; Chair, IBA Closely Held and Growing Business Enterprises



Andreas Kloyer Luther, Frankfurt; European Regional Forum Liaison Officer, IBA Closely Held and Growing Business Enterprises Committee

Alexis Poinsard Fidal, Paris



Chris Owen Penningtons Manches Cooper, London; Senior Vice Chair, IBA European Regional Forum

Oya Deniz Kavame Kavame, Istanbul;Young Lawyers' Liaison and Scholarship Officer, IBA European Regional Forum

Anna Dabrowska Wardynski & Partners, Warsaw

Andreas Stoltze SONA AutoComp Germany GmbH, Munich

Jean Obst Robert Bosch, Stuttgart

Joost Vantomme ACEA, Brussels

Javier Fontcuberta Cuatrecasas, Barcelona

Norihito Sato Mori Hamada & Matsumoto, Tokyo



Andreas Kloyer
Luther, Frankfurt

Alexis Poinsard
Fidal, Paris


The welcome address was given by Marco Rizzi, Chair of the IBA Closely Held and Growing Business Enterprises Committee, and the topic was introduced by Chris Owen, on behalf of the IBA European Regional Forum Committee.


If there is an industry being disrupted in Europe, it is very likely to be the automobile industry.

Five different features can be found within disruptive industries such as the automobile industry. These are:

  1. large transformation. Combustion engines are less popular, car manufacturers in Europe have high fixed costs with a collapsed sales market and a poor reputation following the ‘dieselgate’ emissions scandal;
  2. new forms of mobility, such as electric, autonomous, micromobility or car sharing. This fragmentation is the second element of a disrupted industry. The industry is in transformation due to new competitors like Tesla (with only twenty parts in a Tesla vehicle). A huge amount of fragmentation has taken place over the last ten years. Over €100bn of investments by non-car manufacturers were made in the mobility services industry, notably by United States tech companies and state-owned Chinese companies;
  3. the issue of regulation, where huge changes have been made, such as General Data Protection Regulation (GDPR) at European Union level, telecommunication, energy and so on. The automobile industry now must deal with a very complex multi-layer regulatory landscape;
  4. collaboration, involving specialists, such as data analysts, software experts or telecom engineers; and 
  5. despite what was said by the panel, the reality is that more mobility services are needed. Some may not be jumping into a car to go the supermarket, but instead buying online.

Dealing with a highly disrupted industry is an occasion, and for us, it’s fascinating to see these five different aspects working together to create a highly disruptive industry, one with a wonderful prize for the winners at the end of the day.

Following this introduction, the webinar was split into two parts of almost 25 minutes each. The first dealt with the impact of the Covid-19 crisis on supply chains, and the second focused on mass versus individual transport as the concept for future mobility.

How Covid-19 impacts the structure of supply chains in the automotive industry

Andreas Stoltze began by giving the audience his view from a supplier’s perspective on the impact of Covid-19.

The coronavirus pandemic had caused production at automotive locations worldwide to be shut down in March/April 2020. Now, the automotive producers and suppliers are systematically preparing for a gradual ramping up of manufacturing. However, the slow recovery in customer demand has forced suppliers to introduce appropriate and speedy restructuring measures, including:

  • ramping up production. Automotive companies have put numerous health and safety measures in place to ensure that associates are adequately protected against coronavirus infection; and
  • the first and quickest financial emergency response to the Corona pandemic was to apply for short-time work in some countries. In Germany, the Government supplements 60 per cent of personnel cost, which helps to significantly compensate the losses resulting from the sales drop (up to 60 per cent). Almost all European nations created short-term bridge financing solutions, which, for most of the companies concerned, was no more than just a drop in the ocean.

Consumer demand is shaped not only by real factors such as disposable income, but also by psychological factors that cannot be planned for. Unexpected buyer reluctance could stem from households’ worries about the future economic situation after the coronavirus pandemic. The latest figures show, for example, that the Volkswagen Group had 83 per cent fewer orders in April 2020 in relation to April 2019.

Based on the current market situation, distressed companies will have to consider carefully whether there is still the basis to carry out an out-of-court restructuring process or if restructuring within the scope of an insolvency proceeding is the better approach for successful crisis management.

In many countries (such as, Germany) we find the legal restructuring tool for a self-administered insolvency proceeding – comparable to the US Chapter 11 Code – that allows cutting off claims of creditors through an insolvency plan designed by the debtor and approved by the creditors.

Many operational restructuring measures (such as, mass layoffs, customer price re-negotiations/continuation agreements and so on) can be easier and less expensive under the protective shield of an insolvency court than in out-of-court restructuring situations.

Joost Vantommethen described the overall perception from the perspective of the European Automobile Manufacturers Association (ACEA).

From an ACEA (the EU association of Original Equipment Manufacturers (OEMs) with 16 members) perspective, there is a change within the European car industry in respect of regulatory policy issues and communication strategies.

Transport, notably by car, buses or trucks, is critical for the functioning of our economies and societies. However, today, motor vehicle production and sales have come almost to a complete standstill. In April, passenger car registrations dropped against the figures from a year ago by between 90-98 per cent in lockdown countries. A severe impact on Q1 2020 financial results and the outlook for 2020 is now certain.

A renewal of the vehicle fleet is required in order to restart the market and generate demand. Most factories were shut down and are reopening only gradually. The loss of production is estimated at 2 million vehicles. Production is restarting slowly but it’s difficult to get the whole supply chain moving again. The outlook for sales and registrations are disastrous, down at least 25 per cent according to HIS, as vehicle purchases are not the number one priority for consumers in the wake of the crisis. Over 1.1 million jobs are affected (in auto manufacturing). This situation leads to a liquidity shortage (VW burns €2.2bn per week in cash). The situation for suppliers is even more critical.

So far, ACEA has taken the following action:

• assessing the impact of Covid-19 and the type of support needed via its members and national associations;

• raising awareness of the impact of Covid-19 and requesting support from its various counterparts (eg, the Commission President and Secretary General, regular interactions with Commissioners and so on); and

• preparing for the aftermath of the crisis through an exit and relaunch strategy or working jointly with various organisations (eg, CLEPA, CECRA, ETRMA).

Among the exit and relaunch strategy tools, ACEA has made some recommendations, such as:

• short-term liquidity and/or credit facilities;

• coordinated strategy at EU level to safely relaunch production; and

• regulatory adjustments.

After these impressive presentations, Oya Deniz Kavame and Javier Fontcuberta gave an insight on their respective home jurisdictions, Turkey and Spain. From a lawyer´s perspective, Kavame pointed out how severely Turkey has been hit by the supply-chain disruption caused by Covid-19. Fontcuberta touched upon the sensitive aspects of the Spanish car and automotive industries and showed what is needed by, and done for, the industry by state governments on a regional as well as nationwide level. Both made clear that the disruption is an international phenomenon and will not be solved by national measures, but by internationally coordinated action. As highlighted by Vantomme, too, the relaunch of the industry will very certainly need EU-wide coordination across the entire supply chain as well as regulatory adjustments.

Will the crisis cause a re-think in future mobility concepts of the antagonism between individual and/or mass transportation?

Jean Obst began his presentation by picking up a question from the audience in respect of where the automobile industry would be going.

Obst went back to what Owen said in his introduction and to the last IBA conference in March where the need for collaboration and other topics had been addressed. Many challenges had been identified but Covid-19 is a big hit, which makes it even harder for transformation.

However, there is some good news as the transportation market will continue to grow. The world’s population will grow by one billion over the next ten years, which will increase the need for mobility.

Today, we are facing changes with e-mobility, connected cars and combustion engines. It’s a growing market, but how can the automobile market grow with massive transportation? The market may not grow in certain urban areas such as Berlin, Paris or London, for example, but it may grow in other places where there are no motorways or subways. New markets, such as Africa, will also represent opportunities.

An intelligent solution will need to be found to ensure the coexistence between mass transportation and individual mobility.

Vantomme was then asked to comment on the following question from the audience: ‘How do you see the EU plan for promoting the fleet renewal with climate target of CO2 emission?’ This is at the heart of ACEA’s discussions with the European Commission. ACEA has identified relaunch measures such as:

• a 25-point action plan with CLEPA (the suppliers’ association);

• an EU green deal agenda;

• increasing charging facilities for electric vehicles (EVs); and

• various regulatory changes (VAT reduction, incentives, etc) to be taken by Member States or at EU level.

In addition, an EU recovery plan is expected in the coming weeks.

Following this insight from the industry speakers, Anna Dabrowska and Nohirito Sato pointed out what future concepts of mobility would look like in Japan and Poland. Both stressed the growing importance of joint services and connectivity in the plans for new transportation solutions and how intensively software companies, automotive suppliers and the regulators are cooperating in order to shape the necessary framework for the required integrated concepts. This applies to small and growing companies as well as to well-established industrial conglomerates specialising in this field.

Closing remarks

Andreas Kloyer and Alexis Poinsard closed the webinar by underlining the growing importance of developing smart and integrated solutions for traffic in the decades to come, and being able to meet the challenges in a fast-changing environment with various aspects to meet, for example, a growing population worldwide, the climate crisis, or the importance of being connected with friends and colleagues wherever you are. This all will also create a significant amount of legal work and the need to implement new legal structures of cooperation among the industry players, all of which will make it interesting to follow up on the next developments in the automotive industry.


The webinar can be watched here: /Disrupted-Industries