The Key Role Played by European Partners in the German Automotive Value Chain: A Granular Analysis Based on the World Input Output Database

The automotive industry in Europe experienced a slowdown in 2018-2019, due to a combinationof factors. Structural problems that are specific to the sector, like the difficult transitionto electric mobility, matched with a situation of increased uncertainty at the internationallevel. Germany, the largest European market for automakers, suffered the crisis more than anyother major Eurozone member. However, due to industrial integration, the German slowdownwas transmitted along the supply-chain to Italy and to Eastern European countries. We movefrom this evidence to investigate the intersectoral linkages which are responsible of the transmissionprocess. By using the World Input Output Database (wiod), we shed light on the potentialvulnerability of supplier countries and/or sectors which are too much exposed to the Germandemand. Italy characterizes indeed for a heterogeneous production structure which might helpto potentially offset the risk. However, the shrinking of the Italian automotive value chain due todelocalization, has left the Italian suppliers more vulnerable to foreign demand. Their situationhas worsened in the most recent years, and months, because of the need to transform their businessmodels to comply with electrification plans of the global supply-chain leaders, and to facethe covid crisis, which might result in strengthening the selection process of the less-competitivefirms along the automotive chain, one of the most impacted by demand and supply shocks.