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Today, the automotive industry stands at a crossroads, facing cost pressures, the need for innovation, and global shifts in production structures. The year 2024 continues and deepens the transformational trends that have emerged in recent years, bringing about the undeniable rise of Asian manufacturers and revealing the weaknesses of European production systems. Analysis of current data clearly shows that competitive advantage is shifting eastwards in terms of both production volumes and the quality of technology management and the pace of innovation implementation.

Global centre of gravity: Asia

According to data from the European Automobile Manufacturers’ Association (ACEA), China and Japan accounted for nearly 40% of global car production in 2024. This is more than twice the share of Europe as a whole, clearly showing how far ahead the Asian automotive industry is of its competitors.

BYD, the Chinese giant, is a prime example of this advantage, having increased its sales by 41% year-on-year to reach 4.3 million cars sold. In contrast, despite its larger production scale, Germany’s Volkswagen recorded a 3.5% decline in sales, according to an official statement from the VW Group. This trend is no coincidence. Asian manufacturers are scaling up production and consistently investing in technology and market expansion, as evidenced by BYD’s construction of factories in Europe.

Meanwhile, European industry is being overshadowed by costs and structural barriers

At the same time, European manufacturers are struggling with mounting structural problems. According to the 2024 Automotive Manufacturing Outlook Survey commissioned by ABB, rising labour costs and skills shortages have overtaken supply chain disruptions as the biggest burden. Problems accessing skilled staff and wage pressures are beginning to shape a new cost reality for manufacturers in Europe. While parts and logistics issues have eased since the pandemic peak, they remain the second most significant challenge for the industry due to their impact on operational complexity and supply reliability.

According to data from the Association of Automotive Parts Distributors and Manufacturers (SDCM), the automotive sector in Poland generates around 8% of the country’s GDP and provides employment for over 315,000 people. This makes it the third largest industry in Poland, after the food and energy sectors. The previous advantage of low labour costs is gradually losing its significance.

As Michał Żelichowski, Director of Business Development and Product Management at PSI Polska, emphasises, maintaining traditional structures without integrating modern production management technologies is not just inefficient; it poses a real risk. Today, it is not those who operate more cheaply who win, but those who can make decisions faster. Until recently, people mattered, but today it is data that enables them to operate more effectively and stay ahead of the competition.

Digitisation and automation are a necessity, not an option

In the context of modernising production structures, there is increasing talk of the need to implement the concept of smart factories. As the report points out, a key reason for investing in smart manufacturing is the desire to maximise productivity. However, the high initial costs associated with complex automation and digitisation systems are a significant barrier for many medium-sized and smaller companies in Europe. European industry must move away from a reactive model of adapting to trends and invest in proactive, strategic digital transformation. This is the only way to effectively shorten production cycles and increase resilience to external shocks.

Digitalisation is not a passing fad, but a lasting change. Technologies that were recently seen as a complement to traditional production models are now becoming their main component. Smart factories, MES and APS systems, and digital twins are playing an increasingly important role in real-time operational decision-making. They enable flexible responses to change and minimise the risk of downtime.

Notably, 45% of European companies report increased productivity with smart factories, 42% recognise the value of real-time data, and 40% appreciate the ability to make fact-based decisions. Despite this awareness, however, implementations are still limited.

The main barriers are high implementation costs (51%), the complexity of solutions (35%), and a shortage of specialists (32%). Companies recognise the need for transformation, but all too often they postpone decisions, says Michał Żelichowski. Digitalisation is not something to be considered later; it is the most important component of operational resilience today.

Supply chains remain the Achilles heel of the automotive industry

Despite the situation having calmed down somewhat since the pandemic, the automotive industry is once again facing serious supply chain disruptions. As the latest ABB report shows, 49% of manufacturing companies currently consider the situation in this area critical for maintaining operational continuity. This represents an alarming turn of events following a temporary improvement in 2023, when the number of reports of logistical problems fell to 41%, compared to a record high of 67% in 2022. Today’s data clearly shows that the challenges associated with component supply have not only persisted, but evolved to encompass new dimensions of risk.

The industry still relies heavily on planning models adapted to stable market conditions. However, geopolitical volatility, trade tensions, and commodity price instability necessitate a fundamental change in the approach to supply chain management. Implementing advanced predictive tools and flexible planning scenarios can enable manufacturers to increase their resilience to future disruptions.

Notably, 39% of surveyed companies indicate that supply disruptions pose a greater challenge than order fluctuations or demand volatility. This represents a significant shift in risk analysis, reflecting a change in priorities from sales to maintaining uninterrupted operations. Production is becoming hostage not so much to a lack of customers, but to a lack of the physical components needed to fulfil orders. Without partnership models for cooperation with second- and third-tier suppliers, any improvement will only be temporary.

The automotive sector must transition from a reactive to a proactive approach to risk management in supply chains. Otherwise, crises will recur with increasing intensity, undermining not only the competitiveness of individual companies, but of entire production ecosystems.

The automotive industry is at a crossroads, torn between reacting and anticipating

The global automotive industry is currently facing one of the most challenging and transformative periods in its history. Pressure from supply chain disruptions, growing customer expectations for flexibility and quality, and the need to meet ambitious sustainability goals is forcing manufacturers to fundamentally rethink their existing management models. A new axis of competitiveness is emerging: the ability to anticipate and model future scenarios in real time, as well as react. Digital technologies such as digital twins, APS (Advanced Planning and Scheduling) and MES (Manufacturing Execution Systems) are playing a significant role in this, transforming the way factories operate, plan and adapt to change.

Michał Żelichowski, an expert at PSI Polska, emphasises unequivocally that industry can no longer afford to wait. Modern manufacturing requires an operational management infrastructure. MES, APS and digital twins are not a passing trend. They are the only tools that enable you to maintain control in an ever-changing world.

This accurately reflects the current situation in the European automotive industry, particularly when compared to the more dynamic Asian markets. The data is clear: 52% of Asian companies have increased investment in digital twins, compared to 28% of European companies. A similar disparity applies to MES systems: 41% of Asian companies plan to develop them, compared to less than 20% of European companies. This clearly signals that, despite its access to advanced technologies and skilled resources, Europe is lagging behind in terms of decision-making and readiness for strategic change.

Europe does not suffer from a lack of technological potential: it has experienced engineering staff, access to extensive research and development infrastructure, and support from EU institutions. However, something fundamental is missing: the courage to commit to real transformation.

It is not the implementation of technology that marks the beginning of transformation. It begins when a company recognises that continuing with the old model is more costly than change, emphasises Żelichowski.

If they want to compete effectively on the global stage and not become mere subcontractors to more forward-thinking manufacturing ecosystems in Asia, this awareness must be embraced today by the management boards of automotive companies.

In the automotive industry, where every period of downtime and every delay generates losses running into the millions, the ability to anticipate and adapt is becoming a critical success factor. Reactivity, once sufficient, is no longer an asset. The future belongs to those who can look beyond the day-to-day horizon and build systems that can respond quickly and make intelligent predictions. In this context, the decision to implement digital tools is not just a technological choice; it is a decision about continued existence in the global value chain.

The future of industry depends on today’s decisions

Although Asia currently has the advantage in terms of scale, growth dynamics and innovation, Europe still has the potential to regain its competitiveness. However, this requires a rapid shift towards Industry 4.0, which is based on data, automated processes and energy efficiency.

For decision-makers and manufacturing leaders, this means redefining operating models and investing in people, skills, and technologies. Otherwise, the European automotive industry will face the real risk of further marginalisation, both economically and strategically.