German Automotive Industry, OEM’s and Suppliers - It’s Time to Lead or Be Left Behind.

The German automotive industry is fighting a crisis that goes well beyond supply chains or shifting markets. At its core, this isn’t about pandemic disruptions, or even global economic headwinds - it’s about a leadership culture clinging to the old and blaming external factors for deep-seated internal failures. Highly paid executives are now calling on the state for support, citing high absenteeism and bemoaning the “work-from-home culture.” But what message does this send? To the public, the workforce, and stakeholders, it reeks of helplessness from leaders who, instead of taking charge, seem to be scrambling for scapegoats.

As a CRO,  Expert Advisor and Sparring Partner to C-suites/ Supervisory Boards and shareholders, working with German automotive CEO's and major stakeholders, I’m witnessing firsthand the limits of conventional leadership in a time that demands transformation. From the vantage point of these boardrooms and factory floors, it’s clear: this is not just a business cycle dip. It’s a structural crisis, one that is testing not just balance sheets but the very fabric of how these companies are managed.

The Root Cause: A Crisis of Leadership, Not of Market

Much of Germany’s automotive leadership has managed well through cyclical crises in the past. Yet they are largely unprepared for a structural overhaul, one that calls for a complete reevaluation of how these companies are run. Many executives are hoping for a market rebound, but this is a crisis that requires a fundamental change - not just temporary fixes. As I always put it, “Whether you buy a book or hire McKinsey, the knowledge is available. What truly matters is who can grasp organizational complexity, who has the courage to make critical decisions, and who possesses the natural authority to execute."

In the struggle to navigate through such a transformation, traditional co-determination structures are also showing their limits. Designed to balance interests during economic fluctuations, they are ill-equipped to drive or support the fundamental restructuring that the industry now desperately needs. The stakes are higher than ever, but co-determination, like many management strategies, has hit a wall, unable to support the heavy lift of true transformation.

Escaping the Trap of Old Structures

German automotive leaders must face the uncomfortable truth: outdated structures aren’t a resource to conserve but a liability to abandon. And yet, the management response has often been to safeguard these structures - not to question or adapt them.

The real challenge is that stripping away legacy practices creates a blank canvas, a daunting yet necessary opportunity. Every outdated process, every slow-moving department that once seemed indispensable is now a barrier. The crisis should be a catalyst for reinvention - a chance to rebuild with agility in mind. Instead, we see the same faces around the executive table, clinging to methods that offer quick but shallow fixes. And by the way, the same is true of a lot of external CROs.

I am continuously underscoring the urgency for realistic, action-oriented leadership vs. compulsively pursued harmony with the aim of achieving equality on all levels: “The world doesn't need another "Mr. Nice Guy" who looks through rose-colored glasses and soft-washes reality until it suits everyone. My name and reputation stand for speed to succeed. That means no dog and pony shows and focus on facts!”

Steps to Turn the Ship Around - For Those Willing to Steer

1. Drop the Facade, Embrace Transparency: For too long, automotive executives have defaulted to vague assurances, preferring to “manage the message” rather than deliver an unvarnished truth. Employees, investors, and the public deserve leaders who are ready to speak plainly about the industry’s issues. Clear, authentic communication, even when the message is hard to hear, is essential.
2. Bring in Transformation-Experienced Leaders: Structural transformations demand executives who have led transformation efforts before - managers who understand that real change goes beyond cost-cutting and efficiency. It requires bold decisions and a creative vision for rebuilding. That is why I always emphasize, “Selecting the wrong professional partner can impact finances, organizational performance, and overall growth. I only choose collaborators who align with my values and goals.”
3. Reimagine Co-Determination (Mitbestimmung) for Structural Change: Co-determination, a cornerstone of German industry, can be an incredible tool for navigating downturns - but today’s crisis isn’t just another downturn. It’s structural, and it needs co-determination to evolve into a strategic partner in transformation rather than a reactive force protecting the past. Traditional co-determination has shown its limits in fundamental transformations. A flexible model that integrates co-determination as a tool for constructive restructuring, rather than merely defending old structures, is essential.
4. See Downsizing as a Path to Rebuilding: Downsizing doesn’t mean defeat - it’s the only way to clear the decks for genuine innovation. If unproductive processes or departments need to be cut, that space can be turned into something fresh and adaptable. Abandoning traditional structures, painful as it may be, will create room for new, agile ways of working.

The Broader Picture: Financial, Operational, and Cultural Barriers

A closer look at the numbers reveals additional obstacles. Rising costs, inefficiencies in production, and a workforce stretched thin due to outdated resource management all contribute to a scenario where profitability is squeezed. Instead of analyzing these issues at their core, management often points to external pressures. But much of this friction is self-inflicted, sustained by risk-averse habits and outdated decision-making processes.

The automotive industry’s transformation isn’t just about automation or digitalization – it’s about revamping the way executives think about leadership itself. Over decades, a culture of top-down control and minimal risk has taken root, suffocating innovative thinking. Even when lean practices are introduced, the change often gets bogged down in bureaucratic inertia. For meaningful progress, the industry needs managers who are not only operationally competent but ready to encourage risk-taking and embrace a more flexible, adaptive approach.

“When the world is moving fast, experience can help us, because experience is about pattern recognition. However, when the world is not just moving fast but changing fast, doing what we’ve been doing can become a critical burden.”

A Call to Action for the Automotive Elite

To stay competitive, German automotive companies need to commit to a transformation that is bold and long-term. It’s time to retire the crisis playbook and face the future with a readiness to dismantle the very structures that once drove success. This requires a blend of transparency, external expertise, flexible co-determination, and the courage to downsize where necessary.

If this sounds radical, that’s because it is. The status quo won’t save German automotive - only a new generation of leaders who view crisis as a turning point can do that. The auto industry’s future will belong not to those who reactively call for aid but to those who proactively rebuild.

Enjoyed our latest edition of 𝗧𝘂𝗿𝗻𝗲𝗱 𝗔𝗿𝗼𝘂𝗻𝗱!® 𝗧𝗵𝗲 𝗡𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿?

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Feel free to write me at ruediger.tibbe@excelliance.de or call me at +49 160 4794480.

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Rüdiger TIBBE

Senior Partner & Managing Director

+49 160 4794480

ruediger.tibbe@excelliance.de