Last week’s Interpath Automotive Seminar in Birmingham brought together industry leaders, analysts, and restructuring specialists to examine the actual state of the automotive industry. Far from a simple market update, it was a reality check—a candid assessment of where the sector stands, what’s constraining value, and where resilience and opportunity can still be found. Across new vehicle markets, finance challenges, European headwinds, and Tier 1 supply-chain resilience, one theme emerged clearly: transformation is no longer optional—it is existential.

Market Overview: A Sector Searching for Rhythm

Philip Nothard of Cox Automotive opened with a pragmatic outlook on the UK and European car markets. Despite uncertainty, there are signs of stability returning, particularly in used vehicles. Forecasts suggest 7.76 million used transactions in 2025, signalling consumer appetite for affordability over aspiration.

However, new car dynamics are shifting. Chinese entrants—BYD, Jaecoo, Omoda—now collectively hold over 4.6% market share year-to-date, reshaping competition on price, software, and speed to market. EV uptake continues to rise, although the UK remains on a knife-edge, still short of Zero Emission Vehicle (ZEV) mandate targets. September saw a 29.1% surge in EV registrations, yet OEMs are clearly reliant on aggressive discounting.

Nothard’s core message? The market is finding its feet, but not in the way legacy manufacturers hoped. Volume will belong to those who can price sharply, pivot rapidly, and simplify complexity.

Motor Finance Redress: A Growing Storm

Ed Boyle of Interpath then addressed the looming motor finance redress scheme—an issue many dealers and financiers are still underestimating. The FCA’s scrutiny of historic Discretionary Commission Arrangements (DCA) has already prompted significant provisions at major captives and banks.

While the headlines focus on potential compensation costs, Boyle challenged the audience to consider second-order impacts: liquidity pressure, increased cost of capital, and structural changes to dealer remuneration models. In short, this is a restructuring issue in waiting. For many mid-market dealer groups, the question won’t be if margins are affected, but when they feel it on the balance sheet.

Germany’s Reckoning: Lessons from Europe’s Industrial Heart

Andreas Dölecke provided a stark German perspective—one that mirrors challenges here, only amplified. Germany’s automotive sector is facing its toughest era in a generation: production remains 12% below 2019 levels, insolvencies among suppliers are up 21%, and over 50,000 jobs have been lost in the past year alone.

Despite stable EBIT margins at OEMs like VW, BMW and Mercedes, China (BYD) and the US (Tesla) are pulling away through scale, vertical integration, and software advantage. Core challenges were crystallised into five structural threats: financing gaps, raw material dependency, digital lag, scale inefficiency, and late electrification decisions.

Dölecke’s warning to UK counterparts was clear—learn quickly from Germany’s complacency. The transition to EV, software-defined vehicles, and alternative propulsion cannot be half-hearted.

Tier 1 Suppliers: Resilience as a Strategy

Susannah Cunningham-Gamble explored the Tier 1 battlefield, describing today’s automotive supply chain as a high-stakes chessboard. The winning pieces? Operational agility, diversified supply networks, and a digital backbone.

She highlighted how disrupted call-offs, volatile energy prices, and OEM programme delays are forcing suppliers to rebuild business models from the ground up. Those who can pivot into defence, energy storage, or advanced electronics will survive, even thrive. Those dependent on legacy ICE volumes risk obsolescence.

The Tier 1 playbook she outlined centred around four imperatives:

• Operational Agility – flexible production and workforce structures
• Digital Infrastructure – real-time visibility on risk and performance
• Supply Diversification – multi-region sourcing to mitigate geopolitics
• Collaboration & Innovation – co-investment rather than contract arbitration

Transactions & M&A: A Buyer’s Market, not a Bargain Market

Finally, Laura Slater delved into automotive M&A, emphasising that while the UK market is undeniably challenging, assets with engineering capability, customer relationships, and export potential remain attractive.

However, buyers are increasingly selective. Trade players pursue bolt-ons for capability expansion, while private equity seeks distressed turnarounds with clear margin recovery potential. Yet execution risk is at an all-time high—complex supply chains, tariff uncertainty, and customer concentration now demand deeper due diligence and operational turnaround plans, not just financial engineering.

Slater’s closing sentiment was cautiously optimistic: “Good businesses will sell. But only great businesses will sell well.”

Final Thoughts: A Sector at a Crossroads

This seminar laid bare the reality: the automotive industry is not simply evolving—it is undergoing industrial reinvention. The winners will be those who:

• Embrace electrification without abandoning profitability
• Build resilience ahead of disruption, not in reaction to it
• Pursue strategic partnerships, not transactional contracts
• Accept that scale, software, and capital are now as critical as steel and horsepower

Amid regulation, restructuring and rapid innovation, one truth stands—there is still opportunity, but not for those waiting to be saved. The industry must now decide whether to defend the past or design the future.

Have a great week!