Abstract

The automotive industry in Europe experienced a slowdown in 2018-2019, due to a combination of factors. Structural problems that are specific to the sector, like the difficult transition to electric mobility, matched with a situation of increased uncertainty at the international level. Germany, the largest European market for automakers, suffered the crisis more than any other major Eurozone member. However, due to industrial integration, the German slowdown was transmitted along the supply-chain to Italy and to Eastern European countries. We move from this evidence to investigate the intersectoral linkages which are responsible of the transmission process. By using the World Input Output Database (wiod), we shed light on the potential vulnerability of supplier countries and/or sectors which are too much exposed to the German demand. Italy characterizes indeed for a heterogeneous production structure which might help to potentially offset the risk. However, the shrinking of the Italian automotive value chain due to delocalization, has left the Italian suppliers more vulnerable to foreign demand. Their situation has worsened in the most recent years, and months, because of the need to transform their business models to comply with electrification plans of the global supply-chain leaders, and to face the covid crisis, which might result in strengthening the selection process of the less-competitive firms along the automotive chain, one of the most impacted by demand and supply shocks.