The May 2024 report from Elm Analytics, LLC, titled “supplyAware™ 60,” presents a snapshot of the automotive industry’s financial health and identifies key challenges and trends affecting automotive suppliers globally.
The report highlights a concerning trend of declining financial health among automotive manufacturers compared to the previous year, as evidenced by a statistically significant decline in overall financial health, particularly in profitability and liquidity drivers. Notably, the number of suppliers with critically low liquidity scores (<10/100) has more than doubled since 2022, now representing 25% of the comparable peer group. The Asia-Pacific region has the highest representation among suppliers with critically low liquidity drivers, followed by Europe and North America.
The supplyAware™ 60 serves as a benchmark for assessing the fiscal stability of automotive suppliers worldwide. It comprises a representative sample of publicly traded automotive suppliers across North America, Europe, South America, and the Asia-Pacific region. This roster provides essential financial metrics and acts as a barometer for the industry’s current economic landscape and trends, aiding in risk management, resilience building, and opportunity identification in the supply chain.
The financial health of the supplyAware™ 60 is determined using the Elm Financial Rating (EFR), a proprietary calculation based on various financial metrics categorized into three key drivers: leverage, liquidity, and profitability. The EFR ranges from 0.0 to 10.0, with scores categorized as high-risk (0.0 – 2.0), moderate risk (2.1 – 5.9), and healthy (6.0 – 10.0). Key driver scores, ranging from 0 to 100, are combined in a weighted formula to calculate the EFR.
Elm Analytics’ supplyAware™ platform offers a comprehensive solution for risk assessment in the automotive industry, enabling organizations to monitor supplier financial health effectively and prevent supply chain disruptions. By identifying and predicting suppliers’ financial vulnerabilities, manufacturers can proactively address structural weaknesses within their supply chains, ensuring operational continuity in a dynamic and competitive market. The platform gathers data from over 150 exchanges worldwide and provides an easy-to-use and secure interface for accessing critical information.
Elm Analytics, as a leading provider of supply chain analytics and risk management solutions in the automotive sector, offers supplyAware™ as a flagship offering. Their expertise lies in developing strategic solutions to navigate the complexities of supply chain dynamics, enhancing the resilience of clients’ supply networks through comprehensive supply chain mapping, robust financial risk assessment, and diligent monitoring. With a focus on providing insightful and strategic solutions, Elm Analytics remains at the forefront of supply chain risk management within the global automotive industry.
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