Strategic Decisions on Non-Core and Loss-Making Business Units

Matthias Müller, Partner Restructuring and Finance, Dr. Wieselhuber & Partner GmbH

From Stress to Strength: Restructuring for Financial Resilience of Automotive Suppliers

Understanding the Real Position

The situation in the automotive supply industry is shaped by significant investment requirements alongside increasing financial pressure. Electrification, software integration and new platform architectures demand capital, while fluctuating call-offs, pricing pressure and a more cautious lending environment place strain on liquidity. Companies must secure stability in the short term while positioning themselves for a market that is evolving in both scale and structure.

A realistic understanding of the company’s position is essential. This means examining earnings quality, cash generation capacity, balance sheet resilience and the contribution each business unit makes to the overall strategy. It often becomes clear that pressure does not originate in the core activities but in legacy units that no longer contribute sustainably to value creation. These areas can absorb capital and management time that would be better invested in future-oriented capabilities.

When History Meets Strategy

In family-owned automotive suppliers, this can be a sensitive topic. Certain business units carry emotional significance and are associated with past phases of growth or regional responsibility. When identity and economic logic overlap, discussions can become difficult. A structured and independent viewpoint can help to realign decision-making with the long-term competitiveness of the group rather than the history of individual parts of the business.

Choosing the Path That Strengthens the Group

Once the position is clearly understood, the effectiveness of ongoing and planned initiatives can be assessed. Measures that genuinely strengthen margin resilience, operating flexibility and customer positioning matter more than incremental adjustments. Transparency across the income statement, balance sheet and cash flow reveals where targeted restructuring is necessary to prevent financial strain from spreading across the group.

At this stage, strategic options become comparable. These may include operational redesign, realignment of the product portfolio, carve-out and sale of non-core activities or a carefully managed wind-down. In situations where stability and continuity need to be secured under time pressure, or where stakeholder alignment is complex, court-supervised restructuring or the use of pre-insolvency restructuring frameworks can help preserve value. The suitability of each path depends on the specific industrial, financial and stakeholder context.

For the analysis to be meaningful, one requires a clear and comparable assessment of the available courses of action. Based on long-standing experience in financial advisory, corporate restructuring and insolvency practice, it is possible to develop a well-founded scenario evaluation that clarifies opportunities and risks, the economic impact and the strategic implications of each alternative. This provides the basis for decisions that are both transparent and aligned.

Restructuring Alone Does Not Create a Future

Reducing exposure alone does not create resilience. Companies that only scale back risk becoming increasingly interchangeable and losing pricing power. Renewal is essential. If capital released from non-core activities is used to develop new competencies, deepen technological relevance or strengthen strategic customer positions, the business regains weight and direction.

Resilience arises from two movements that must be coordinated: letting go where sustainable value creation is no longer possible and investing where the company can build future relevance. This requires practical planning, disciplined implementation and thoughtful alignment with banks, shareholders, employees and customers. Companies that manage this regain the ability to shape their own path rather than being shaped by circumstance.

Safe and Sustainable-by-Design: Setting New Standards for EV Coolants

Electrification, including hybrid, battery, and fuel cell electric vehicles (EVs), is driving innovation in powertrain and thermal management systems. Moving away from internal combustion engines is crucial to reducing greenhouse gases, air pollution, and their impact on the climate. With transportation accounting for ~28% of global emissions, reducing its impact is essential to achieving global decarbonisation.

By applying safe and sustainable-by-design (SSbD) principles during R&D, Arteco ensures its solutions are aligned with future environmental and regulatory standards. Water–glycol-based engine coolants are widely used in electric vehicles for indirect liquid cooling. Their excellent heat transfer properties, proven automotive performance, compatibility, and ease of handling make them a commercially preferred solution for thermal management.

For demanding scenarios such as fast charging, the industry is trending towards increased and closer battery-to-coolant integration. To enhance the safety of current and future battery systems, Arteco’s pioneering work led to the development of the Freecor® EV Milli coolant range with low electrical conductivity.

Meanwhile, industry standards have also begun to impose stricter limits on electrical conductivity. For example, ASTM D8566 specifies a maximum electrical conductivity of 100 μS/cm for fresh coolants used in battery electric vehicle applications. Maintaining low electrical conductivity in use, a parameter often overlooked or insufficiently emphasised in existing specifications, is essential to ensure system robustness. Freecor® EV Milli technology resists such electrical conductivity spikes upon contact with brazed aluminium surfaces. Its formulation helps maintain the initial safety benefits by stabilising conductivity levels, ensuring continued electrical insulation throughout the vehicle’s operational life.

While EV-specific coolants are developed to meet safety and performance requirements, Arteco has gone further by addressing their climate impact. Recent life cycle assessment (LCA) studies show that the most significant climate impacts associated with coolants are largely attributable to raw material extraction and end-of-life treatment. In response, Arteco has prioritised resource efficiency in its development strategy, leading to the creation of the Freecor® EV ECO coolant range.
Freecor® EV ECO coolants incorporate base fluids linked to bio-based or recycled feedstocks, allocated via a certified mass balance approach. The benefits of the ECO coolants are reflected in their significantly reduced Product Carbon Footprint (PCF) compared to their traditional virgin fossil-based equivalents.

Over 94% Cycle Efficiency Electric Drive Unit: From Ambitious Targets to Validated Reality

How a dual-drive EDU, design-to-CO₂e thinking, and battery innovation converge to deliver <10 kWh/100 km energy demand and >94% system efficiency – ready for vehicle application.

Dipl.-Ing. (FH) Wilhelm Vallant, Product and Business Development Manager Transmission & E-Axle, AVL List GmbH

The automotive industry is at a turning point, and OEMs face a dual challenge: delivering uncompromised performance while meeting stringent sustainability and cost targets. AVL’s latest technology demonstrator addresses this challenge head-on, setting new benchmarks for energy efficiency, lifecycle CO₂e reduction, and system integration.

The project’s objectives were clear: achieve an Electric Drive Unit (EDU) average cycle efficiency of over 94 % (WLTP) and reduce vehicle energy demand to below 10 kWh/100 km. These goals demanded a holistic approach – optimizing the EDU, battery systems, and vehicle aerodynamics in unison.

At the heart of the demonstrator vehicle lies a dual-motor EDU featuring two Permanent Magnet Synchronous Machines (PMSMs), a compact single stage spur-gear transmission, and a dual Silicon Carbide (SiC) inverter. One motor operates continuously for maximum efficiency, while the second engages only for boost and recuperation via a dog clutch. This intelligent operating strategy minimizes losses across real-world duty cycles. Using AVL’s Powertrain System Optimizer (PSO) and AI-driven Design of Experiments methodology ensured optimal sizing and control strategies. The result: validated average EDU efficiencies of 94.1 % in real-world testing and 94.4 % in customer-specific cycles.

Efficiency alone is not enough. AVL integrated lifecycle CO₂e considerations from concept to production, applying a “Design-to-CO₂e” methodology to further reduce material usage, cutting system weight, cost, and lifecycle CO₂e.

Two battery concepts complement the EDU: A performance-optimized pack leveraging silicon-anode/NMC811 chemistry, advanced evaporative side cooling, and cell-to-pack integration for maximum energy density.

A cost-optimized LFP pack featuring cylindrical cells, multifunctional cooling plates, and CO₂-based evaporative cooling – eliminating the need for a separate low-temperature circuit and reducing system complexity.

Vehicle-level efficiency was enhanced through a fully virtual aerodynamic optimization process, achieving a 23 % drag reduction in simulation and 20 % in coast-down testing – critical to meeting the sub-10 kWh/100 km energy demand target.

This demonstrator is more than a showcase; it’s a blueprint for scalable, production-ready solutions. By combining cutting-edge EDU design, battery innovation, and lifecycle sustainability, AVL empowers OEMs to deliver electric powertrains and complete vehicle designs that excel in efficiency, performance, and environmental responsibility.