How to Grow
Automotive suppliers are benefitting from globalization, innovation, and restructuring
To date Japanese, North American, and European suppliers have defined the international automotive supplier industry. Current trends indicate that this structure will change dramatically in the next ten years: while the American suppliers will have to go through a major restructuring process due to their customers’ continuing weakness on their home market, the Japanese suppliers will be able to benefit from the global success being enjoyed by the Japanese automobile producers. In Europe, the German suppliers will benefit most from the strong position held by German producers in the premium segment.
In the international automotive supplier industry, three trends can be seen which will help the players in the market grow qualitatively and quantitatively – on the condition that they know how to exploit the opportunities. The global activities of the automobile producers mean that the suppliers can expand into new international markets, which would lead to quantitative growth through globalization. The customers’ growing demands and tougher legal regulations are driving a need for new technologies, but also offer an opportunity for qualitative growth through innovation. And finally, the reshuffling of the US American market will open up growth opportunities in the form of takeovers of entire companies or the integration of profitable parts of them, i.e. quantitative growth through restructuring.
The global structure of the automotive industry is defined by three groups of producers and suppliers. The group based around the US companies General Motors (GM), Ford, and Chrysler and their supplier networks presently represents 25 percent of worldwide automotive production (Source: VDA). The second group is centered on Japanese industry and is responsible for 31 percent of worldwide vehicle production. The third group is based in Europe and is strongly influenced by the high-end market targeting of major German producers as well as the mass production of French and Italian provenance. According to the VDA, Germany alone contributes 13 percent of worldwide automotive production.
The automotive industry is also characterized by a regional structure. 95 percent of Japanese production is supported by local companies, and even in Europe 85 percent of the vehicles are sourced from European producers. Only in North America are things different – just 64 percent of the automobiles are sourced within the region, 29 percent are already from Japanese companies.
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