Challenging relationships
By Ian Henry2019-11-20T14:11:00
As the trend of electrification gains pace, and demand in the global new car market dwindles, suppliers are looking at ways to best serve their OEM customers
The global automotive components industry is facing some severe headwinds; from finances being buffeted by demand fluctuations, mostly involving declining vehicle volumes; from increased investment requirements in electrification and autonomous vehicle technology; and from the global trading environment, which is experiencing severe turbulence as the US and China battle for economic supremacy. The EU is unavoidably caught up in the latter, and although US tariffs on EU cars or components have yet to be increased this may well happen in the next six months or so, placing further strain on existing supplier finances.
More than 20,000 jobs are said to have been cut at US suppliers between January and May 2019, and these losses, resulting from the trends mentioned above, are symptomatic of an industry that is at risk of seeing much of its established value eroded. Analysts at Deloitte have calculated that automotive suppliers have created over $500 billion in shareholder value since the 2008-09 recession, more than doubling the sector’s pre-recession value. Much of this is now at risk, especially in highly commoditised, traditional technologies, or sectors where rapid technological change means once standard technologies will no longer be required. The converse is also true, with new technologies representing significant potential for value creation…