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Changing trends in automotives

Posted: 19 Apr 2010     Print Version  Bookmark and Share

Keywords:automotives  downturn  changing trends 

Even as the world car industry steers itself back on the road to recovery after the last 18 months, suppliers are evaluating the impact of their survival strategy. They have now started looking to change their focus from survival to growth and to develop a strategy to meet their mid- to long-term goals.

There are many reasons why suppliers lose or gain market share from one year to another, whatever the market environment. However, analysis of the supplier shares from 2007 and 2009, from the IMS Research report Automotive Systems Supplier Market Shares—2010 Edition shows that not necessarily the survival tactics, but rather the choice of longer term strategy, determined success during an unprecedented downturn in the world's car industry.

First, suppliers relying heavily on the "big three" US vehicle manufacturers (Chrysler, Ford, and General Motors) found it particularly hard to maintain their position. Delphi, which has worked hard for years to increase its customer base beyond General Motors, has still lost a large share of the world market, and has had to sell off production of many systems. Visteon, previously affiliated to Ford Motor Co., has fared slightly better than Delphi; but nevertheless has lost 1 per cent of the world market for both instrument clusters and air conditioning.

Denso, on the other hand, has significantly strengthened its world position since 2007 in several systems, including instrument clusters and park/reverse assist. However, it still depends heavily on Toyota Motor Co., and there will be repercussions from the Toyota vehicle recall which marred the giant vehicle manufacturer in early 2010. The wider implication is that those suppliers with heavy reliance on a few customers, or on one region, may be extremely vulnerable in an economic downturn. A diversified customer base may reduce the pain, or diffuse it over a longer period.

Second, suppliers who were quick to get a foothold into emerging markets, such as China and India, have done relatively well. Examples are TRW and Valeo, which have each seen their position going from strength to strength in China. It further emphasises the value of suppliers continuously building new relationships and widening their customer base.

Many suppliers will now start looking to change their focus from survival to growth and to develop a strategy to meet their mid- to long-term goals. On the surface, the industry seems simply to have lost about two years; forecasts of production volumes and electronics revenues for electronics indicate that 2007 levels will not be exceeded until 2012. However, it may not be wise for suppliers simply to dust off their strategies from two years ago.


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