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Smaller automotive suppliers grow biz in downturn

Posted: 01 Apr 2010     Print Version  Bookmark and Share

Keywords:Automotive  suppliers  market share 

The past one and a half years the economic climate amplified a steady decline in car sales and vehicle production, particularly in the United States. The tight credit environment clearly hurt car dealers, vehicle manufacturers, and the rest of the automotive industry. Recent IMS Research's report indicates that smaller, domestic suppliers managed the downturn surprisingly better with an increase in their market share.

Vehicle manufacturers cut down on shifts; suppliers revised their earnings expectations; and auto dealers slashed prices. The stress was even greater on the smaller tier two and tier three suppliers who make parts for the tier one suppliers. Now, when there are clear signs of recovery, with higher growth this quarter (Q1—2010) than in any quarter in 2009, it is fitting to take a closer look at how the major suppliers managed the downturn.

All suppliers would have had some type of "survival plan" but some things are just beyond anybody's control; it is only natural that some suppliers' plan were more successful than others. IMS Research's latest report Automotive Systems Supplier Market Shares—2010 Edition, indicates that not only those suppliers with heavy reliance on the "big three" US vehicle manufacturers have had a difficult time to maintain their position; but large suppliers with a broad portfolio and evenly spread sales struggled too. Surprisingly, quite the opposite seemed to be the case for many smaller, often domestic, suppliers. "The report found that, for many systems, the category "others", generally suppliers with less than 3% market share increased that share substantially in all regions. It seems that many smaller suppliers, have had the ability to adapt and benefit from the downturn better than many of the established ones", states Helena Perslow, the author of the report.

Despite a steep hill for world vehicle manufacturers to climb, to reach 2007 vehicle production, the future looks bright for system makers. There are several electronic systems that look likely to see continued increasing demand. "We are not only talking about electronic stability control, which will see a significant increase in fitment rate from legislation; but there are other systems for which we expect higher demand," says Perslow. She continues, "Electric power steering is one example; adaptive headlights are another. Driver assistance systems and convenience systems in particular look like they will be able to ride out this storm".

Systems, which are offered only on higher trim levels or are optional, such as electric windows and air conditioning/climate control are sure to increase in demand. Another of IMS Research's reports: "The World Market for OEM Automotive Electronic Systems—2010 Edition", forecasts that the fitment of electric windows (front or rear) in new vehicles is expected to increase from the 6.70 crore (67 million) of 2009, to 11.32 crore (113.2 million) in 2017.

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