Outside suppliers provide components and systems for
70% of the vehicle value.
The following global trends will influence and shape the
automotive industries’ way of doing business. Trends include:
• OEM “insourcing”;
• Large Tier I restructuring;
• Lack of liquidity will continue;
• Chasm between winners and losers will become clearer;
• OEM and large Tier I suppliers will be less tolerant of
supplier restructuring;
• Most consolidation will be in the form of liquidations;
• Strength in balance sheet and liquidity equals significant advantage;
• Large Tier II commodity suppliers will emerge in each
commodity; and
• Private equity influence will be on the sidelines now.
As a result of these trends a whole new and challenging industry will emerge and, with it, a less fragmented
base of supply but one with a magnified need for real
partnering never experienced before.
From the PPG data at right we see 10 years of dynamic
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consolidation activity resulting in an increase of $29 billion ( 47.5%) increase in industry value and a significant
decrease in the numbers of formulators. In 2008, seven formulators control more than 55% of the global marketplace
while in 1997, 16 formulators controlled 50%. CW
