The 1998 Automotive Suppliers Survey is an
annual analysis of the critical factors and trends which Tier One, Two and three
automotive suppliers consider most important to the success of their business in the year

This report is based on the interpretation
of the research analysis provided by Cardiff Business School, based in the UK and the JBA
Automotive Business Unit.

The research was conducted through
telephone interviews and carried out by market research organizations around the world.
The interviews, taking approximately 20 minutes each, were carried out in local languages
with the key decision makers in each company. Over 550 interviews were carried out within
eight different countries, namely UK (50), France (51), Germany (51), Italy (50), Spain
(50), South Africa (51), Australia (35) and USA (220). The results are representative of
the supply industry as a whole, with 57% of respondents being in Tier One, 30% in Tier Two
and 13% in Tier Three. The results therefore allow both global industry analysis and
inter-regional comparisons.

The results were gathered in conjunction
with various agencies worldwide and several leading automotive journals: Automotive
Computer Solutions in the UK, Automobil Produktion in Germany, Logistica Management in
Italy and Auto Revista in Spain. The project is sponsored by JBA and IBM.

Research Methodology

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By GlobalData


The research companies conducted interviews
in Europe, USA, South Africa and Australia with Tier One, Two and Three companies with an
annual revenue of at least $32 million (20% to 25% of interviews were conducted with
companies with revenue between $16 million and $32 million).

Table 1: Interviews

UK 50
Spain 50
France 51
Germany 51
Italy 50
USA 220
South Africa 51
Australia 35
Total 558

Table 2: Overall Breakdown
of Supply Tiers

Tier One
Tier Two
Tier Three
312 166 73 551*

*(Seven US companies would
not state which tier they were in)

Table 3: Country Breakdown
of Supply Tiers

Country Tier One Tier Two Tier Three
UK 28 18 4
Spain 23 23 4
France 19 21 11
Germany 23 19 9
Italy 22 17 11
USA 165 39 11
South Africa 5 24 20
Australia 27 5 3


Revenue breakdown

Due to the different currencies used as
revenue brackets in the research carried out, the report analysis refers to the companies
as small, medium or large companies rather than by revenue. The following tables indicate
what classifications have been used within the small, medium and large brackets.

UK £10 – 50M
US $35 – 500M
South Africa R50 – 300M
Australia $Aus40 – 100M
France 95 – 470MF
Germany DM28- 140M
Spain Pts2500 – 12000M
Italy 27 – 140B Lira


UK £50 – 100M
US $500 – 1B
South Africa R300M – 200M
Australia $Aus100 – 200M
France 470 – 940MF
Germany DM140 – 280M
Spain Pts12000 – 24000M
Italy 140 – 280B Lira


UK £100M+
US $1B+
South Africa R1B+
Australia $Aus200M+
France 940MF+
Germany DM280M+
Spain Pts24000M+
Italy 280B Lira+

Executive Summary

The two items considered most important by
the automotive suppliers industry are:

  • Customer integration
  • Product quality

This is consistent across all Tiers and all
regions. As an automotive supplier, the ‘total product’ supplied includes integration and
quality, not just components.

The industry is structuring itself around
Tier One suppliers who will accept design and manufacturing responsibility for the OEM.
The OEMs expect year on year cost reductions from suppliers. This not surprisingly draws
customer integration and supplier quality to the forefront of automotive suppliers
concerns. Underpinning this is a simple strategy of reducing costs by improving quality.

Customer integration
Volume supply to assembly tracks involves control by the minute, the Tier One
supplier taking on late configuration and sequence supply of assemblies from adjacent
facilities to the OEM. Customer integration requires seamless systems for scheduling,
sequencing, goods receiving and billing. The rapid cycle times and high volumes are
compounded by many derivatives within the production schedules, the administration of this
routine volume transacting is recognized as being a prime opportunity for ‘costdowns’. The
use of EDI to fulfill this aim is considered mandatory for suppliers. Tier One suppliers
will become more like the OEMs of today and are beginning to make the same demands on Tier
Two and Three suppliers as OEMs currently make on Tier One suppliers today. OEMs are also
planning to reduce the number of Tier One suppliers per vehicle from say, 200 to 100 on
new models. This approach will trickle down the Tiers, leaving only the suppliers who
excel at integration and quality. Those left will obtain the benefits of higher volumes,
and will be expected to reduce costs via job flexibility.

Product quality
By relying more on suppliers to design and make large assemblies, OEMs also delegate
quality responsibilities. The demonstration of this quality, with accurate statistical
measurement, places a demand on suppliers to capture data and to analyze large volumes of
quality data. This data will include serial number, date, time, condition and employee.
With vehicle production running at 30 units per hour, data should be captured and
displayed on line for meaningful and responsive analysis.