GM’s completed sale of Nexteer to Pacific Century Motors (PCM) marks the start of a new chapter for a 104 year old supplier once known as Saginaw Steering Gear. As part of the deal, PCM will leave Nexteer’s existing management team in place and headquartered in Saginaw, Michigan.
Nexteer is already well positioned with a global development infrastructure and local production. And its engineering capability looks set to strengthen in the coming months, too. The supplier is currently looking to recruit 100 engineers for its headquarters in Saginaw, Michigan by the end of the year.
Go deeper with GlobalData
While today’s announcement puts the official seal on a deal that has been negotiated for several months, it is particularly interesting to note Zhao Guangyi’s comment that PCM will provide Nexteer with access to capital investment that will allow the steering supplier ”to continue its global growth in technology and manufacturing, particularly in China.”
The power steering market is fragmented in China. Like many competitive industries, there is downward pressure on selling prices and Nexteer faces strong competition from the likes of China Automotive Systems, Shanghai ZF and First Auto FKS.
In our view, one of the ways to achieve growth in this market will rest on Nexteer’s ability to find and develop local suppliers with the appropriate skills and process controls to make components for power steering systems. Meanwhile, Nexteer can expect PCM’s existing business relationships to open new doors to the blossoming Chinese automotive market.
While hydraulic powered steering systems are in decline in both North America and Europe, we are seeing modest growth for such systems in emerging markets such as China. However, over the longer term, these markets will also move to full electric steering as market pricing for electric power steering (EPS) matures and scale is achieved.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAnd while we see an appetite in terms of functionality of EPS in China, it may prove challenging for Chinese workshops.
Matthew Beecham
See also: US: Steering specialist Nexteer sold to Beijing investors
