Suppliers expect 2007 to be another tough year – mainly driven by further deteriorating relationships with OEMs. This is the main conclusion of a survey carried out by Roland Berger and SupplierBusiness with over 130 senior executives in the global automotive supplier industry in December 2006.
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Expectations however differ from region to region – European suppliers are less pessimistic about future conditions for the industry than their North American competitors, or even Asian suppliers – and suppliers with revenues less than US$1bn seem to be more optimistic than their larger competitors.
Main concerns, not surprisingly, include further increased pricing pressure, unclear development of raw material prices, as well as the accelerating shift towards low cost/low tech components. Compared to last year, suppliers seem to be much less concerned about weak production volumes in North America and Europe.
When asked about their key management priorities for 2007, executives ranked the reduction of overhead cost as number one, followed by increased low cost country sourcing and improved launch management for new products. 80% of executives believe that the pace of globalisation will increase further.
India has dramatically gained ground and is considered to be the number one investment priority for the next 12 months – probably in part because many suppliers have built up Chinese presence over the past few years, while they are still not present in India. Russia will also experience increased attention from the supplier community.
SupplierBusiness
