As carmakers focus on building their brands in the next decade they will hand over much more manufacturing and development responsibility to suppliers, according a new report.

The study by Mercer Management Consulting and the Fraunhofer Institute says the value of the global supplier industry will grow almost 70% from €417 billion today to €700 billion in 2015. At the same time the number of suppliers will be reduced by half to 2,800.

New kinds of partnering will allow suppliers to meet massive industry-wide investment demands. And with new forms of cooperation, suppliers will improve margins by around 3% by generating savings of €600-€1,000 per car.

Return on capital should increase by 4% to around 10%, according to the study. The average level of integration of OEMs will fall from today's 35% to 23% in 2015.

The value of OEMs' contribution to value-added manufacturing will actually fall by around 10%, though they will produce 35% more vehicles, says the report.

Only premium models will buck this trend as OEMs increase their development and manufacturing contribution to top-of-the-range models as part of their efforts to build and differentiate their brands.

Vehicle manufacturers and suppliers employ around 8.8 million people around the globe. But to meet growth demand, suppliers need to employ an additional 3.3 million by 2015.

Electronics is key

The biggest growth will be in electrical and electronic components. The average value of electrical and electronic parts in cars will rise to €4,150 by 2015 from €2,220 today.

The total industry for automotive electronics will grow from €127 billion to €317 billion. OEMs will maintain some influence in this area, but suppliers will account for 85% of the growth. In €ope, 600,000 new jobs will be created in automotive electronics.

Ralf Kalmbach, head of the Mercer Automotive Practice Group, and author of the study, warns that OEMs and suppliers must prepare for the massive investment required in the industry by 2015, particularly in electrical and electronics research and development.

Suppliers will need to make most of this investment - and will need to develop new financing strategies to make this possible.