Automotive suppliers face immense challenges

July 2016

Leading automobile manufacturers are currently speaking of the fact that the entire industry is in an “epochal change”. In fact, never before have such serious changes in the market, product and process occurred at the same time. And never before in the history of the automotive industry has the supplier industry had to master such a high proportion of the management of structural change due to its current value added share of 70%.

A few months ago, the Saxon State Ministry for Economics, Labor and Transport (SMWA) commissioned a consortium consisting of the Chemnitz Automotive Institute (CATI) and the Network Automotive Supply Industry (AMZ) to analyze these current developments and trends and, in a second step, to analyze their effects to evaluate the automotive supplier industry in Saxony. The trend analysis is complete; a short version appears under the title “The automotive agenda of the future” as a special publication of the magazine “Autoland Sachsen” issue 2-2016.

New markets, new competitors, new mobility patterns

The market-related changes alone generate structural changes of considerable significance in the automotive industry. “They lead to new locations, enable new market segments and business fields, promote new players, generate new customer preferences and also demand new identities from producers.” , says Prof. Olle from the Chemnitz Automotive Institute.

The trend towards regional shifts in production and sales in favor of emerging markets, shifts in the product segments, new competitors from the automotive industry and from other sectors, the growing importance of car sharing providers and driving service providers – all of these are indicators of a change that we are beginning to see first stand.

Product trends – low-emission and networked

On the product side, there are two main areas of innovation: innovations to reduce emissions, consumption and weight (new drives, lightweight construction) and innovations to connect vehicles (‘Connected Car’ / autonomous driving). Electronics and software have become the decisive enablers and drivers for all innovations today.

These trends not only lead to the gradual substitution of today’s components and materials (e.g. internal combustion engines, transmissions, conventional chassis components, steel as a material, functionality and material for interior components), but also to completely new vehicle concepts. And by networking the vehicle, the car itself becomes an object in the digital world – with almost inexhaustible possibilities for new services and providers of data and information.

Process trends – mega platforms and Industry 4.0

At the interface from product to process, mega platforms of & gt; 2 million vehicles p.a. per platform, considerable savings for the automobile manufacturer, change the requirements for the supplier industry (internationalization and volume) and increase the risk for all parties involved. Quality problems now affect a significantly higher number of components and vehicles; they may also lead to significantly higher costs for mass recalls. An indication of this could be that in 2014 and 2015 the number of recalls worldwide was higher than the total annual production of new vehicles.

The internetization of production and business processes (Industry 4.0) is only at the beginning of a development that will lead to a paradigm shift in industrial production. The automotive industry is very strongly focused on product and production, so that certain aspects of Industry 4.0 are clearly neglected. So far, continuous digitization in the entire value chain and the redesign of business processes (from development processes to customer order processing) have been neglected. In the latter area in particular, the automotive industry can learn from other industries and creativity competitors.

Conclusion

All in all, the industry – manufacturers and suppliers – will face a huge challenge in the next 10-15 years. “This challenge will cause particular problems for the medium-sized supplier industry. Because many of these topics have to be started at the same time today in order to be competitive and sustainable in the future ”, says Dirk Vogel, the project manager of the network of automotive suppliers (AMZ).

In the second part of the study, which will be completed by the end of September 2016, the project team uses company-related data from over 200 companies with over 40,000 employees to show the risks and opportunities that the Saxon automotive supplier industry can expect in the next few years.

The study as PDF (German)