Executive Briefings

Opinion: Auto Suppliers Must Learn to Drive Change or Watch Industry Pass Them By

First, Tesla surpassed General Motors and Ford Motor Co. in market cap. Then Ford announced cutting 10 percent of its salaried workers before firing CEO Mark Fields.

Does anyone doubt change is sweeping the auto industry? The moves at Ford highlight two competing pressures: to increase stock prices while investing in technology to up the ante on autonomous and electric vehicles.

But this pressure presents opportunities for auto suppliers as well. To take advantage, they must rethink their traditional passive relationship with manufacturers and grab a bigger role in charting a future for the industry, through partnerships with new customer types.

Parts makers, a once relatively stable business, will need to be increasingly nimble as the car companies and technology giants wrestle over the automobiles and trucks of the future. Will they run on electric batteries or hydrocarbons, or both? Will these vehicles still have drivers or be autonomous, or both? Will they have one owner or be shared?

Put another way: If you’re going to make interiors for Volvos, you should be talking with Uber about increasing surface durability because its cars might have more passengers riding more hours a day. Or, if you’re going to make bumpers for Lexus, maybe you should be planning new designs or materials with Apple or Google, perhaps ones with special bumper sensors. Should video cameras be inside as well as outside of vehicles?

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Does anyone doubt change is sweeping the auto industry? The moves at Ford highlight two competing pressures: to increase stock prices while investing in technology to up the ante on autonomous and electric vehicles.

But this pressure presents opportunities for auto suppliers as well. To take advantage, they must rethink their traditional passive relationship with manufacturers and grab a bigger role in charting a future for the industry, through partnerships with new customer types.

Parts makers, a once relatively stable business, will need to be increasingly nimble as the car companies and technology giants wrestle over the automobiles and trucks of the future. Will they run on electric batteries or hydrocarbons, or both? Will these vehicles still have drivers or be autonomous, or both? Will they have one owner or be shared?

Put another way: If you’re going to make interiors for Volvos, you should be talking with Uber about increasing surface durability because its cars might have more passengers riding more hours a day. Or, if you’re going to make bumpers for Lexus, maybe you should be planning new designs or materials with Apple or Google, perhaps ones with special bumper sensors. Should video cameras be inside as well as outside of vehicles?

Read Full Article