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Home » Can North American Auto Suppliers Create Value?

Can North American Auto Suppliers Create Value?

June 18, 2008
McKinsey Quarterly

North America's auto suppliers are struggling for survival, squeezed by rising costs, blistering competition, declining production volumes, and relentless downward pricing pressure from automakers themselves facing severe business conditions.
McKinsey research finds that over the next five years, North American suppliers could potentially create value across 60 to 70 percent of a vehicle's content, in three product segments: those that provide opportunities for significant innovation; those that are consolidated, with high barriers to entry; or those that give agile competitors early-mover cost benefits.
Creating value in the fourth area, which represents 30 percent of a vehicle's content, will be extraordinarily difficult. Consequently, North American suppliers should actively consider their exit options in these segments.
Our findings, which have strategic implications for suppliers and OEMs alike, show that North America's auto suppliers must consolidate and restructure their portfolios to improve profitability.
Source: McKinsey Quarterly, http://www.mckinseyquarterly.com

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Technology Automotive High-Tech/Electronics North America
KEYWORDS Automotive High-Tech/Electronics North America Technology
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