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According to the German Automotive Industry Association (VDA), the German automotive industry is wherever the markets are. This trend and systematic relocation of manufacturing sites continues. Due to the combination of global quoting and local sourcing, there is pressure on strategic OE suppliers to copy this ongoing globalization strategy in following the OEMs to their foreign manufacturing locations. Due to the successful expansion of international manufacturing, German OEMs are seeking to increase local content & sourcing respectively. Due to the importance of existing and future consumer markets in North and South America, opportunities for U.S. suppliers continue to exist, especially in case of expansions of manufacturing capacities by German OEMs in North America. Selection of new suppliers however remains subject to an extensive pre-qualification process.
Best Prospects for U.S. Exports
to technology suppliers (e.g. human–machine interface, connectivity & infotainment, autonomous technology, components for electrification), as well as a redesign of distribution models and vehicle marketing & sales (digital). OEM & supplier relationships are further affected by factors such as increased model and variety diversity, shorter product life cycles, modularization and assembly strategies, implementation of new technologies (e.g. electrification, digital services), cost pressure and capital intensity levels.
This ongoing transformation of the traditional value chain is also connected to a significant rise in costs which, to a great extent, is driven by investments in the development & integration of innovations. This will consequently cause further market consolidation & concentration. Additional pressure comes from new and non-traditional suppliers, e.g. in the fields of battery (cell) technology, digital services, data analytics & algorithms, software, and mobility services. Significant investments in the generation and acquisition of innovations (e.g. R&D, M&A activities, implementation of new technologies & processes, talent acquisition etc) can be observed already today and are expected to increase around the following topics/areas (non-comprehensive): Advanced manufacturing (smart factories of the future to include high degree of automation, human-machine collaboration, wearables, local & additive manufacturing), new materials, automated & autonomous vehicles, V2X technology, Advanced Driver Assistance Systems (ADAS) and components, machine learning, alternative drive systems (electrification) & storage/refueling technology and infrastructure, electronics and electrical systems, software, mobility services & new business models. New value streams are expected to emerge from digital services, connected & automated cars and on-demand business models as OEMs transition from traditional manufacturers of physical assets (i.e. vehicles for individual, ownership-based transportation) to mobility service providers. Investments and strategic alliances in related fields will further determine the position and market shares in the auto industry of tomorrow.
current trends