As BorgWarner’s acquisition of Delphi Technologies shows, tier one automotive suppliers are turning to acquisitions and restructuring their business to focus on advanced technology, helping to protect margins, avoid commodification and transition to electrified powertrains
In our latest report focused on the operating profits of major automotive suppliers, a general trend emerges of margins under stress, with most companies on a downward trajectory.
However, those suppliers with better performing margins are often those producing more dynamic, specialised technologies, for example in advanced electronics or driver assistance systems, rather than those focused on highly commoditised products, such as seats or mechanical engine parts.
We expect that this divergence in financial performance is likely to continue as vehicles take on more sensors, electronics and software. If suppliers are to protect their profit margins, they will need to offer more than products available at the lowest bid.
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OEMs are rushing to bring out more electric SUVs in a bid to meet emissions targets and protect margins. But they will require innovations in design and engineering to stay desirable and competitive in an increasingly crowded field
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You asked, we answer. We return to the questions from our audience that we didn’t have time to answer in our live webinar, ranging from which parts of automotive tier 1 suppliers’ business models are at risk of commodification, to how tier suppliers are changing supply chain processes
