An aluminium casting company that is steeped in tradition has to restructure its production and organisation to react to the new challenges of electromobility and the disappearing demand for internal combustion engines.
German manufacturers of electronics systems and electrical products are suddenly the main focus of the German automobile manufacturers.
The list of examples is long: the current upheaval in the automotive industry – from internal combustion engines to electric propulsion – and the related restructuring of OEMs’ supply chains is forcing a large part of the automotive component supply industry to reposition itself in relation to electromobility. In addition, this is allowing companies from outside the sector (e.g. from the mechanical and systems engineering area), which are coming to the attention of the OEMs as a result of the technological upheaval, to position and establish themselves as long-term and strategic suppliers.
Advantages as a supplier for the automotive industry
The automotive industry is known for its exacting standards and difficult contract negotiations. Nonetheless there are a number of factors in favour of this competitive industry:
- Due to the very high volumes of purchasing, and the long timeframes contracts are awarded for, attractive economies of scale can be realised.
- The high costs for OEMs to industrialise supply chains, and long-term and strategically focused production plants guarantee a high level of location security. As the new technologies, especially in the area of electromobility, are associated with high levels of investment on the part of suppliers, the market for suppliers offers great opportunities as a result of the low number of competitors.
- From the OEMs’ point of view therefore, long-term supplier development and cooperation presents an advantage to allow strategic partners to compensate for a lack of expert knowledge.
- In addition, competition in the automotive industry is greatly dependent on the functions and technologies integrated into vehicles (technological leadership). The supplier thus exchanges information with the OEMs on new innovations and technologies on an ongoing basis. This offers innovative technology companies and start-ups the possibility of positioning themselves as potential suppliers for the OEMs.
Opportunities for the suppliers
The strategic opportunities for suppliers can be broken down into three different areas. Horizontal integration – development of a broader product portfolio and the use of synergies and economies of scale, vertical integration – increasing added value by integrating upstream and downstream process steps, or diversification – restructuring outside of existing core competencies.
Know what the customers want
Whether restructuring or a newcomer, the automotive industry is characterised by a multitude of requirements and quality standards. Through our long-term collaborations with a large number of German OEMs, you can rely on our dedicated expertise to plan for the future in as long-term and sustainable a way as possible. In the process, KBC will support you in focusing sales strategies and all the way up to the preparation for the nomination of OEMs. So what does that mean in practice?
- Before contracting: Analysis and processing of market and competitive information, networking with the OEMs (introduction and placement), analysis of individual core competencies.
- For contracting: Implementation and support in creating the proposal – from planning, costing and simulations, to supplier management and the associated purchased parts and plant.
- Nomination: Development and optimisation of an efficient negotiation strategy as well as proposal amendments and follow-up work.