The need for megasuppliers is growing as automakers seek to produce their vehicles in multiple locations around the world. This trend played a part in the formation of Yanfeng Automotive Interiors, the U.S.-Chinese joint venture that is now the world’s largest supplier of automotive interiors with annual sales of $8.5 billion.
YFAI was created last July when Yanfeng Automotive Trim Systems joined with the vehicle interiors arm of U.S.-based Johnson Controls Inc. YFAI CEO Johannes Roters explained why consolidation will continue during a recent interview with Automotive News Europe Managing Editor Douglas A. Bolduc
Is the recent formation of Yanfeng Automotive Interiors an example of the growing need for suppliers to become even bigger and more global?
I think consolidation will continue to happen. Why? Because of the growth that has taken place since I started my automotive career in 1982, especially in Asia. It simply happened. Asia, including China, is the biggest automotive market, and the other mature markets are very solid and had good 2015 sales numbers as well.
What role have the automakers played in accelerating the supplier consolidation trend?
Look at Daimler and the Mercedes C class. They produce this car in China, Germany, the U.S. and South Africa. They need to guarantee the same quality everywhere. That means you need suppliers that can respond globally. The interior business is very capex intensive. You need a certain size to generate enough cash so you can make this investment, set up the footprint and connect to different regions. You also need global standards in place so that you can deliver the expected quality to the customer in the same way around the globe.