TRAVERSE CITY, Michigan -- Supplier executives, beware: You might soon get commoditized.
The global industry transition to electrified propulsion will render many companies secondary suppliers in the next few years as automakers increase reliance on complex electric systems with fewer outsourced parts, a new global automotive supplier study from Deloitte argues.
The study findings were released Monday on the eve of the Management Briefing Seminars here.
The coming shift in vehicle sourcing will require supplier executives to take a new, hard look at what roles they are prepared to play in the supply chain.
The consulting firm's fourth annual Global Automotive Supplier Study, to have been released Monday, recommends that supplier executives realistically examine whether their businesses operate in growing, stagnant or declining product segments. With automakers investing heavily in electrification, autonomy and other mobility trends, suppliers need to think strategically, said Neal Ganguli, Deloitte's U.S. automotive supplier practice leader and one the four authors of this year's study.
"We believe what suppliers need to do is really take a look at their product portfolio and figure out, 'What does this mean for me? There are pieces of my portfolio that probably need investment for growth, there are pieces of my portfolio that potentially are stagnant and or declining," Ganguli told Automotive News.
The strategies to successfully navigate each segment are different, he said.
"If you're playing in a stagnant segment," Ganguli said, "go for skill, go for consolidation, go for cost leadership and efficiency. Somebody is going to consolidate that market, and it's just that it's going to be a commodities market."
The strategy will be different depending on whether demand for a company's product is likely to grow or decline in the face of electrification, he said. And suppliers that serve multiple segments will want to narrow their business focus, as companies such as Visteon and Aptiv have done, Ganguli said.