A squeeze on automotive suppliers, together with the adaptation of new technology, will lead some major players to play a bigger role in overall vehicle development cycles, especially in shaping customer user experiences
At first glance, there does not appear to be much of a link between car design and the relative profitability of automotive tier 1 suppliers. However, rising costs and pressure on margins are transforming the business models of major global suppliers – with many putting a greater focus on data, software and a variety of design services alongside traditional hardware and engineering.
In our report analysing the profit margin development and business strategies of the top 20 global automotive suppliers, we found a trend among some companies to mitigate declining profit margins by attempting to capture more value across the development cycle. That includes transitioning more to ‘full service’ supplier relationships, such as ‘build to suit’ processes with automotive OEMs, alongside more standard ‘build to print’ services.
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