Automobile production makes up America’s largest manufacturing sector and contributes about 3.5% to the country’s total GDP. The millions of jobs associated with designing, producing, and supplying components to assemble, sell, and service new vehicles play a huge part in fueling the US economy. Additionally, America’s automakers are among the largest purchasers of aluminum, copper, iron, lead, plastics, rubber, textiles, vinyl, steel and computer chips.
Over the last five years, disappointing sales and cost cutting initiatives to match the down global economy have hampered industry growth. But even amid continuing high oil prices, the lingering effects of the bailout, and scaled-down production levels, there are signs of a slow recovery. Economic after-effects have changed the landscape of the Automotive market, but they have also created opportunities for companies to capitalize on its recent transformation. Major costs remain as labor, materials, and advertising, but continual strides are being made to curtail these through increased manufacturing efficiencies and procuring better / lower cost materials.
The largest threat to the US market continues to be increased foreign competition, or globalization. To remain competitive, the Big Three and other automakers must design vehicles that meet consumer demand in both mature and emerging markets, all the while producing them at lower costs using the most advanced technologies. Many continue to shift their production facilities from high-cost regions such as North America and Europe to lower-cost regions such as China, India, and South America.
According to a study by CSM Worldwide, China and South America together are projected to represent more than 50% of growth in global light vehicle production in the Auto Industry until at least 2015. Chinese automakers will upgrade their technology to meet international standards, while Indian automakers will venture into international markets by introducing innovative products. Although automakers continue to shift production facilities to new regions driven by cost and demand factors, developing supplier networks is a great challenge as existing suppliers often lack the financial strength to expand capacity into these new markets.
At Synergetics, we have a depth of experience from having served a number of facets of the Automotive sector. We have advised both leading manufacturers and downstream suppliers on engagements designed to enhance revenue, strengthen operational efficiency, and decrease costs. Our experienced team of consultants can assist businesses in delivering sustainable returns. We believe that common challenges are:
– Delivering more to customers on a faster timeline while maintaining cost efficiency,
– Standardizing internal processes but differentiating those to the end user,
– Ensuring that cost management does not compromise perceived quality,
– Translating global standardization efforts into segmented regional propositions,
– Focusing the portfolio strategies for delivery in high-growth markets, and
– Stressing the importance of having a flexible and efficient supply chain model.
Related Case Studies
INSURANCE AUTO AUCTION & ADESA (Featured Study)