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Home » Auto suppliers are headed for a shakeout
Forward Thinking

Auto suppliers are headed for a shakeout

September 22, 2009
Supply Chain Quarterly Staff
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Asian and European auto suppliers are likely to take over their distressed counterparts as that industry undergoes consolidation, according to the results of a study of more than 350 automotive suppliers conducted by the consulting firm PRTM of Waltham, Massachusetts, USA. PRTM singled out China's Guangzhou Automotive Components and Weichai Power Company as leading suppliers in the auto industry that are well positioned to buy suppliers in other countries. Others topping the list of companies that are likely to buy up competitors include large, successful auto-parts suppliers in Japan and Europe.

PRTM said that the greatest number of bankruptcies and buyouts is likely to occur among suppliers of chassis and electrical and electronics systems. The report pointed out that chassis systems, which include brakes, steering, axles, and suspensions, require considerable capital to produce, hence any drop-off in order volumes quickly affects those suppliers' profitability. Dietmar Osterman, global lead director of PRTM's automotive industry practice, said that pressure for mergers and acquisitions will be especially strong for the more than 120 chassis suppliers worldwide, as this segment has a number of strong buyers as well as very weak companies. As for makers of automotive electronics, this segment represents the "future of the vehicle industry," and many suppliers will want to buy a company in that area to add such capabilities to their businesses, he said.

Only one U.S company made PRTM's list of the 10 top global suppliers. Glass and paint manufacturer PPG of Pittsburgh, Pennsylvania, was placed on the list because it is highly diversified in other industry sectors besides automotive. PRTM predicted that several of the remaining 31 North American auto suppliers will either declare bankruptcy or be acquired.

Source: "Several Chinese Auto Suppliers Likely To Emerge As Leading Global Consolidators, PRTM Study Finds," www.prtm.com Press Release, August 2009

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