Automotive suppliers can range in scale and size from very large corporations to small or medium-sized companies. They play an integral role in both the manufacturing process and the automotive supply chain. There are also different roles and categories of automotive suppliers which we will further define. Keep reading to discover what automotive suppliers do and how they impact the automotive industry and supply chain as a whole.
What do automotive suppliers do?
Automotive suppliers are commonly defined and referred to as companies that manufacture goods or products that are utilized within the production process of an automobile. This can also be expanded to pertain to companies that supply goods or products to an automobile manufacturer, also known as an Original Equipment Manufacturer (OEM), in any way, be it directly or indirectly. As automotive suppliers play a key role in the automotive manufacturing industry, they commonly supply individual components to OEMs.
Most suppliers within the automotive industry can fall into one of two main categories: those that supply specific automotive parts directly to an OEM, or companies that provide non-automotive-specific parts or services to the supply chain. Although the ladder of the two categories is not always grouped into the automotive industry, they still play a critical role and can impact the automotive supply chain as a whole.
Because of the substantial part automotive suppliers play in the automotive industry, they can also be broken down by the supplier pyramid which allows individuals to better gauge the roles of specific automotive suppliers. The supplier pyramid organizes and orders suppliers ranging from an OEM to the final product, or more specifically, the vehicle – with the automotive manufacturer representing the top of the pyramid. The pyramid encompasses the entirety of the automotive manufacturing supply chain including part suppliers, component, module or system suppliers and original equipment manufacturers.
Automotive suppliers can also be broken down into Tier 1, Tier 2 and Tier 3 suppliers. For more information on Tier 1, Tier 2 and Tier 3 suppliers, and how they can utilize industrial shipping racks from American Manufacturing, read our blog on how industrial automotive racks help with shipping.
Why are automotive suppliers a necessary part of the automotive industry?
As of 2019 automotive suppliers were responsible for creating $510 billion U.S. dollars in shareholder value since the last recession which more than doubled the overall market value from the end of 2008, according to Deloitte. Automotive suppliers are prevalent within the automotive industry both within the U.S. and globally as their services are heavily relied upon.
What does the future look like for automotive suppliers?
The future of automotive suppliers is constantly evolving. Current and future trends shape where and how the automotive industry focuses its efforts. For example, electric and shared vehicles will most likely change how consumers think of mobility in the very near future. Advancements in technology and changes in value may also alter consumer preferences, and in turn, lead automotive manufacturers to shift tactics sooner rather than later.
There are four main forces at play for the future of automotive suppliers: electrification, net entrants, shared mobility and technology convergence, according to Deloitte. Although these forces are already making an impact on the industry, they are still projected to increase. By 2025, an estimated 25 to 30 million light passenger vehicles on the road are expected to be equipped with some sort of electrified powertrain, according to Deloitte.
Currently, in order to keep up with arising trends, there have been numerous examples of OEMs, automotive suppliers and those just entering the industry working together to come up with and implement new business models.
Although ever-changing markets and economies can lead automotive suppliers and the automotive industry as a whole to shift tactics, the need for quality products will remain. In order for parts to be shipped, products to be maneuvered or assembled and goods to be transported, the automotive industry must utilize durable and well-manufactured products.
How American Manufacturing can help
At American Manufacturing, we have worked with the big three automotive companies and Tier 1 suppliers for 50 years by supplying them with quality industrial carts and industrial dollies, along with other various products. At American Manufacturing, our industry knowledge and experience, along with our high-quality products and services, enables us to be a preferred supplier to Chrysler, Ford, General Motors and their suppliers at the same time. We specialize in the high volume production of standard steel containers and will always work to maximize performance and minimize cost for our customers.
For more information, please feel free to contact us or call us at 419-531-9471. We would be glad to answer any questions you may have and talk with you about how we can help your supply chain and manufacturing process be more efficient and optimized for best performance.