How Are Auto Industry Firms Facing Change?
The global auto industry is highly concentrated, with a handful of global MNCs dominating design and development in the main markets. While most vehicles are centrally designed, local markets require customized designs. Parts and assemblies are typically produced in more than one region. Design and buyer-supplier relationships typically span multiple production regions. Increased outsourcing has led to a bundling of value chain activities in supplier firms, which often have superior capabilities.
The international auto industry was savaged last year by the financial crisis. While the overall credit risk in the auto industry was impacted globally, regionally, and nationally, not every firm was hit hard. In fact, some firms even saw their credit quality improve during the crisis. This suggests that auto manufacturing remains a major sector of the world’s economy. But how is this sector changing? Are companies in the auto industry embracing change and adapting to the changes?
A new study has examined the importance of global supply chains and their relationship to value creation in Portuguese auto industry firms. Using online questionnaires, quantitative research was conducted on the auto industry firms in Portugal. The results were validated with the use of descriptive statistics methodologies and correlation analysis. Statistical analysis of the results allowed the researchers to make conclusions about value creation. The findings indicate that this industry is an essential part of the overall economy and contributes to Portugal’s competitiveness.
The auto industry is now stepping up its borrowing to keep pace with the global economy’s slowdown. In the past few years, six major European automakers have issued $133 billion in bonds or loans. And there are more loans and bonds on the way. In addition, a large number of auto parts suppliers and retailers have also turned to the capital markets. A total of $133 billion in automotive-related debt has been raised in just three months, which is more than the industry has raised in any single quarter.
The automotive industry is shifting toward a seamless digital experience, powered by advanced technologies and customer data platforms. Although pandemic-conscious consumers are still wary of physical locations, automotive OEMs are providing safer, remote alternatives for shopping and service. In a recent survey, seventy percent of automakers and dealers reported a decrease in physical traffic while a significant increase in online traffic. The automotive industry is embracing digital first experiences to meet customer expectations.
Saltillo, Mexico, is home to several auto-related industries. Chrysler and General Motors both have assembly plants in the city. Daimler Chrysler also has two plants in Saltillo, one for automobiles, the other for engines. The town also boasts several Tier 1 supply companies, including Arnecom, Brown Corporation, Cooper-Standard, and Delphi Technologies. Located in the Saltillo Valley, Saltillo is a great place for automakers and their suppliers to do business.