Auto Parts

OEMs have modified their attitudes toward suppliers and are encouraging value-added partnerships in which Tier One suppliers take on more risk inherent in vehicle development programs. By taking on more assumed responsibility, typically they must provide multiple, related components in a system or modular form that cuts assembly complexity and inventory costs, in exchange for a steady expansion of the relationship and lengthening of commitments.

At the same time, automakers have been allying themselves with other OEMs to form a group strong global alliances. These trends have created a big incentive for suppliers to meld into a smaller number of major systems integrators that can supply OEMs across the globe. Such consolidation will continue at a fairly robust pace through the middle of the decade.

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