Performance and Disruption: A Perspective on the Automotive Supplier Landscape and Major Technology Trends

McKinsey Advanced Industries (March 2016)

Performance and disruption-coverAfter rebounding strongly from the 2008 economic crisis, the automotive supplier industry continues to be a growth engine for the global economy. McKinsey research into the performance of the global top 100 automotive suppliers reveals that automotive suppliers have reached the highest profitability level of the last decade with average profits of almost 7 percent in 2013 and 2014.

The crisis significantly reshaped the supplier industry: in 2004, the top 100 companies delivered roughly 36 percent of industry revenues – a decade later, they controlled half of all sales. This high level of consolidation suggests two future industry models: mega suppliers with superior scale and reach or high-value niche players. The industry has also reshaped itself geographically, largely due to Asia’s new dominance as a car market (disregarding the recent slowdown in China), a change illustrated by the dominance of Asian companies on the current top 100 global supplier list.

The aftermath of the global economic crisis proved automotive suppliers’ ability to survive a setback and come back stronger than ever, but a number of new challenges will further test the industry’s mettle. New technologies present promising opportunities and threaten the status quo at the same time. The biggest disruptors are in the areas of vehicle electrification, in-car connectivity, autonomous driving, advanced manufacturing, and the introduction of advanced materials in the vehicle platform.

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