Thursday, May 28, 2009

Trend #5: Forming More Global Alliances

Globalization in the automotive industry is playing out in many ways. Many OEMs and their suppliers are moving operations to new, lower-cost areas. Meanwhile, other regions like China, Russia, and India are emerging as major factors in automotive consumption and production. China is, by far, the most dramatic new player in the automotive industry. It is now the third largest car market after the U.S. and Japan, and automakers have only scratched the surface of the potential Chinese market. Every major OEM now has established operations in China, and many are pressuring their suppliers to follow them. Suppliers will be solidifying an increasing number of global alliances throughout their own enterprise and that of the OEMs. To survive the requirement for globalization, suppliers will need to diversify not only their plant locations, but also their customer base. They will form new alliances with companies based in foreign locations, maximizing their revenue but adapting their value-added products for local OEMs as well as for the domestic OEMs they have followed overseas or across borders. They will exploit the new markets by becoming an integral part of the economies in which they operate.

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