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Automotive suppliers

Navigating economic and geopolitical hurdles, revamping strategies, and forming strategic alliances are essential for automotive suppliers to stay competitive and drive innovation.

What’s going on

The global automotive supplier industry is experiencing a fundamental shift. Traditional business models are being redefined by evolving market demands, technological disruption and value chain realignment. To stay competitive, suppliers must make strategic investments and embrace advanced technologies to drive innovation and position themselves for long-term growth.

5 ways automotive supply is changing

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Geopolitical shifts and cost pressures

Automotive suppliers face economic uncertainty, inflation, and high costs, intensified by supply chain issues and geopolitical tensions. Weak EV demand—amid reduced incentives—slows momentum, despite ongoing electrification investment. To stay resilient, suppliers are rethinking strategy, optimizing investment, and sharpening growth goals.

Electrification and software-defined vehicles

The rapid shift toward software-defined vehicles (SDVs) and electric vehicles (EVs) is reshaping the automotive supplier landscape. European players face mounting competition from advanced Chinese brands, intensifying the race for technological leadership. To stay ahead, suppliers must scale digital capabilities, embedded software expertise and electrification investments.

Partnerships

Value creation in the automotive industry comes from dynamic networks where traditional and non-traditional players collaborate by sharing data, co-developing platforms and integrating products and services. To stay competitive, suppliers must forge strategic partnerships with OEMs, tech firms and mobility innovators to accelerate innovation and speed to market.

Industry consolidation and M&A

Automotive suppliers are undergoing a wave of consolidation, reshaping portfolios to align with the future of mobility. Many are pursuing tech-driven M&A—acquiring software firms and startups to boost innovation. Success will hinge on making strategic acquisitions, accelerating digital transformation and integrating next-gen technologies.

Sustainability and circular economy

Sustainability and circular economy are now strategic priorities, reshaping business models. As OEMs raise environmental targets, suppliers must adopt greener tech and practices to stay competitive. Though it demands major investment, this shift lets suppliers stand out as leaders in environmental performance.

What you can do

Accelerate time to market, minimize quality defects and create a feedback loop between end-customer and research & development.

Increase agility and resilience in unpredictable environments; reduce costs through synergies between plants; and lower the overall carbon footprint.

Outsource non-core and low-value tasks to reduce costs and focus on core business activities, enhancing efficiency and competitiveness.

Leverage AI and generative AI technologies to drive cost efficiencies, enable advanced simulations and "what-if" capabilities for better decision-making, and unlock new opportunities for innovation and operational excellence.

Form strategic partnerships with leading technology companies to capitalize on their significant investments in cloud computing, data analytics and artificial intelligence.