U.S. Auto Parts Manufacturers Facing Serious Challenges From the Global Supplier Industry
Like many other industries, the auto parts market is highly diversified. Suppliers work worldwide on every continent but Antarctica. Globalization has drastically reshaped the automotive industry in most countries including the United States, India, China, Japan and South Korea, but especially in developing countries where domestic carmakers are under severe competitive pressure from foreign suppliers.
Most of the auto parts that an average family car or a sports car will need can be found locally, even in the United States. However, for more expensive and sophisticated vehicles, like those imported from Europe or Asia, it is advisable to find the part online. For example, in the United States the engine bay is typically made of stainless steel. This is because steel is inexpensive and easily molded into many different shapes and sizes. There are also special auto parts suppliers that make their own customized vehicles or parts for foreign automobiles.
A premier auto part supplier in the United States is Robert Bosch. Robert Bosch is a German based manufacturer and part maker of precision bearings, pump systems and timing devices. The company was established in 1923 and it began with the manufacturing of precision bearings for aircraft engines. In recent years the company has expanded into other areas including the automotive industry.
With the emerging economies of Asia, Latin America and Africa the automotive industry of the developed world is undergoing changes as well. These emerging economies are producing cars at a much higher volume than the traditional car makers in the United States and Europe. The automobile manufacturers of these emerging economies are also looking for ways to lower their manufacturing costs and find new markets. Since the introduction of the ethanol fuel additive in gasoline in the 1940s the auto parts manufacturing industry of the western world has had to change with the times. Today’s cars are much more fuel efficient and the auto parts needed to support these changes have to keep pace too.
In this period of dramatic change in the global supply chain for auto parts has been transformed as well. Many of the traditional suppliers of auto parts are now part of the “third world” supplier industry. They have made deals with the emerging economies of Asia, Latin America and Africa. These countries have open markets for auto parts and are eager to purchase them from any supplier who can provide them at the lowest cost.
If you have any experience in international trade, you will be aware that when exporters move their factories from one country to another there are many changes in the way they conduct their business. They tend to expand their sales force so that they have a greater number of outlets in these other nations. They also tend to buy cheap labor and use these low-cost services to underbid the established suppliers. As a result of these actions the price of the goods that enter the country via the trans-national route reduces drastically. This is why the Japanese suppliers are having difficulty in maintaining their current market share in the global auto parts market.