The competitive pressure of technology companies makes transformation inevitable for automotive suppliers
After several years of continued growth, revenues and margins for OEMs and automobile suppliers are now under pressure. Facing with competitive pressure from technology companies, OEMs and suppliers are now looking to reducing their cost base, making investments in technology and building up new competencies.
In our Standing on the Verge of Momentous Change: Automotive Supplier Industry in Turkey report, new partnership models driven by the new competition environment and the business models questioned by the suppliers are discussed.
According to the report, Turkish auto suppliers can aim for extending their product portfolio to technology-intensive products by help of the important experience gained on developing products and vehicles in the last decade. Also, Turkish labor market has a lot to offer for attracting global auto suppliers looking for cost reduction. However, auto suppliers should decide on their strategy over cost leadership or technology leadership.
Key Lessons
Strategy on Firm Level: Auto suppliers should decide on their strategy over cost leadership or technology leadership.
Strategy on Country Level: Government and companies should work together to set up the value chain positioning and organize division of tasks in order to prevent “everyone-fighting-with everyone” industry model.
Roadmap Design: Firms should engage in roadmap planning, setting target levels and implement commitment to these levels.
Partnerships: Firms should update their cultural mindset for new partnerships with digital / technology companies.
Opportunities on the Horizon
OEMs
The subsystems of motor, electronics and software are becoming new focus areas.
Location advantage
Turkey offers a great place to produce for East Asian companies targeting Europe market.
Building on existing capabilities
By choosing the right partner for joint ventures, Turkish auto suppliers can aim for extending their product portfolio to technology-intensive products.
Strong Labor market
To attract global auto suppliers looking for cost reduction, the Turkish labor market has a lot to offer.
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