More attention will fall on sales, service and customer support

ED RICHARDSON
THE CURRENT number of 5 500 suppliers will shrink to about 2 800 by 2015, and the 12 independent automobile manufacturers today will be whittled down to nine or ten, according to the Future Automotive Industry Structure (FAST) 2015 study by Mercer Management Consulting and the Fraunhofer Society.
According to the study, automobile makers will be devoting much more attention to post-production activities, such as sales, service and customer support. A number of reasons will prompt them to focus on this “downstream” business.
Contact with customers and brand image are destined to become the critical success factors in competition. The high level of international production standards and the faster rate of obsolescence of technology allow less and less room for product differentiation. Thus, brand differentiation will increasingly be sought in the brand experience.
As automobile makers focus more and more on the downstream end of the business, development and production will be shifted increasingly to the automotive suppliers. Already, automobile makers develop and build only about 35% of their autos themselves and by 2015 this share of production will sink 23%, the rest being built by suppliers and service providers. The vehicle components most affected by this trend will be the body, sheet steel, paint and chassis. Furthermore, automobile makers will increasingly withdraw from the production and assembly of modules.
According to the study, very few automobile makers intend to increase their own production through 2015 in absolute terms. In particular, the mass-market brands will decrease their own production share by up to 30% and their total own production terms will fall by 15%. This trend will affect brands like Chrysler, Ford, Citroën and Nissan. Premium brands like Audi, BMW and Mercedes-Benz, on the other hand, will increase their own production in carefully selected areas. Finally, all brands will see a significant increase in the volume of outsourced production that has to be managed, which will more than double in some cases.