Abstract
Outsourced Exterior Systems and Modules Gains in Popularity
The need to concentrate more on vehicle-related services and ensure faster development and
assembly time is compelling most automakers to transfer the manufacturing and assembling of external
modules and systems to Tier 1 suppliers. This strategy would not only reduce infrastructure
investment, but would also assure greater quality and responsiveness to market needs. Since 65 to 80
percent of the value of a vehicle is related to the supplier, automakers need to be cautious in
selecting a supplier with the right technology portfolio and the necessary expertise to bring in
cost savings. It is equally crucial for suppliers to offer strong system level innovations and
integration capabilities for highly optimized systems.
This Frost & Sullivan research service examines the North American automotive exterior
modules and systems market, segmenting it into front end, door, roof, and rear end modules. It also
discusses the various market trends and opportunities while providing in-depth analysis of market
share, forecasts, market drivers and restraints, and revenues. Strategic recommendations offered in
this study enable companies to align their positioning strategies to benefit from the changing
market conditions and obtain maximum return on investment.
Suppliers Innovative Solutions Allows Automakers to Target Niche Segments
The ability to cater to niche segments has become vital to meet the diverse tastes and
preferences of consumers around the world and to make a mark in todays competitive automotive
business. With automakers introducing more niche vehicles, suppliers ability to contribute to value
addition and vehicle differentiation are gaining importance. "By collaborating with tier 1
suppliers, automakers can focus on the total vehicle, manufacturing multiple vehicles from the same
platform, in the same plant," explains the analyst of this research service.
Moreover, there is greater emphasis on creating a strong brand name and increasing customer
loyalty to stimulate repeat purchases. With suppliers offering high-quality ready-to-install
components for quicker product launches, automakers can focus more on marketing and branding,
product positioning strategies, and warranties.
Collaborative Efforts Opens Up Huge Opportunities for Suppliers
Modular configuration combined with the increased technological complexity of vehicles components
necessitates stronger cooperation in design activities between automakers and suppliers. In such
partnerships, tier 1 suppliers assume the responsibility for the coordination of sourcing individual
components and most importantly tight functional integration of exterior systems and modules.
The suppliers are not just fabricators, but comprehensive engineering centers where capabilities
in areas such as project management, organizational project standards, ramp-up management or
purchasing are crucial to the overall success of a vehicle platform. "With production synergies
becoming increasingly difficult to achieve and margins depressed, tier 1 and tier 2 suppliers are
forced to continue searching for additional added value or cost reductions," says the analyst.
"In many cases, this has taken the form of producing complete systems, and exterior modules are
a prime example."
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