The latest Global Automotive Barometer survey indicated a positive business climate in the automotive supplier industry and a continuing strong momentum of the Chinese auto market.
According to the survey, the outlook for the global automotive supplier industry looks much more favorable than it did a few months ago.
Among about 200 executives from global automotive suppliers who took part in the survey at the end of last month, more than 90 percent of suppliers now expect a more positive business climate than last year, and three-quarters of participants questioned foresee double-digit business growth.
The survey, conducted by A.T. Kearney, a global management consulting firm, shows that the growth prospects for suppliers are predominantly seen in China. As a consequence, the establishment of local capacities in China – not only for manufacturing but also for new product engineering – is set to be increasingly important.
On the other hand, suppliers are also aware of barriers to market entry and growth in China. Competition is perceived as being more intense than in their respective home markets, while labor costs are expected to rise significantly, and the majority of suppliers see weaknesses in the infrastructure and in legal protection.
"Whereas at the end of last year, growth expectations for 2010 were quite modest, the majority of automotive suppliers now view prospects for the next 12 months more positively. The majority of participants in the survey are even envisioning double-digit growth in 2010," said Martin Haubensak, partner of the Global Automotive Practice at A.T. Kearney. "Only 4 percent expect a negative business climate this year. This appraisal is supported by an anticipated increase in orders in the current year."
According to the survey, expectations with regard to supplier insolvencies are also changing: while one year ago most participants in the Global Automotive Barometer survey foresaw an increase in insolvencies, only one-third are of that opinion this time. More than one-third even expect a decrease in financial distress.
However, the skeptical view of suppliers regarding the stability of automotive OEMs (original equipment manufacturer) remains unchanged. Most suppliers still expect some of their OEM customers to fail economically over the next three years.
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