CSM Worldwide to Auto Suppliers: North American Market Holds Opportunities in New Places

DETROIT, Aug. 26, 2003 -- The North American automotive market may not get the attention of a burgeoning market such as China, but it remains an important base of opportunity to automotive suppliers that can adapt to the changing landscape. This was the message from CSM Worldwide at a recent client briefing, a message meant to counter reports and supplier statements that the North American industry fails to offer business prospects.

Looking at economics, sales, production and global issues, CSM analysts examined the North American market. What they see is a mature market that is experiencing shifts in OEM leadership and purchasing strategies, yet a market that offers profit-making potential to suppliers with the flexibility to change and adapt. A recap of the highlights:

* The U.S. economy continues to show signs of recovery. Interest rates and inflation are low while productivity and disposable income are on the rise, but it's a different kind of recovery for the auto industry. The permanent elimination of industry jobs, high consumer debt and an almost complete lack of pent-up demand are all contributing towards a softer snapback compared to previous recoveries.

* North American sales volumes are forecast to remain healthy. By 2008, CSM calls for N.A. sales to reach almost 20.5 million units, 17.3 million in the United States. The market is also set for a product explosion, with 248 new model introductions or major revisions through the 2006 model year. With such a high level of competition, brand equity will play a large role in separating winners and losers.

* While short-term vehicle production rates will remain stable, it's important for suppliers to view the market as highly volatile, especially with the expected plethora of new vehicles and variants. The key for suppliers will be to remain flexible and embrace lean manufacturing techniques to accommodate variability in production schedules.

* The long-term North American production outlook shows consistent growth, but it's no doubt sobering for The Big Three. GM, Ford and DaimlerChrysler are facing a combined negative annual growth rate of 1.6 percent through 2008, while the New Domestics will grow at 7.2 percent per year. Supplier opportunities will also exist with luxury brands, as output is set to expand in North America. Contracts for luxury vehicles are often an opportunity to deploy advanced technologies, which can later migrate to lower- cost vehicle segments.

* Compared to the global auto market, North America's position is changing. Adapting to global rationalization will be paramount over the next decade, and significant import and New Domestic offerings will continue unabated. While overall production volumes will be there, suppliers will have to adapt to new players and purchasing strategies.

CSM Worldwide supports more than 350 automotive suppliers with global market intelligence and forecasting services. With corporate offices in Detroit, CSM Worldwide covers the global automotive environment from London, Brussels, Frankfurt, Budapest, Sao Paulo, Tokyo, Beijing, Shanghai and New Delhi.