The Future of the
Automotive Value Chain
Supplier industry outlook 2025 The Future of the Automotive Value Chain | Supplier industry outlook 2025
Preface 05
Unprecedented change in the automotive world
and its potential impact on the supplier industry 06
Four plausible scenarios for the automotive value
chain and their implications for the supplier industry 12
The Deloitte Automotive Value Chain Industry Model 20
Investigating specific material cost developments:
Selected model deep dives 30
Overall model result overview45
Transformation paths towards 2025 for the
automotive supplier industry46
From integrated material cost projections to tailor-made
transformation strategies for automotive suppliers 63
Conclusion 67
Contacts 68
03 %
04The Future of the Automotive Value Chain | Supplier industry outlook 2025
Preface
Automotive players are facing disruptive We worked towards validating all theseconfident that we are bringing valuable
times. Many insights, opinions, and rec- hypotheses by developing the Deloittesupport to the table for automotive de-
ommendations have been voiced on this.Automotive Value Chain (AVC) Industrycision makers when it comes to tackling
Earlier in 2017, we published our views on Model, a comprehensive material cost some of the most burning strategic deci-
the drivers that will likely shape the auto- forecasting tool, which gives volumesions.
motive industry over the next decade. We predictions broken down into a vehicle;s
ranked and fused these into four scenario component clusters. The model shows that We hope you enjoy reading our insights
narratives, giving an outline of what the 15 out of 19 vehicle component clusters and thoughts on the future of the automo-
automotive value chain might look like in will likely see a decline in market volume tive value chain and the related supplier
2025. Our previous issue primarily high- (in Germany, NAFTA and China; not con-markets.
lighted implications for car manufacturers sidering effects from general inflation or
(OEMs). In this next piece we move further spare parts demand). The biggest losers
down the value chain, in an attempt to shed will be components related to conventional Joe Vitale
light on supplier market implicationsbustion engines, e.g. transmissionsGlobal Automotive Lead
dropping up to -36% in volume. Likelyat Deloitte Consulting
We defined a set of four hypotheses as a winners, especially suppliers with stakes in
starting point to our investigation: the fields of electric drivetrains and battery Dr. Thomas Schiller
technology, as well as autonomous driving Global Automotive Consulting Lead
oo Commonly discussed automotivefeature development, on the other hand, at Deloitte Consulting
mega-trends, like connected and auton- must prepare to manage and cater for
omous drive or electrification, will lead to growing demand of up to 15 times their
significant change in demand for specific current volume. Regional projections show
vehicle component clusters that while material cost volumes in Germa-
ny are facing a general decline, volumes in
oo As a result (some) suppliers will face dras- China will increase due to general strong
tically shrinking market volumes, whereas vehicle sales forecasts.
others must be able to manage massive
demand increases Our core premise, however, is that scenar-
io-based thinking is the best preparation
oo This will result in significant, strategic, for dealing with the uncertainties the future
operational, financial, transformation automotive industry developments hold.
demand for many suppliersTherefore, we split each of our volume pro-
jections along our four scenarios for 2025
oo Portfolio and localization strategy defini- and beyond.
tion processes should be supported by
a solid market volume projection model By presenting the Deloitte AVC Industry
taking all these drivers and megatrends Model now to the broader public, we are
into account
05