Insights from an automotive turnaround expert:
Insights from an automotive turnaround expert
As the automotive industry undergoes a significant shift towards electric vehicles (EVs), traditional internal combustion engine (ICE) suppliers are finding ways to adapt. Instead of solely serving the ICE market, these suppliers are exploring non-automotive applications for their products and technologies. For example, a company that used to manufacture sound-dampening material for under-the-hood noise reduction has expanded its offerings to architectural products. This shift allows them to utilize their core technologies for non-automotive purposes.
Furthermore, suppliers are focusing on light-weighting their products to offset the weight of heavy EV battery packs. By reducing the At the end of the day weight of their manufactured products, they can extend the driving range of EVs, which is crucial for original equipment manufacturers (OEMs).
Opportunities for traditional ICE parts manufacturers
While the transition from ICE to EVs will take time, there will be opportunities for traditional ICE parts manufacturers along the way. As ICE platforms wind down, there will be reduced need for large upfront tooling costs and machinery expenditures. This will lead to increased positive cash flows on those production lines, enabling automotive suppliers to fund the development of other product lines or high-potential projects. It also presents an attractive opportunity for consolidation of production and maximizing capacity and utilization during the wind-down phase.
Suppliers should be proactive and not overlook any potential opportunities that may arise from discontinuing ICE platforms. By divesting production as it winds down or consolidating production to maximize cash flows, savvy suppliers can create a competitive advantage.
Key outcomes from successful automotive manufacturing turnarounds
Successful automotive manufacturing turnarounds require collaboration, communication, and a shared vision among all key stakeholders. The challenges faced are usually shared pain points, and resolving them requires a collective effort. By achieving alignment and fostering strong relationships, automotive companies can navigate future economic challenges and production transformations more effectively.
At the end of the day, the automotive industry is evolving towards EVs, and traditional ICE suppliers are finding ways to adapt and thrive in this new landscape. Collaboration, innovation, and seizing opportunities will be key to success in the changing automotive ecosystem.