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2016 RSM Automotive Monitor Survey

Insights into trends and changes in the automotive supplier industry

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After six consecutive years of sales growth—and anticipation of at least three more years of revenue increases—automotive suppliers for both original equipment manufacturers and the aftermarket have reasons to be optimistic. About one-third of suppliers report revenues increasing by 11 percent or more; the percentage of aftermarket suppliers reporting profitable years has only a slight edge over OEM suppliers.

Nearly half of the suppliers participating in the 2016 RSM Automotive Monitor survey are thriving; a significant majority expect not only revenues to increase in the coming months, but employment and profits as well. Many suppliers are planning to increase their investments in information technology, equipment and machinery, and research and development. A majority of those surveyed expect the entire auto industry to improve—some think substantially—for the next three years. 

Yet there may be some reasons for concern that are worth watching. While the current interest rate environment does not appear to present substantial challenges, the potential for interest rate increases was a significant concern of Monitor participants, second only to weakening economies. Pressures from OEMs on pricing, changing requirements and erratic schedules are worrisome (if perennial) issues. Labor concerns—including rising employee costs and the shortage of engineers—may impair growth for some suppliers.

For auto suppliers to achieve their ambitious expectations, a number of areas should be considered:

  • Growth: As suppliers make plans for growth, executives will have to accommodate Corporate Average Fuel Economy standards, fuel source and materials innovations, changing demographics, new regulatory standards and evolving consumer demands.
  • Global: U.S. companies making strategic decisions to take advantage of international markets will need to keep in mind that many non-U.S. suppliers are planning to enter or expand their presence in the United States. 
  • Technology: The high level of change in technology—particularly in fuel sources and materials—will generate opportunities but also will challenge both OEM and aftermarket suppliers to prepare for the new service requirements to come.
  • Margins: Auto suppliers are optimistic about profit growth in the coming months, and most are planning to increase profits through cost reductions, pricing increases or product discontinuation.
  • Risk: Many OEM and aftermarket suppliers do not have secondary products. In a sector-driven economy, this can be a questionable strategy that makes their companies vulnerable to downturns.

The perspectives of C-level decision-makers in companies from countries around the world provide a unique insight into the automotive industry. The analysis provided here is designed to spark discussions that can help drive individual companies and the industry forward in the months and years to come.

Survey methodology

The RSM Manufacturing Monitor survey was conducted by an independent research firm, The MPI Group, Inc., an independent research firm, on behalf of RSM US LLP and its affiliated international firms. There were 1,174 total valid respondents to the 2016 Monitor survey, with completed questionnaires received in March and April 2016. Responses were received by MPI, then entered into a database, edited, and cleansed where necessary to ensure answers were plausible. The information provided is confidential and accessible only by RSM and MPI. Monitor data will be shared with third parties only in aggregate form, through RSM articles, white papers and presentations.

 

 

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Steve Menaker 
National Industrial Products Practice Leader

800.274.3978


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