Automotive Engineering - December 2024 - 3

SUPPLIER EYE
Ode to 2024
A
s I write this version of the Supplier
Eye column, 2024 has been a critical
year for our industry. No matter if you
are a supplier, OEM or some other position
in the ecosystem, this year has set us up
for feast or famine through this decade. Let's
explore why this year will go down in the record
books as a pivotal one.
Editorial timing dictates that this is submitted
just before the U.S. elections. While you will read
this with the election in the rearview mirror, all
indications are for an extremely close political
outcome, though the ensuing weeks will be the
final arbiter. The outcome nonetheless will impact
our industry for years.
First will be the trajectory for U.S. light vehicle
emissions legislation. California's famed GHG
waiver (ability to set their own emissions legislation)
and funding of the IRA (Inflation Reduction
Act) will drive U.S. hybrid and battery electric
propulsion adoption rates. How OEMs and suppliers
adjust will dictate future viability.
Second, the election outcome will impact the
scheduled 2026 renegotiation of the USMCA
trade agreement. Suffice to note that it may not
matter which U.S. party wins, the current USMCA
will likely change - especially with respect to U.S.
value add criteria and Mexico's future role. Look
for much energy to be driven in this direction as
suppliers and OEMs alike seek to optimize their
footprint given possible trade-driven shifts.
Other market shifts will impact the trajectory
of the global industry past 2024. Specifically, the
rise of China-based OEMs and the implementation
of tariffs in the U.S., Canada and EU on
China-made EVs will impact competitive dynamics
for several years. These tariffs will likely draw
reciprocation from China with one possibility
Michael Robinet
Executive Director,
Consulting,
S&P Global Mobility
SAE Foundation
Trustee
michael.robinet
@spglobal.com
China is likely
to focus its
attention,
for now, on
other export
markets for
their offerings
and possibly
seek to build
vehicles within
North America
or the EU.
being tariffs on imports from North America or
Europe. This would further burden Western
OEMs should exports be stunted. China is likely
to focus its attention, for now, on other export
markets for their offerings and possibly seek to
build vehicles within North America or the EU.
Conversely, there's the volume decline of
Western-based OEMs in mainland China, which
has not solely occurred in 2024 though the industry
is finally coming to grips with the incredible
share decline. According to the S&P Global
Mobility Light Vehicle Production Forecast,
Western OEM production share will slip from
35.9% in 2023 to less than 30% this year. That
equates to a reduction of seven vehicle assembly
plants with annual capacity of 250k - more
than 1.7 million units shifted in one year. As recently
as 2019, Western OEMs accounted for
53.5% of production. That's an incredible swing
which may continue through this decade and
impact global volumes and scale dynamics for
Western OEMs. Without a strong mainland China
market presence, Western OEMs will need to
focus more effort on success in the EU, North
America, Japan or South Korea. All markets
which are not expected to grow that the same
pace as mainland China through the decade.
Lastly, there's the pace of EV adoption and
investment profiles for battery plants/critical mineral
acquisition and refinement. Scores of OEMs
and suppliers have delayed, rescoped or cancelled
plans for EVs - instead extending ICE programs
while also integrating more hybrid structures
as a bridge to the future. These seismic
shifts reverberate through the supply chain with
footprints, investments and, in the end, profitability
hanging in the balance. 2024 will leave its imprint
on the industry for years to come.
AUTOMOTIVE ENGINEERING
December 2024 3
Automotive Engineering - December 2024

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