Strategic Sourcing Pulse

  The automotive industry in 2024 has been a year of disruption, adaptation, and innovation. From the electrification race to global supply chain upheavals, several key events and trends reshaped the sector. As we close this transformative year, let’s dive into the most critical facts that defined 2024 and how they will influence the future of the industry. 1. German OEMs Struggle to Keep Pace in the EV Transition The dominance of German automakers like Volkswagen, BMW, and Mercedes-Benz is under pressure as the electric vehicle (EV) revolution progresses. Despite pouring billions into electrification, these legacy players have faced slower-than-expected adoption, supply chain challenges, and fierce competition from Chinese brands like BYD and NIO. Key Data: In 2024, Volkswagen's EV sales grew by only 8%, far below its targeted 20% growth rate. Chinese automakers captured 43% of the global EV market share , compared to European automakers’ 28%. Consumer reports highlighted German E...

  In recent months, France has faced an alarming wave of job cuts and plant closures in its manufacturing sector. Industry giants like Michelin and Auchan are reducing their workforce, while the transition to electric vehicles (EVs) accelerates the decline of traditional roles in the automotive sector. These developments highlight the urgent need for businesses to adapt to changing economic and technological landscapes. For supply chain and purchasing professionals, these changes demand more than just observation. They require proactive strategies to ensure resilience, competitiveness, and alignment with future market trends. This blog explores the underlying causes, offers actionable insights, and provides a detailed roadmap for navigating this new reality. Understanding the Causes of France’s Manufacturing Job Cuts 1. Transition to Electric Vehicles The automotive industry, a cornerstone of France’s economy, is undergoing a paradigm shift. EVs are simpler to manufacture compared ...

 The proposed 25% tariffs on vehicles and potentially their parts manufactured in Mexico could have wide-reaching effects on car prices, the supply chain, and the broader economy. Understanding this tariff's full scope and market impact requires examining the interplay between pricing, production, and sourcing. 1. Comprehensive Impact on Car Prices The tariffs would directly increase the cost of importing vehicles built in Mexico. For vehicles priced under $30,000—a significant segment of the market—the 25% increase would disproportionately affect consumers seeking affordable options. Here’s a breakdown of the expected impact: Car Price Impact Direct Tariff Pass-Through : Automakers are likely to pass on a significant portion of the 25% tariff to consumers. For example: A $25,000 vehicle could see an increase of $6,250, pushing its price to $31,250. Popular models like the Ford Maverick or Chevrolet Equinox, which are currently competitive in the under-$30,000 range, would face red...

  The automotive industry in 2024 has faced a series of defining moments, from mergers and market shifts to labor challenges and technological breakthroughs. These developments not only shaped the present but are poised to influence the industry’s trajectory in 2025 and beyond. Let’s take a deep dive into the top 10 automotive news stories of 2024, analyze their significance, and explore what they mean for the road ahead. 1. Honda and Nissan’s Merger Talks: Reshaping the Industry In a year full of surprises, Honda and Nissan began discussions to merge, a move that could create the world’s third-largest automaker. The merger aims to combine resources for electric vehicle (EV) development, streamline operations, and compete more effectively with global giants like Toyota, Tesla, and Volkswagen. Why It Matters : This merger signals the need for collaboration in an increasingly competitive market where EVs dominate. Combined expertise could lead to innovation, but cultural and operatio...

  As the year ends and planning for the next year begins, cost reduction and supplier management become critical components for businesses, especially in manufacturing. In this blog, we’ll explore actionable strategies to achieve realistic cost savings (3-5%) while strengthening supplier relationships and optimizing procurement processes. Leveraging these insights will empower businesses to improve profitability and resilience in a competitive market. 1. Realistic Cost Reduction Goals and Strategies 1.1 Detailed Cost Analysis and Target Identification Break down costs into categories and prioritize areas for improvement: A-Items : High-cost materials (~70-80% of expenses). Focus on alternatives or optimized sourcing. B-Items : Medium-cost components (~15-20%). Consider renegotiating contracts. C-Items : Low-cost, high-quantity items. Streamline consumption and minimize waste. Pro Tip : Evaluate switching materials for key components to reduce costs. For instance, replace metal part...

  China's recent export ban on critical minerals—gallium, germanium, and antimony—has sent shockwaves through industries dependent on these materials. With these minerals crucial for semiconductors, defense systems, and renewable energy technologies, the U.S. faces a critical decision: adapt swiftly or face prolonged supply chain disruptions. This blog explores viable alternative sources, the costs of developing these options, and what U.S. businesses and policymakers can expect as they respond to this economic challenge. The Importance of Critical Minerals China's dominance in the production of these minerals creates a strategic chokehold: Gallium: 80% of global supply, critical for semiconductors and LEDs. Germanium: 70% of global production, used in fiber optics and infrared systems. Antimony: 60% of global output, essential for flame retardants, alloys, and batteries. The U.S. relies on China for over 80% of its critical mineral imports. Any disruption can escalate costs...

The potential merger of Nissan and Honda marks a critical juncture in the automotive industry. While it represents a bold move towards consolidating resources and strengthening market position, it also raises complex challenges, particularly in organizational restructuring and leadership in the electric vehicle (EV) space. This blog delves into the diverse opportunities and challenges that this merger presents, exploring how it could redefine the landscape for both companies and the broader automotive market. Nissan: The EV Pioneer That Lost Momentum Nissan's role as an early adopter of EV technology, notably with the Leaf model, positions it as a pioneer in the transition to electrification. However, despite its early start, Nissan has struggled to maintain leadership in the EV market. Companies like Tesla and emerging Chinese manufacturers have outpaced Nissan in terms of innovation, market penetration, and brand appeal. Key Questions: Why did Nissan, with its early mover advanta...

The European automotive industry is at a tipping point. For decades, Europe has led the global market with innovation, engineering expertise, and iconic brands like Volkswagen, BMW, and Mercedes-Benz. However, the tides are turning. Rising costs, stricter regulations, and aggressive competition from Chinese electric vehicle (EV) manufacturers are challenging Europe’s dominance. This blog explores how these pressures could result in major European automakers being acquired by Chinese companies, marking a profound shift in global industrial power. With history as our guide, let’s analyze what these changes mean for the future of the industry. The Perfect Storm: Why Europe’s Automakers Are Struggling Europe’s car manufacturers are under pressure like never before. Several interconnected challenges are pushing the industry into uncharted territory: 1. Strict EU Emissions Regulations The European Union has implemented tough laws to meet ambitious climate goals, including banning internal co...

 The automotive industry has long been dependent on a global supply chain for semiconductor chips, a critical component in modern vehicles. The ongoing chip shortages have pushed companies and governments alike to rethink their strategies, focusing on self-reliance and domestic production. Two recent developments—Bosch’s $225 million U.S. chip grant and Tenstorrent’s customizable AI chips—highlight this shift toward innovation and self-sufficiency. But what can we learn from these moves, and how should businesses prepare for this new era of chip manufacturing? Here’s a breakdown of key lessons and actionable steps. What We Need to Learn 1. The Strategic Importance of Chips Chips are no longer just another component in vehicles; they are the backbone of EV powertrains, infotainment systems, and autonomous driving features. The U.S. Bosch deal and Tenstorrent’s AI chips underscore the necessity of securing a stable chip supply to maintain competitive advantage in the automotive marke...

  Negotiation is the cornerstone of procurement success. While many professionals understand the basics, excelling in negotiation requires a deeper dive into specific tactics, detailed examples, and a nuanced understanding of psychology and strategy. This blog unpacks 10 advanced strategies with actionable examples to help you level up your negotiation game. 1. Preparation: Digging Beyond Surface-Level Research Preparation is more than googling your supplier. It involves deep market analysis, supplier intelligence, and scenario planning. Why It Matters: Preparation enables you to predict the supplier's needs, constraints, and decision-making triggers. Example: You’re negotiating a long-term contract with a steel supplier. Market research reveals global steel prices are declining, and the supplier recently lost a major client. Armed with this information, you propose a lower price while offering volume commitments, addressing their capacity concerns. How to Master This: Use industr...

  As electric vehicles (EVs) continue to revolutionize the automotive industry, questions about their reliability remain at the forefront of consumer and business decision-making. While EV technology is rapidly maturing, several challenges still hold back their full potential. In this blog, we’ll explore the major problems impacting EV reliability , supported by data-driven insights , and provide actionable solutions for consumers and fleet managers alike. Why EV Reliability is a Hot Topic in 2024 The demand for EVs is skyrocketing, with global sales projected to reach 14 million units in 2024 (IEA). Despite the growth, terms like "EV reliability problems," "EV battery lifespan," and "electric car maintenance issues" dominate Google search trends. Why? Buyers want to ensure their investment in greener technology is backed by durability and performance. A 2024 Consumer Reports study showed EV reliability is improving, but electric cars still experience 42...

  The global auto industry is undergoing rapid transformation, driven by technological innovation, evolving market demands, and trade policy risks. Chinese automaker BYD has been at the forefront, leveraging its hybrid and electric vehicle (EV) strategy to expand globally. At the same time, major U.S. automakers like GM and Ford face mounting challenges, including declining sales in China and the looming threat of tariffs on Mexican imports. This article explores these developments using real data and highlights what businesses need to consider moving forward. 1. BYD’s Hybrid Strategy and Quality Challenges Rising Market Share in Russia, but Quality Issues Persist Chinese automakers, including BYD, have rapidly increased their presence in Russia. As of 2023, Chinese-made vehicles captured 49% of the Russian market , up from just 7% in 2021. However, Russian consumers report ongoing quality and service issues , including interior durability problems, electrical failures, and a lack ...