WEBVTT

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Brian, thank you so much for
joining us.

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So auto suppliers, they've
really been operating in such

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challenging times, really over
the past few years.

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What's on the horizon for them
in 2025 and beyond?

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So I think as we look to 2025,
in many ways it's going to be a

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reckoning for the automotive
supply base. After just years

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and years of challenges,
beginning back with a slowdown

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in China in the latter part of
the last decade on through

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coronavirus, the chip crisis,
the slowdown of EV growth last year.

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There's a lot of hope that those
problems were all temporal in

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nature and that there are better
days ahead.

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I think what we're coming to
realize is that those better days,

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they may be ahead, but they're
not going to be here within the

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next couple years.

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And so instead of looking to the
old ways of doing business and

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just incremental change, it's
now how do we actually reimagine

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our business in light of these
challenges that may be more

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structural in nature.
Fundamentally resetting cost

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structures, fundamentally
rethinking business models to

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find a way to not just survive
but to thrive in this new environment.

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What are the core priorities
for leaders?

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So there's really four things
that we're stressing to

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executives on the supplier front
that we've been talking to.

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The first is about focus.

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Over the last few years, with
the move towards

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electrification, with the move
towards connected vehicles, a

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lot of suppliers—all
suppliers—have really been

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struggling to figure out, where
do they play in this new environment?

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They find themselves making bets
in lots of different areas, lots

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of new technologies,
lots of new products.

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And now they find themselves in
a situation where they have a

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cost structure, they have a
business model that's just not tenable.

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It's too high cost.

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It's resulted in too many
distractions, and they're just

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not in a position to be a
winner, you know, necessarily.

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And so first and foremost, it's
really about narrowing in on

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where can you be essential?
Where can you create

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differentiated value for
automakers in a way that others

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can't and really harness all
your time, energy, and effort in

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those areas?

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The second thing is that
regardless of where you decide

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to play, it is going to be
expensive. Investment is going

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to be required. And it's
incumbent upon companies to

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really look at where are there
opportunities for us to rethink

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our cost structure, to
dramatically eliminate waste, to

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change and eliminate work, to
free up the resources to fund

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this journey ahead?

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And for many that really is
going to require a clean sheet approach.

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The automotive industry has been
in an always-on cost-cutting

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mode for the past five years,
but it's been more incremental.

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Now this is the time to
basically take a clear,

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zero-base, clean sheet approach.
Start from scratch based on

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where you think volumes will be,
based on affordability envelopes.

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You know, what does your
business model, cost structure,

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now need to be in order to be
able to deliver your customer

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requirements as well as deliver
for shareholders?

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And for that, we think digital
and AI is a key unlock.

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It's going to allow suppliers to
fundamentally do work cheaper,

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faster, better.

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A lot of executives have talked
about the promise of AI, but

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they haven't yet harnessed how
to do it.

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And from our vantage, it's
really about, understand what

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the full potential is.

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You know, so think big, but
start small.

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Focus on a few key areas that
will drive some quick wins,

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create some momentum, and then
quickly scale fast once you have

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the momentum, that wind behind
your sails.

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And then the last piece, is
really about partnerships.

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These are massive investments
that are being asked of

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suppliers, to support these OEMs
in making the move to

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electrification or new
business models.

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It's tough for them to afford to
do it on their own.

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And we think there's an
opportunity to drive better

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scale by partnering with other
suppliers or in some cases with

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the OEMs themselves.

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Thank you so much.

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No, thank you.