- We are in a perfect storm for automotive suppliers.
An economic downturn will dampen demand.
Labor and material prices are going up,
so are financing costs.
And amid all this, auto suppliers must continue
to transform their business to address
the seismic industry shift from internal combustion engines
to electric vehicles.
These companies need to move on two fronts right now.
First, they should focus on preserving their profitability
over the next couple of quarters
by taking steps that include conserving cash,
cutting discretionary spending,
and reducing energy consumptions.
In some cases, they can also work with their OEM customers
to ensure rising costs are shared.
Second, they should make strategic moves
that will set up the business for success in 2023.
They can start by evaluating the likely volatility
of the market and their own overall financial stability.
That insight will help companies to identify the actions
they need to take to protect margins,
adjust pricing, or overhaul procurement.
Companies can weather the storm,
but only if they move quickly.