The auto parts sector

1
The auto parts sector
2
Automotive industry

• Real Plan in 1994 Boom in imports.
• The devaluation of the Real in early 1999
  Production fell by 15 in the automotive
  industry.
• In 2000 recovery in production, new investments
  by foreign investors to use Brazil as an export
  base for other Latin American markets.

3
THE AUTO PARTS SECTOR

• Group of dominant companies in the international
  market
• -Delphi, Goodyear Tire (USA)
• -Bosch, Michelin, Continental (Europe)
• Centralizing development, supplier selection and
  purchasing activities.

4
Centralizing development

• Reduction in the number of components
  manufactured inside assembly plants.
• Consolidation of common platforms for the
  development of vehicles.
• Suppliers must establish plants in all of the
  locations where the respective vehicle is produced

5
Centralizing development

• Progressive reduction in the number of suppliers
• number of supplier per model 250-300 with
  intentions to reduce to 100-150
• The assembly of components has evolved into the
  assembly of modules.(cock pit of the vehicule)

6
Impact on Suppliers

• Growing interdependence between suppliers and
  assemblers.
• Globalization of the supplier base.
• Substantial number of acquisitions and agreements
  (joint ventures) following the wave of mergers
  that has taken place in the automobile industry
• Other supplier try to concentrate a specific
  segment.

7
Location of automobile assembling in Brazil

• In 1950s , region of São Paulo state.
• In 1970s moved to the Vale do Paraíba region.
• Automotive production plants were also installed
  in Paraná state, and later in Minas Gerais state.
• Large part is coming from São Paulo state.

8
Auto parts in Brazil

• Difficulty to adapt to the automobile industry
  with all the instability (Real plan,
  devaluation).
• Integrated suppliers ( located near the plant,
  pre-assembled systems.)
• Technological joint ventures and agreements with
  foreign companies. Ex joint ventures to
  be able to make modules

9
Auto parts in Brazil

• COMPANY NUMBER OF
  SUPPLIERS
• MBB Classe A 140 10
• Renault 100 5
• Audi 140 13

10
Auto parts in Brazil

• New companies as a result of the new assembly
  plants.
• Use of common platforms in Mercosul (scale
  gains).
• Looking for quality control.

11
Auto parts in Brazil

• Segments with higher technological content
  dominated by foreign companies (brakes,
  electronics)
• Brazilians companies are suppliers of components
  of central parts (suspension, plastics).

12
Auto parts in Brazil

• Frustration for Brazilian companies the level of
  capital needed to accompany assemblers in other
  countries.
• Expect the participation of foreign capital for
  second level suppliers.
• Modernization and expansion of production create
  opportunities for suppliers and canadian firms.