Weekly News Review | 17 September 2018 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

A premium future for suppliers?

With the news that the reality of using flying cars is approaching with even greater pace than expected, at this year’s Geneva motor show signed a deal to test air taxis in the OEM’s hometown of Ingolstadt, and the rapid march of driverless car technology, I was reminded of the renewed focus on interior quality in all forms of transport. In the past, even higher segment vehicle interiors definitely lagged behind the best household interior design. Now, with the preponderance of designer label furniture and domestic objects - witness the elegant and crisp design of the humble vacuum cleaner produced by Dyson - the consumer expects to be surrounded with ‘cool’ design everywhere that they live, travel and sit. Added to this is the manner in which car makers have ‘spoilt’ the consumer with more and more sophisticated in-car features and furnishings and we could be heading to a perfect storm of desire and expectation throwing tremendous demands on suppliers, particularly in the interiors market.

The United Nations recently reported that an estimated two-thirds of the world's population will live in cities and contrary to town planners’ wishes, many will want to own a car - or other ‘personal mobility solution’.

Suppliers can profit from this challenging scenario. Consumers’ new expectations must lead these suppliers to continue increasing luxury and quality in their products and, as the Apple model shows, they will pay for it. For as congestion in urban areas increases, drivers, or users of autonomous, semi-autonomous and driverless vehicles will have much more time to enjoy the vehicles’ interiors. They will demand all the connectivity features found in their homes - they will insist on all vehicles having wifi for example - and this is where technology and interior makers can profit.

With the advances in production such as injection moulding combined with luxury materials and the democratisation of connected and convenience technology such as the aforementioned wifi, technology and interior suppliers are in possibly the best position of all automotive vendors. They will no longer have to constantly chase premium vehicle contracts to boost their bottom line, the market will come down to meet them. For example, car sharing will cause consumers to constantly compare different vehicle interiors both in person to other users and through social media. OEMs will be pressured to provide more and more sophisticated driver and user experiences in even their most basic models. Of course this will lead to vigorous competition in the market, which is almost always healthy and beneficial for consumers, and the new interior supplier giants that have been formed of the conglomeration of smaller suppliers will thrive. All too often I find myself forecasting a gloomy future for suppliers’ but I feel that there has never been a better time for vendors to bring exciting new technology, materials and quality to a market growing in sophistication and volume.

Simon Duval Smith

Simon Duval Smith

Simon Duval Smith

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