2012-03-20-奥纬咨询-South_American_Auto_Manufacturing_8页_1mb

South American Auto Manufacturing: Supplier Localization Movement Summary

Core Content

The South American auto manufacturing industry, particularly in Brazil and Argentina, has experienced significant growth since 2005, outpacing other regions such as North America and Europe. This growth is attributed to a combination of factors including a rising middle class, increased credit availability, and a stable macroeconomic environment. The expansion of original equipment manufacturers (OEMs) has led to a greater emphasis on supplier localization, as companies seek to meet local demand and reduce dependency on imports.

Main Views

• Growth Drivers:

  • A growing middle and upper class in Brazil and Argentina has attracted global OEMs.
  • Increased credit availability and foreign investment have boosted purchasing power.
  • Post-2008 economic crisis, OEMs are investing in new manufacturing facilities and modernizing existing ones.

• Supplier Localization:

  • OEMs are moving their manufacturing footprint to remote areas, requiring local suppliers to support operations.
  • Local suppliers are being drawn to OEM sites through incentives like tax breaks and land offers.
  • Protectionist policies in Brazil and Argentina favor local sourcing, with import tariffs and local content requirements encouraging domestic supply chains.

• Consumer Influence:

  • Consumers demand modern, high-quality vehicles tailored to their lifestyles and available at convenient times and places.
  • This has increased the need for OEMs to ensure on-time delivery of high-quality parts, especially during new product launches.

• Lean Implementation:

  • Lean methods are influencing the evolution of supplier localization.
  • OEMs vary in their lean maturity, from early-stage implementation to benchmark levels.
  • Lean practices help in improving labor productivity and standardizing manufacturing processes.

• In-Sourcing vs. Outsourcing:

  • OEMs are balancing in-sourcing and outsourcing based on factors like labor costs, productivity, and quality.
  • Suppliers are becoming more integrated into OEM operations, providing logistics, maintenance, and even main-line assembly.
  • Labor regulations in South America make outsourcing less attractive, as OEMs are often required to hire new workers.

Key Information

• Market Growth:

  • Combined sales in Brazil and Argentina increased from 2.1 million to 5.2 million units (2005–2010).
  • CAGR of 20% in Brazil and Argentina, compared to 18% in Asia, -7% in North America, and 2% in Europe.

• Supplier Integration:

  • 17% of major modules are assembled in supplier parks near vehicle assembly sites.
  • Ford's Camaçari plant in Brazil attracted 26 suppliers, offering them more work content.

• Protectionist Policies:

  • Brazil and Argentina impose high import tariffs (35% and 21.5% for passenger cars, respectively).
  • Local content requirements mandate that 30–60% of a vehicle's components be sourced domestically.

• Lean Strategies:

  • OEMs are implementing lean practices to improve productivity and quality.
  • Strategies include in-process quality, collaboration between manufacturing and R&D, standardized systems, and balanced labor-automation approaches.

• Future Outlook:

  • As OEMs adopt global parts standards, some in-house manufacturing may be outsourced.
  • Suppliers with existing facilities near OEMs have a competitive advantage.
  • Logistics solutions are crucial for optimizing production and meeting just-in-time demands.

Conclusion

The South American auto manufacturing industry is undergoing a transformation driven by economic growth, consumer demand, and strategic supplier localization. OEMs and suppliers must adapt to these changes by integrating lean practices, understanding local regulations, and collaborating closely to ensure efficient and high-quality production. Those who innovate and align with the evolving needs of the market will likely lead the way in this dynamic region.