Automotive Parts Industry: The Battle for Market Share

Market Leaders and Their Strategies

Aptiv and BorgWarner, as market leaders, focus on leveraging technology trends, financial strength, and strategic partnerships to maintain and grow their market share. Aptiv emphasizes partnerships with OEMs and semiconductor manufacturers, while BorgWarner prioritizes technology-focused products and balanced capital allocation to drive sales growth and long-term value.

"We believe we are well-aligned with industry technology trends that will help to support sustainable future growth in this space and have partnered with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies." --- (APTV, sec filing, 2024/Q1)

"This is critically important as customers potentially consolidate their supply base and look to industry leaders that have the financial strength and long-term technology leadership to support them." --- (BWA, earning call, 2024/Q1)

"We are capitalizing on our long-standing relationships with the global OEMs and further enhancing our positions with the key growth market OEMs to continue expanding our worldwide leadership." --- (APTV, sec filing, 2024/Q1)

"While we cannot control the near-term volatility in propulsion mix across the globe, we can focus on BorgWarner - driving sales growth above market production through technology-focused product levers converting that growth into earnings on an all-in basis and following a balanced capital allocation strategy that creates long-term value for our shareholders. With that, I will turn the call over to Craig." --- (BWA, earning call, 2024/Q1)

"We doubled down on enhancing our capabilities in that particular market. I think I've mentioned previously, we're partnering with over a dozen semiconductor manufacturers in China to deliver their solutions to the automotive market in China." --- (APTV, earning call, 2024/Q1)

Role of Innovation and Technology

Tesla and Nvidia emphasize the critical role of innovation and technology in maintaining a competitive edge. Tesla focuses on production innovation, efficiency, and accelerating technological advancements, while Nvidia highlights its leadership in energy-efficient accelerated computing and AI, which are pivotal for future automotive technologies.

"We will continue to adjust accordingly to such developments, and we believe our ongoing cost reduction, including improved production innovation and efficiency at our newest factories and lower logistics costs, and focus on operating leverage will continue to benefit us in relation to our competitors, while our new products will help enable future growth." --- (TSLA, sec filing, 2024/Q2)

"NVIDIA is at the forefront of energy efficient accelerated computing. General purpose computing performance scaling has slowed. Customers are turning to NVIDIA pioneered accelerated computing as the path to sustainable and cost effective innovation." --- (NVDA, event transcript, 2024/06/26)

"They will make the value of product and not Tesla. So, that's where I think I'm probably most useful is that is accelerating the pace of technology and innovation and getting to scale." --- (TSLA, AGM, 2024/06/13)

"Today, we continue to push the frontiers of accelerated computing and AI.Our competitive advantage is our expertise, scale and velocity to create the most advanced and end to end optimized AI computing systems, create new markets for them and attract the world's developers while delivering extraordinary value to our customers." --- (NVDA, event transcript, 2024/06/26)

"They may also lead to difficulties in recruiting high quality employees, something that Tesla needs to remain innovative and at the forefront of a quickly moving technological landscape." --- (TSLA, event transcript, 2024/06/13)

Supply Chain Dynamics

Ford and GM are strategically diversifying and innovating their supply chains globally, with Ford focusing on geographical distribution and design changes for EV components, while GM emphasizes sustainability and ethical practices in its EV supply chain.

"The supply chain is there. Supply chain will be in ASEAN, supply chain will be in Western Europe, the supply chain will in Eastern Europe, the supply chain will be in Africa, the supply chain will be in Mexico." --- (F, conference, 2024/05/30)

"Other shareholder proposals focus on our EV supply chain policies and practices.GM follows sustainable and ethical practices throughout our entire global supply chain as we advance our strategy to make all electric zero emission vehicles more accessible and affordable for everyone." --- (GM, event transcript, 2024/06/04)

"We are designing a super-efficient platform, leveraging innovation across our product development, supply chain and manufacturing teams.With no engine or drivetrain, a smaller vehicle can have a much roomier package, actually the interior package of a class above, with a small silhouette." --- (F, earning call, 2024/Q2)

"We applaud GM's efforts to integrate sustainability into its operations and supply chain." --- (GM, event transcript, 2024/06/04)

"To use a completely different supply chain, to totally change the design standards for our EV components, to go to vertically integrate and make the sourcing decisions, to a lower part of the supply chain, all those things were actually required now to be fit." --- (F, conference, 2024/05/30)

Regional Market Differences

GM's U.S. retail market share increased by 70 basis points, offsetting lower fleet volume, while its market share outside China decreased by 0.3 percentage points, highlighting regional market performance disparities.

"In the second quarter we ran roughly 150 basis points below the industry. While at the same time our U.S. retail market share increased by 70 basis points, more than offsetting the lower fleet volume to rental companies." --- (GM, earning call, 2024/Q2)

"Our total vehicle sales outside of China were 0.4 million units for market share of 3.5% in the six months ended June 30, 2024, representing a decrease of 0.3 percentage points compared to the corresponding period in 2023." --- (GM, sec filing, 2024/Q2)

Future Trends and Predictions

Future trends in the automotive parts industry include advancements in autonomous driving technology, with Level 2 and Level 3 systems being the focus for the near future. Additionally, data-driven predictions and potential supplier price increases will shape the industry's cost structure and technological progress.

"Obviously, it takes time to do the experiments because it takes a few weeks to train, it takes a few weeks to collect tens of millions of video clips and process all of them, but you can estimate what’s going to be the future progress based on the trends that we have seen in the past, and they’re generally held true based on past data." --- (TSLA, earning call, 2024/Q1)

"Level 4, level 5 will eventually come into play longer term. But really, when you think about cars launching today and for the foreseeable future, globally, level 2, level 3 is an opportunity for us." --- (QCOM, conference, 2024/05/21)

"Additionally, our suppliers have in the past and may in the future increase their prices during periods of capacity constraints, or for other reasons, thus increasing our costs." --- (QCOM, sec filing, 2024/Q2)

Consumer Preferences and Demand Shifts

Consumer preferences are shifting, with GM and Ford noting fluctuating demand for EVs versus ICE and hybrid vehicles. GM is adjusting strategies based on demand trends, while Ford observes increased demand driven by specific consumer interests. Both companies are positioning themselves to adapt to these evolving market dynamics.

"Would you say that the 200,000 to 300,000, is that something that you're going to stick to sort of come hell or high water and then gauge consumer demand from there or is it something that you could slow walk maybe towards midyear toward the second half if it doesn't seem like the consumer demand is materializing?" --- (GM, earning call, 2024/Q1)

"That's good to hear. Have you seen any signs of weakening consumer demand so far in the market?" --- (F, conference, 2024/06/11)

"The first question is, recent market trends seem to indicate that EV sales are slowing compared to their ICE and hybrid counterparts. What action, if any, is GM taking to assist with consumer adoption?" --- (GM, event transcript, 2024/06/04)

"And that's why I think consumers are purchasing them and demand has increased so much." --- (F, conference, 2024/06/11)

"And I think as consumers continue to see that, we'll be well positioned as EV demands at the retail side continue to trend." --- (GM, earning call, 2024/Q1)