Analyst: Auto Suppliers Poised to Weather Any Storm

Jan. 2, 2018

Despite a down year for vehicle sales, the automotive industry's supply chain is positioned to survive—and possibly even thrive—in the next few years, according to one analyst.

Jan. 2, 2018—When the final figures are tallied, North American light vehicle sales are expected to end up at approximately 17.1 million units for 2017, representing a slight downturn.

Yet, Mike Wall, director of automotive analysis at IHS Markit, recently told that the automotive supply chain is positioned to survive—and possibly even thrive, in future years.

In 2018, “we’re looking at 16.9 million units in terms of light vehicle sales,” Wall told “Now, I say all that and I’ll tell you: Sales of 16-17 million units in production is … good news for the industry. It’s all relative, of course, if you compare it to the last peak and what have you.

“Next year we’re looking at 17.5 million units—so, growth in production, yet a little bit of a contraction in sales.”

The industry analyst noted that more exports are expected out of North America in 2018, explaining the disparity between production and sales.

Wall added that, because the market is favoring bigger SUVs, trucks and crossovers rather than cars, suppliers are somewhat protected from fluctuations due to the fact those tend to be higher-margin vehicles.

“Not everybody picks up on that” fact, Wall noted. “In my conversations with suppliers, that’s exactly the vibe I’m getting. … Where we’ve seen strength in the market is crossovers, utility vehicles, trucks, light trucks, pickup trucks—those tend to be higher margin components and tend to be higher margin business. So it’s higher content, larger parts, more margin.”

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