With all eyes on Detroit for the North American International Auto Show, the buzz word for the industry entering 2018 clearly is "disruption." Suppliers to the sector know their long-term prospects could be drastically different as the auto business continues to surge forward toward a new horizon.
More and more, it looks likely that the future will lean more toward electrification and autonomous vehicles, and less on the internal combustion engine.
China, the United Kingdom and France already have pledged to ban gasoline and diesel engines by 2040. One study showed that 75 of the top 100 global automotive suppliers will be greatly disrupted.
Many of the suppliers clearly aren't ready for the change, largely because the U.S. auto-buying public hasn't embraced electric vehicles. The public continues to choose full-size trucks, SUVs and CUVs, with cars losing favor.
Some of the more forward-looking firms, though, are putting plans in place to make sure they are part of the future landscape. One tactic some already are opting for involves splitting large supplier firms up.
The thought is one stand-alone entity can concentrate on continuing to serve the traditional automotive business, as global light vehicle sales continue to climb and U.S. sales, while declining somewhat, still remain strong. That would leave the split-off firm a clear path to concentrate on developing new technologies to match the needs of the future frontier of automotive.
Delphi already took this route in December, and others are sure to follow suit. Continental A.G. acknowledged it is in the early stages of studying how the company can be more flexible to respond to the changes coming to automotive.
Toyoda Gosei is taking a slightly different tack. The Japan-based auto supplier said it is looking to expand its product base to target next-generation technologies, along with exploring ways to improve its current product base.
As 2018 unfolds, it's clear that the fork in the automotive road is at hand, and the choices suppliers make now will prove vital later.