With advancing technology, the automotive industry is becoming a good opportunity to invest, especially in the developing countries since people are buying automobiles. Automotive supplier can be defined as the companies that manufacture goods to be used in the manufacture of automobile parts or used as the automobile parts such that these goods are supplied directly or indirectly to the Automobile Manufacturers.
Automotive suppliers can be categorized into the automotive suppliers in the narrow sense who produce goods that are automotive specific parts and components and supply them directly to original Equipment Manufacturers (OEM) and the automotive suppliers in the broader sense who supply non automotive specific parts. Starting an automotive manufacturing company is a great idea based on the factors mentioned above though this sector is facing a lot of problems such as stiff competition and rising prices of raw materials. Automotive parts manufacturers deal with a variety of parts that they manufacture such as engine parts, breaking parts, spark ignition and parts and body and chassis here!
It is important to consider your area of interest based on your knowledge and capability and also the capital investments before deciding to start your investment. Automotive parts manufacturing is a very broad area and it is important you choose a segment that you will supply for example passenger vehicles or heavy trucks or any other segment of the industry such as Mayco International. In many developing countries though we have good manufacturing capabilities, costs and lack of technical knowledge results to importation of automotive parts and components which we can just study and produce our local parts.
Below is the analyzed challenges faced by automotive parts manufacturers which force them to be creative and innovative or else they would experience great losses. The starting capital required to purchase land, buildings, capital goods, and raw materials is very high, and if you have doubtful financial background it makes it very hard for the banks to finance your investment, and this is the major reason why developing countries scare their citizens from this kind of investment. In most third world countries good infrastructure is only limited to towns leaving people from local villages in a situation that they cannot use automobiles or rather no business can go on using vehicles, and when more parts become unopened, the automotive industry is not expanding because their market is limited.
Over the years, most people consider automotive parts imported from developed countries as superior to those manufactured locally due to the presence of counterfeits and suppliers are facing a great challenge of addressing this issue. Lastly manufacturers has no other bargaining power rather than lowering the price of their manufactured parts which lowers the profits that they get.