The Role Of Auto Parts Buyers In Global Trade 43

The Role Of Auto Parts Buyers In Global Trade

In good news for traders, supply chains have been observed to shift back to their previous positions. That’s why leading countries that are into automobile export are set to expand their respective share in the global automobile and auto component trade.

For example, developing nations like India have a huge potential to become the manufacturing hub for large players in the auto sector. They can easily localize and substitute their respective shares.

McKinsey shared similar insights in their recent 60th ACMA annual convention. The report further talked about the emerging automobile manufacturer, stating that the exporting nations sell their goods to various countries. It is a rare scenario when most exports go to a single nation.

What’s The Current Scenario?

The auto parts buyers are interested in suppliers who can fulfill the orders in the promised time and at friendly rates. On the other hand, auto parts manufacturers can achieve their respective targets by expanding their focus on:

  • Manufacturing high-value parts (engine components, electricals, electronic circuits)
  • Frequently replaced parts (exhausts, brakes, and gearbox parts)

Recently, many countries have been observed to adopt updated emission norms to meet environmental regulations. This change is sure to bring about a surge in the number of orders by auto parts importers.

The exporting nations can further ramp up their collaborations with the global suppliers who are willing to relocate their manufacturing locations. This comes with the fact that recently many manufacturers showed a willingness to move their manufacturing units to new and more favorable locations.

If we look at the current state of auto parts manufacturers and exporters, then Germany holds the mammoth share with 15 percent, followed by China’s 11 percent. At the same time, Japan and Korea have 7 percent and 6 percent respectively.

The Role Of Auto Parts Buyers In Global Trade

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Auto Parts Buyers And Export Expansion

In the recent past, multiple nations expanded their export opportunities, mainly due to the decisions they made regarding their manufacture and export strategy. The countries mentioned above have a huge trade surplus for auto components. Furthermore, they have achieved the status with several advantages.

Some of those advantages are the presence of huge original parts manufacturers, ease of doing business, good expenditure on research and development, and availability of skilled labor. Due to the above factors, even the auto parts buyers have established their trust in the conventional importers.

Auto parts buyers also rely more upon the importers with variable import categories such as shafts, bearings and fasteners, upholstery, and electronics. Their priority always sticks with manufacturers who are more into high-value products like gearbox, ventilation systems, compact air conditioning, and more.

Aftermarket Opportunities In Global Trade Of Autoparts

Most auto component manufacturers believed that the aftermarket was a huge booster during the COVID-19 lockdown period. This is due to the fact that most auto parts importers relied on their respective markets, which was generally affected because more people postponed their plans to buy a new vehicle.

This directly led to the situation where more repairs were required, and it opened up a window of opportunity for the auto parts manufacturer. It is again a well-known fact that the aftermarket for light vehicles remained generally resilient during times of distress.

Therefore, they are hot favorites for the new players in the business who want to stick with a product segment that has survived the tests of time. During the recent financial crisis, the United States car sales saw a fall of nearly 17 percent, but contrastingly, the aftermarket spending only saw a meager decline of 1 percent.

Therefore, it further solidifies that aftermarket sales can also serve as a safety valve for the auto industry, and auto parts buyers generally drive it. This further shifts the focus to the micro-markets where the most proximate repairing center has increased importance over the distant service providers.

What’s The Future Role Of Auto Parts Buyers?

As discussed earlier, the choice that auto parts buyers make generally steers the auto part industry. However, the manufacturers can always cash in the opportunity by following a simple three-way approach.

  1. Firstly, they need to concentrate on the aftermarket strategy, i.e., the 7 per cent micro-market contributing to 50 per cent of market demand.
  1. Next, they can encourage greater agility in the sales sector by trusting new platforms like virtual sales and planning their stocks accordingly.
  1. Finally, the auto component manufacturers can also soar by expanding their partnerships with influencers like local mechanics with good popularity; this strategy can also work for global markets. All they need to do is establish a channel between their company and local influencers.

What’s Next For Auto Part Buyers In Global Trade?

It will be interesting to see how the future auto part markets take shape, given the fact that the recent market shocks gave jitters to all the stakeholders of the auto parts business. However, one thing is certain, the auto parts business doesn’t depend upon the monopoly of a single party, as it is a perfect example of circular trade!