Steve Man
Asia Director of Research
Senior Auto Analyst
sman24@bloomberg.net

June 20172• Automakers can lower
production costs• Boosts returns
Suppliers• Suppliersconsolidates
production footprint
to achieve
economies of scale

Automakers

Customers• Consumer choices
increase and prices
become relativelylower

3

4

5

6

Brexit
NAFTA

EUTPP

7

Uprooting sourcing arrangements
Higher capital costs from production relocation
Diseconomies of scale
Lean becomes inefficient manufacturing
Higher production costs and profits fall

Suppliers to consolidate and reorganize to copewith new environment
8SUPPLIER CONSOLIDATION TRENDPRESENTS OPPORTUNITY

Supplier A – Plant 2
Supplier B – Plant 2

Supplier A – Plant 1
Supplier B – Plant 1

Supplier A – Plant 3
Supplier B – Plant 39SUPPLIER CONSOLIDATION TREND – MAJOR
PLAYERS IN U.S., EUROPE

Source: Automotive News

10AUTO SUPPLIER CONSOLIDATION TREND –FUELS M&A ACTIVITY

11AUTO COMPONENT MAKER VALUATIONSWILL SURGE

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