AT Kearney’s Dunne tells suppliers to get to China.
European automakers have learned to “use the best parts” of their global operations to meet customer needs in both rich and poor markets and have the advantage of high levels of production volume and technology and well-developed distribution networks.
This has sustained them against Japanese and Korean competition so far, Dunne said.
“European automakers are used to working globally,” he told the Automotive News Europe Congress.
But Chinese automakers and suppliers will use extremely low-wage labor and government assistance to grow over the next decade – and have the advantage of a booming home market from which they can export, he said.
“China has always been the world’s biggest market, except for the past 150 years,” Dunne said. “I believe China will regain its rightful position in the world,” although that may take some time, he added.
European-based suppliers should either focus on technology and innovations for European premium carmakers or compete globally for the broader mass-market brands, he said.
That means reducing costs and broadening their customer base, including manufacturing in China.
“For suppliers I have two suggestions,” Dunne said. “Learn Mandarin. Keep tight controls on your intellectual property rights.”