A new IBM Corp. study of 100 automakers and suppliers has found that more are doing better financially than they were five years ago -- and a significant number are doing very well.
The IBM study, "Changing Lanes for Success," found that 70 companies made more than 2 percent profit in 2005, compared with 46 in 2001.
The study found that 35 companies increased profits by at least 3 percentage points, and 32 achieved 5 percent profit or better in 2005. Only seven companies achieved 5 percent profit or better in 2001.
The study looked at 35 automakers and 65 automotive suppliers from around the world.
"So much has been reported, and depending on who you talk to, some folks think that the automotive industry is about to go the way of the dinosaur," says Linda Ban, leader of the global industrial sector for the IBM Institute for Business Value.
"We found that there are actually more automotive companies making more money today than what they were five years ago," she says.
IBM also found that 17 companies replaced losses with profits while six did the opposite.
Those automakers and suppliers generating the highest profits were the most flexible, Ban says. Flexibility in the auto industry typically refers to assembly plants and the ability to quickly add models or change models to meet customer demand.
IBM says the most profitable companies have flexible business models, Ban says.
One such company that IBM cited is Magna Steyr, of Graz, Austria. Traditionally an automotive supplier, the unit of Magna International Inc. also assembles the BMW X3 SUV and other vehicles.
Magna Steyr sells flexibility and speed to automakers through contract development and vehicle assembly, IBM says. As a result, the company has created a system that can manage production surges, niche vehicles and market volatility, the study says.
The keys to a flexible business model, Ban says, are responsiveness to customers, efficient processes and operations, and the ability to differentiate products and services.
You may e-mail Ralph Kisiel at [email protected]