The good news for North American auto suppliers is that a robust industry is about to turn up the business volume with record numbers of new-vehicle launches.
What's the bad news? According to Michael Robinet, one of the industry's chief trackers of North American manufacturing: The frequency of the launches will accelerate. Ramp-up speeds will have to improve. Vehicle components will be redesigned more frequently, requiring factory tooling to be changed out sooner than in the past, meaning less time to reap profits from a given vehicle program.
And a larger percentage of vehicle launches will take place in Mexico, Robinet, managing director of advisory services for IHS Automotive, said at the seminars Tuesday.
He forecast that in 2018, 42 percent of North American launches will occur at assembly plants in Mexico, compared with 3 percent this year.
"Do you have the right capabilities in Mexico to support 40 percent of the launches in North America?" he pointedly asked industry suppliers. "I would hasten to say that most of you don't."
Robinet forecast that automakers will launch 27 new vehicles in North America this year. The number will rise to 45 in 2018.
But he said suppliers face "a new cadence" of model changes that will put new pressure on their business models. Seven-year product cycles are giving way to five-year cycles, and three-year product freshens will become more significant.
"The new cadence is five or six years — change in packaging, change in engines, change in technology, change in content, change in structure," he said. "It's five years now, not six or seven."
Because automakers are shortening the time a model might be in production, suppliers will face more pressure to ramp up faster, Robinet warned. There will be a greater expectation to capture profits early in the cycle and less tolerance for slow launches or missteps.