Opinion

Last updated: 19th May 2010

However last week’s show was host to the early exchanges in the car wars as the major OEMs staked their claims in the development of their electric/hybrid models. Even Porsche, who once stood proud with their rear mounted Boxer engines, were showing off their hybrid concept. Whatever next – a diesel 40 mpg Aston!?

This could all be very exciting news for the UK automotive suppliers who have survived a torrid economic downturn and 15 years of cost downs and process re-engineering.

UK suppliers are at the forefront of automotive engineering and the OEM zero emission car wars will help them restake their claim on the world stage. By 2020, 10% of the world’s car parc is forecast to be electric/hybrid cars and this means we are set for a step change in automotive technology development. Whether the electric car or hybrid win the day in 50 years time no one really knows, however the functionality of the constituent systems of the car won’t fundamentally change in terms of transmission, powertrain, suspension systems and braking. The supply chain is well placed in terms of engineering expertise to harness technology and new materials and develop stronger, lighter and safer components.

I expect the UK winners in the automotive supply chain to become increasingly important to the OEMs. They will either receive a tap on the shoulder and be asked to increase their own critical mass and robustness or they will become the targets of those that do receive the tap on the shoulder. If you are one of these suppliers, now is the time to carefully manage your growth, sensibly fund your development costs and working capital and decide whether down the line you want to be a consolidator or start to eye up your future partner now.

Mark Humphries
Partner
Catalyst Corporate Finance