Pricing Dynamics in the Automotive Supply Chain PPT

This PPT slide, part of the 133-slide Pricing Strategy Workshop PowerPoint presentation, titled "OEM Pricing Overview" presents a structured analysis of pricing dynamics within the automotive value chain, focusing on Original Equipment Manufacturers (OEMs) and their suppliers. It highlights the distinct challenges and levers affecting pricing strategies across different tiers of suppliers.

In the "Rough Numbers" section, the slide indicates that OEMs face significant cost pressures and competition, operating in a stagnant market with limited growth. Tier-1 suppliers, in contrast, are exposed directly to OEM pricing pressures, but struggle to pass on these costs to Tier-2 suppliers. This creates a challenging environment where Tier-1 suppliers are increasingly expected to take on responsibilities traditionally held by OEMs. The mention of "100" for Tier-1 suppliers suggests a substantial scale, indicating their critical role in the supply chain.

The "Pricing Challenges" section elaborates on the difficulties faced by each tier. OEMs are grappling with increased cost pressures and a mature market. Tier-1 suppliers face limitations in passing price increases down the chain, while Tier-2 suppliers, who typically supply commodity products, are now feeling the effects of pricing pressures as Tier-1 suppliers attempt to mitigate their own challenges.

The "Pricing Levers" section outlines strategies for managing these pressures. OEMs can control costs through incremental demands for cost reductions from suppliers, leveraging large purchase volumes and robust information systems. This suggests a need for strategic alignment and efficiency across the supply chain to navigate the complex pricing environment effectively.

Overall, this slide serves as a valuable resource for stakeholders looking to understand the intricate pricing dynamics in the automotive sector and the strategic responses required to thrive.

This slide is part of the Pricing Strategy Workshop PowerPoint presentation.

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