The U.S. automotive parts industry has nearly doubled since 2009 in terms of exports. Today, there are large domestic automakers in countries around the world, including China, India and Russia--not to mention, legacy manufacturers in the United States, Europe and Japan.
Each manufacturer produces their own parts, such as engines, transmissions, frames and body parts. But increasingly, many large manufacturers are turning to first-tier suppliers for the design and production of most components and even large sub-assemblies.
In fact, large first tier suppliers are now as global as the vehicle manufacturers. The first-tier suppliers get subcomponents from second tier and third tier suppliers, and this chain continues down to raw material suppliers.
To limit exposure to currency fluctuations, reduce transportation costs, minimize risks of damage in transit, avoid adverse political results and take advantage of local incentives, automakers tend to produce in the market/region where the vehicle will be sold. Mass-produced vehicles are generally only exported to countries where the economies of scale do not support local assembly.
The major exception is limited-production luxury, sports or other special use vehicles. Similarly, parts and vehicle manufacturers seek to produce OE parts as close to the assembly plants as possible.
They do it in part to address the factors pushing towards vehicle assembly localization. Modern auto plants are built for just-in-time delivery of components, making long overseas supply chains costlier and riskier.
Exceptions tend to be high-tech, high-cost and light-weight components, such as computer modules.
As another example, exports of
light-weight alloy wheels are more likely to be
shipped long distances than heavy and inexpensive,
basic steel wheels.
