SPEAKER 1: We've just spent a lot of time talking about the OEMs or the original equipment manufacturers. What I'd like to talk about now is I'd like to talk about suppliers. The names of the suppliers may not be very big or as popular, but certainly the technology and the parts they provide are crucial for the quality, technology, and the cost of the new cars and trucks.
Looking at this Ford Focus here, we can talk about one of the big suppliers for Ford, which is Visteon. And I want to pop the hood of this car and just see what some of the parts are that we'll need to know. The parts companies can be making the lights here, they can be making any of the interiors, and they supply almost every single part of the car with the exception of the engine and the transmission.
Looking underneath the hood of this Ford Focus ZX5, you can see that it's filled with lots and lots of parts. You've got thousands of parts and components that go into any individual vehicle. And these parts are made by a variety of different companies.
The trend lately has been doing it in systems. So you'll have the same company try to provide such as the power train, which would be the engine and transmission. You have another company that may be working on the anti-lock brakes systems, they'll be working on the heating and cooling systems that are there. And it's much easier for the OEMs or the big car companies to deal with fewer numbers of suppliers and deal with systems so that all of the parts fit together and function as a complete unit. Doing it only smaller individual parts runs into more quality problems.
The big deal for the suppliers is trying to make sure that they are almost invisible to the user. You will look inside here, you won't see a lot of names. They don't label everything. They really hide in the background.
But when they go wrong, if any of these parts go wrong such as a radiator or a battery, you can be stuck on the side of the road. And who gets the blame? It's usually not the supplier that gets the blame, it's the global companies such for this would be Ford. Ford will get blamed for having any particular part go wrong. Whereas they may not have even been involved in the making of it.
Well, we've looked underneath the hood of this Ford Focus ZX5, but that's something most people don't do nowadays. They've become so integrated with different computer systems that even if you wanted to fix and repair the parts you don't have the diagnostics to be able to do that. So let's close the hood here and take a look at what's going on inside the car.
Inside the car, you're going to be running into a lot of the different global tier one-- tier one meaning one of the larger, the first tier suppliers-- some of the tier one suppliers that would be provided. You've got seats here, most likely made by one of the companies such as Lear or Johnson Controls.
You've got the cockpit, which is what it's called, named after the aerospace industry like a jet fighter, the cockpit having a lot of the different electronics for the radios, CD players. Now you're getting into some of the multimedia or DVD players. You've got different companies that could be doing the air conditioning units could be built by different companies such as Delphi or Visteon.
You've got the instrument panels could be done. The instrument panels could be built by one supplier, that tier one supplier, but could very easily be getting a lot of other parts from tier two and tier three suppliers.
If you look at the steering wheel inside the ZX5, you can see that it's got an airbag. The airbags are pretty important for safety, but I bet it contains some things you didn't know it had. Almost all air bags contain gold. So they're literally made of gold so the connectors will react fast enough for it to explode on impact. So it's a pretty crucial system that's a relatively new innovation in the car industry.
Looking in the backseat, you can see some other safety features. You've got a lot of the seat belt use that they're being made by different companies, could be made by TRW and some of the other safety suppliers that are focusing on safety aspects. Seats could be made by multiple different suppliers.
Head rest, door panels, sometimes the glass is made by a supplier. Visteon has a huge glass industry. A lot of the lights, different lighting units could be from different tier one suppliers.
Many of these parts suppliers supply more than one company. The largest part supplier or tier one supplier is Delphi. Delphi used to be part of General Motors, now it's been spun off on its own since 1999.
The second largest supplier is Robert Bosch. Bosch you may have heard of for developing some very important safety systems. Bosch was the first one to put the ABS or anti-lock braking systems on cars.
They were famous in the United States for many, many years for their spark plugs. They were the ones who kind of helped put high performance engines in today's cars. Without Bosch and their spark plugs and their electronic fuel injection systems, cars today would be very different and nowhere near as high performers.
The third on that list for the global suppliers is Visteon. But I want to get back to this again a little bit later in the next section. Let's move on to talking about some of the other companies as well.
From Japan you have some very large corporations involved in the supplier industry. You've got Denso, which used to be Nippon Denso. Used to be part of Toyota. So like Delphi was spun off, Visteon was spun off, Denso was also spun off from Toyota.
The other company from Japan, you've got Aisin Seiki. So you've got two big suppliers from Japan. You've got quite a few different suppliers from Europe.
You've got Faurecia from France. Bosch we've mentioned. You've also got Valeo and Siemens. So you've got several European ones.
You also can see Magna, that Magna's from Canada. So you've got the largest global suppliers making up quite a unique group of suppliers. You've also got the North American suppliers. In North America, it's the names you may be more familiar with.
So each of these companies focus on different regions. Delphi, 77% of their sales are here in North America. You've got 18% in Europe, 3% in Asia, and 2% in the rest of the world for a total of about $25 billion in sales.
An interesting note about Bosch is Bosch sells a lot of their sales in Europe. And the value of the euro keeps gaining on the US dollar. That if the euro keeps gaining, Bosch is poised to pass Delphi as being the largest supplier based on sales globally.
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Buying a car made in America is easier said than done. A quick look at the auto industry shows global competition is stronger than ever. The top 12 global car companies represent the U.S., Japan, Germany, Italy, France, and South Korea.
When you consider the manufacturing of parts and assembly of vehicles imported to the U.S., then Mexico, Canada, the United Kingdom, Sweden, China, Belgium, and Australia become major players as well. The global auto industry presents a diverse mix of nationally- and internationally-owned companies, all fiercely competitive. Understanding the current auto industry can help consumers be more aware of where their products are made.
This video is part 4 of 6 in the Today's Cars series.