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Decreased Domestic Production Puts Pressure On Parts Suppliers

August 15, 2007

DETROIT — Auto parts suppliers are experiencing loss as a result of the recent decline in profits — a combined loss of $15 billion last year for domestic automakers — in the North American auto industry, according to the Detroit Free Press. With the decrease in consumer demand, automakers are reducing production and looking to save on auto parts, which puts pressure on suppliers to lower prices to stay competitive.

The cost to make these parts, however, is increasing as demand is decreasing, causing many suppliers to fall into debt.

Auto analysts have suggested looking for innovations for products, which will set a supplier apart from its competition. Suppliers that offer breakthrough powertrain technology have greater opportunities for growth than those that do not.

Another way to keep up with the changing market is to expand, supplying parts to different areas globally where auto industries are flourishing. Costs may be less in other countries as well.

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