Study of industry and

market dynamics –
Automotive seating

Summary report,
February 2020
In the following report Strategy& gathered insights regarding
the automotive seating market
Scope and management summary
Scope of report Management summary

• Market for car seats is growing faster than the global

automotive market and will reach approximately 77 Bn.
Expert interviews Desk research USD in 2025
Various expert interviews Analysis of numerous
with OEMs and seat reports, studies and
• Market shares vary greatly between the markets – the
manufacturer scientific articles big players have balanced between 9 and 31% of the
global market
• A differentiated picture of the seating market emerged –
above all, the difference between the US and EU was
striking
Results
• Expert interviews showed that innovation, development
Comprehensive analysis of automotive seating market expertise, process landscape and sustainability are
and industry dynamics, OEM nomination criteria for seat
manufacturers, competition landscape and innovation/
differentiating factors
technology trends • In the near future especially comfort and sustainability-
related innovations are expected

Automotive seating report February 2020

Strategy& Source: Strategy& 2
One result of the report was the development of a JIT tool for
site-decisions/ optimizations on a global scale
Strategy& JIT tool

What's in it for you How to use the tool

SITE SETTINGS

• Display of OEM production • Display of key facts per

sites worldwide based on selected site and selection
latest IHS data of different KPIs for detailed
• Transparency regarding analysis possible:
DASHBOARD locations and landscape of • # of vehicles produced
global seat manufacturers • # of SOPs
• Analysis of catchment area • vehicle segment etc.
for site-decisions by varying • Filtering options according to
distance from JIT to OEM OEM, vehicle segment and
site (based on geo data) period of time available

Automotive seating report February 2020

Strategy& Source: Strategy& JIT tool 3
Content of report

01 Global automotive seating market

02 OEM nomination criteria for seat manufacturers

03 Automotive seating innovation/ technology analysis

Automotive seating report February 2020

Strategy& 4
 Top-down analysis

Market for car seats is growing faster than the global

automotive market and will reach approx. 77 Bn. USD in 2025
Development of global market
Global automotive market1 Global automotive seating market Comments

Market size [bn. USD] Market size [bn. USD] • The market has stagnated
4,000 100
from 2017 till 2020 for both,
vehicles and seats
90
3,500
+4.4%
80 +4.7%
3,000 +0.1%
-0.1%
• From 2020, the automotive
70 seating market will grow at a
2,500 60 faster rate than the global
automotive market
2,000 50
(4.7% compared to 4.4%)
40
1,500

1,000
30 • This is due to technological
20 and regulatory trends
500 10
0 0
2016 2018 2020 2022 2024 2026 2028 2030 2016 2018 2020 2022 2024 2026 2028 2030

Spread of analysis Average of analysis XX CAGR (compound annual growth rate) Top-down calculation of various studies and strategy & research

Automotive seating report 1) includes passenger cars, LCVs excluded February 2020
Strategy& Source: Strategy& desk research, Allied Market Research, Mordor Intelligence, Technavio, IHS Sales Forecast 5
Market shares at a glance – various automotive seating types
as well as fabric covers shows potential growth areas
Market overview

74.9 % 46.3% 43.9 % 53.5%

Market share passenger cars Share of standard seats Fabric share of seat covers Market share APAC

Vehicle types (2018) Seating types (2018) Seat covers (2018) Seat market regions (2019)

6.6% PC Standard Real leather NAFTA

10.2% 17.0%
LCVs Electric 18.7% Artificial leather EMEA
18.5%
HCVs 20.4% 46.3% Air-conditioned 43.9% Fabric APAC
Others 55.9% 27.2%
74.9% 34.5%
23.1%

• Great market potential for • Standard mechanical seat • Fabric with a high share • APAC with highest global
RATIONALE

car seat manufacturer with high market coverage related to total market share (56%)
penetration market for seat covers
• High share of passenger • APAC as potential and
cars according to total • Market dynamics • Increased pressure on car promising growth area for
market for all vehicle types characterized by E/E and manufacturers regarding seat manufacturers
HVAC components environmentally and
animal-friendly production

Automotive seating report PC: Passenger cars LCV: Light commercial vehicles HCV: Heavy commercial vehicles HVAC: Heating, Ventilation and Air Conditioning February 2020
Strategy& Source: Strategy& desk research, Allied Market Research, Mordor Intelligence 6
Furthermore, shares vary between the markets – The big
players have balanced between 7 and 31% of the global market
Competitor’s market share

Global NAFTA EMEA APAC

Adient1 and Lear with 54 % Magna with high relative strength Faurecia strong in its domestic market Local players very dominant

Others Others
Others Others
18% 15%
25% 25% 25% 23%
31%
9% 11% 41%
2%
2%
7% 12% 15%
13% 4% 26% 20% 28%
23% 7%
9% 12%

• 5 suppliers cover 82% of • Relatively high proportion • 4 suppliers dominate 84% • Adient with a very strong
RATIONALE

the total market of smaller suppliers of the market footprint related to several
other Chinese JVs and
• Globally relevant suppliers • Relatively balanced NAFTA • Faurecia strongly players
have between 7 and 31% market regarding car seat represented in its domestic
market share manufacturers market

Automotive seating report Others: Yanfeng, TS Tech, DYMOS among others 1) Adient share including joint ventures February 2020
Strategy& Source: Strategy& desk research, Allied Market Research, Mordor Intelligence 7
Looking at costs, players like Faurecia were able to adapt
their costs to gain a strong market position especially in EMEA
COGS over revenue
CAGR COGS 2016-2018 (in %)
Comments
10
Dana
Cost Disadvantage
9
Freudenberg
Cummins
• Lear and Magna have been
8
Plastic Omnium Iochpe able to improve revenue
7
Linamar Huayu without a disproportionate
6

5
MANN+HUMMEL
Leoni
increase in costs
Hankook Tire Covestro
4 Schaeffler Continental Valeo
Infineon
• Adient had to record a decline
Denso
3 Bridgestone Hella
Asahi Glass in revenue and was not able
2
Adient
Lear to adapt production costs
1 Autoliv Magna
Goodyear Share of seating within company
0 NTN (revenue 2018) • Faurecia managed to reduce
Toyota Boshoku
-1 Tachi-S
Stanley Electric
Faurecia 42% costs to a higher degree than
NSK
-2
Hitachi
they suffered in revenue
Sungwoo

• Decline in revenue and cost

-3 ThyssenKrupp 13%
Koito Faurecia
Visteon Adient Magna
-4

-5
TS Tech 95%
reduction have been
-6
Calsonic Kansei Martinrea proportional for Toyota
35%
Lear
76%
Toyota Boshoku Boshoku
-7 Cost Leadership
-8
-7,0 -6,5 -6,0 -5,5 -5,0 -4,5 -4,0 -3,5 -3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5
Seating suppliers on corporate level TOP 100 Linear regression line
CAGR revenue 2016-2018 (in %)

Automotive seating report February 2020

Strategy& Source: Strategy& Automotive Supplier study 2019, Strategy& desk research, Bloomberg, Statista, Annual Reports of related companies, 8
Content of report

01 Global automotive seating market

02 OEM nomination criteria for seat manufacturers

03 Automotive seating innovation/ technology analysis

Automotive seating report February 2020

Strategy& 9
We conducted 11 interviews discussing strengths and
weaknesses and the development of the seating business
Interviews

• Decisive OEM nomination criteria

• Competitive weaknesses from the OEM's
perspective
OEM • Innovation needs from the OEM's perspective

07 Interviews with
well-known OEMs
• Strengths/ weaknesses of competitors MANUFACTURER
• Competitive positioning
• Innovation needs from a competition perspective
04 Interviews with
Tier-1 seating players

Automotive seating report February 2020

Strategy& Source: Strategy& 10
A differentiated picture of the seating market emerged – above
all, the difference between the US and EU was striking
Interview quotes
Team leader purchasing China Project Manager Seats Head of department procurement interior

"The competition on the market is currently "Price pressure beats at the end of the day "The current suppliers on the market are
very manageable - an additional every innovation" resting on their laurels and are not very
Competitor would be very positive" innovative"

European OEM European Supplier European OEM

Series Manager OEM VP Business Development Purchasing Manager Seats QMT

"Competitors who can take ownership beyond "Vertical integration is a necessary evil to gain “Specific seat supplier was very disappointing
all value chains have a great advantage in control over quality and SOP" with insufficiently qualified employees and a
terms of trust" late change of production location - this must
not happen again"

US OEM US Supplier European OEM

Automotive seating report February 2020

Strategy& Source: Strategy& interview series with OEMs and competitors 11
While most of the Top OEM criteria is fulfilled by seating
manufacturers, innovation is still a white spot
OEM nomination criteria (1 of 4)
Criteria Interview-scoring Evidence from interviews
Low High • Usually decisive for awarding
Commercial • Especially within current cost reduction pressure, procurement has
competitiveness to achieve challenging saving targets
Pricing, pricing conditions 1 2 3 4 5

JIT factory planning • OEMs consider willingness to invest as basic prerequisite

JIT/ JIS Factory planning – • Seating suppliers are aware of the high importance and are
Willingness to invest in new plants investing accordingly
close to OEM 1 2 3 4 5

• Agility is considered as hygiene factor

Agility • Especially relevant in Asian countries
Ability to react flexible and fast to • OEMs are generally satisfied with suppliers (especially
customer demands 1 2 3 4 5 FCA with Magna)
• Ensuring quality is crucial for OEMs
Quality management • OEM expectations are generally fulfilled by existing seating
Standards for effective quality suppliers – exceptions existing
management processes in plants 1 2 3 4 5

• OEMs value ability to innovate

Innovation capability • Competitors are questioning innovation due to cost pressure of
Proactive demonstration of design OEMs
and product innovations 1 2 3 4 5 • As a consequence OEM innovation requirements are not fulfilled
OEM relevance for nomination Positioning of seating manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 12
OEMs are not satisfied with process landscape, R&D
expertise and sustainability of their seating suppliers
OEM nomination criteria (2 of 4)
Criteria Interview-scoring Evidence from interviews
Low High • Interview partners attach high importance to change management
Change management • Change management is used by seating suppliers for price
Fast and pragmatic response to increases
change requests 1 2 3 4 5

Process landscape • Current suppliers are already integrated to a high degree

process landscape interlinked with • However, there have been problems to achieve milestones regularly
OEM including milestones, quality (especially quality)
gates, role descriptions, etc. 1 2 3 4 5 • Integration is highly relevant for OEMs to exploit efficiency potentials
• OEMs expect inhouse expertise for R&D
R&D expertise • Not considered as important from seating suppliers because of cost
Internal know-how advantages if R&D is done by external service providers
1 2 3 4 5

• OEMs with stronger focus on holistic and robust production

Production management management within the context of negative experiences
Robust production management and • Considered as important by seating suppliers but not fulfilled
planning to avoid delivery stops 1 2 3 4 5 sufficiently
• High variance within interviews
Sustainability • Interview partner expect increasing relevance especially for German
Sustainable and ecological product OEMs (e.g. Daimler)
design and production 1 2 3 4 5 • Geographical differences (e.g. China)
OEM relevance for nomination Positioning of seating manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 13
Nomination criteria with medium relevance from a OEM
perspective are almost fulfilled to OEMs’ satisfaction
OEM nomination criteria (3 of 4)
Criteria Interview-scoring Evidence from interviews
Low High • Is checked by OEMs in advance to awarding within a risk
Financial stability assessment
Financial health of company or
mother company 1 2 3 4 5

• Due to negative experiences OEMs set their focus more on

Production expertise production expertise
Inhouse (series) development and • OEM expectations are generally fulfilled by existing seating
production 1 2 3 4 5 suppliers – exceptions existing
• OEMs demanding orientation to their production footprint
Production network • Seating suppliers are taking OEM production footprint into location
Existence of global production decisions
network 1 2 3 4 5

• Independent project-/program management is considered as basic

Project/ program prerequisite
management • Lacking transparence of suppliers leading to conflicts
Proactive project management 1 2 3 4 5 • Program management is part of audit
• Global supplier management is expected by OEMs
Supplier management • According to interviews, suppliers are overachieving expectations
Global supplier management and
material planning 1 2 3 4 5

OEM relevance for nomination Positioning of seating manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 14
The relevance of vertical integration capabilities is assessed
higher by seating manufacturers than OEMs
OEM nomination criteria (4 of 4)
Criteria Interview-scoring Evidence from interviews
Low High • Stable partnerships are especially relevant for big platform projects
Partnership • However, assessments vary among interview partners
Stable partnerships from former
projects (project history) 1 2 3 4 5

• Only minor relevance for awarding decision

Geographical origin • Partially slight preference for local suppliers
Geographical origin of seating
supplier (EU, NAFTA, China) 1 2 3 4 5

• Ability to vertically integrate single components is assessed as

Vertical integration crucial by seating suppliers
High vertical integration of single • Against the background of current procurement strategies
components 1 2 3 4 5 (especially German OEMs) with low relevance
• Plant managers are not considered as important by OEMs
Plant management • Criterion within plant audit
Competent plant manger for
avoidance of quality issues 1 2 3 4 5

OEM relevance for nomination Positioning of seating manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 15
The analysis showed that innovation, R&D expertise, and
process landscape are differentiating factors
Nomination criteria in a nutshell
Distinguishing factors Hygiene factors

High JIT factory planning

Innovation capability Change management Agility
Process landscape Commercial
R&D expertise Quality management competitiveness
Relevance for OEM

Financial stability Production expertise

Sustainability Production management
Production network
Project/ program management
Supplier management

Partnership
Geographical origin Vertical integration
Plant management

Low
Low Fulfillment by seat manufacturers High

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 16
Content of report

01 Global automotive seating market

02 OEM nomination criteria for seat manufacturers

03 Automotive seating innovation/ technology analysis

Automotive seating report February 2020

Strategy& 17
In the near future especially comfort and sustainability-related
innovations are expected by OEMs and seat manufacturers
Time perspective
Comfort Flexibility
1
22 2
Sustainability Seats flexibly rotatable, movable and
21 3 Comfort 1 Personalization of the comfort settings 12 exchangeable
Adaptation of comfort settings to biometric
20 2 13 Quick conversion to sleeper vehicles
4 measurements
Adaptation of comfort settings to emotion
3 14 Mobile Office
recognition
19 5
All comfort settings can be adjusted via HMI in
4 15 Self-cleaning materials
the seat
Speakers and noise cancelling integrated in the
18 6 5 16 Integration of workout elements
seat

Security Visual and tactile stimuli against discomfort Security

6 such as travel sickness
17 7 Actuators in the seat foam that simulate Smart linking of vehicle data with safety
7 17 systems in the seat
"walking“
Smart linking of seat data with safety systems
8 Over the air activation of comfort functions 18 in the seat
16 8
Sustainability
9 Olfactory control via the seats

15 9 19 Use of recyclable/recycled materials

10 Engines with low noise emissions

14 10 20 Use of lightweight construction materials

Flexibility 11 Memory Foam for total body contour adaptation
Assessment
13 11 21 Efficient seat climate control
12 Seat manufacturer

22 Skin foam
Short term (< 2 years) Medium term > 2 and < 5 years) Long term (> 5 years)

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 18
In terms of automotive seating comfort, OEMs and suppliers
assess the relevance of comfort-related features very similarly
Relevance assessment (1 of 2)

RELEVANCE
LOW MEDIUM HIGH

1 Personalization of comfort features

2 Adaption of comfort features to biometric measuring

3 Adaption of comfort features to emotion recognition

4 Possibility to adapt all comfort features through HMI integrated in seats

5 Speaker and noise cancelling integrated in seats

Comfort

6 Visual and tactile stimuli against discomforts like motion sickness

7 Actuators integrated in seating foam to simulate walking

8 Over the air activation of comfort features

9 Olfactory fragrance management through seats

10 Engines with low noise emissions

11 Memory Foam for total adaption to passenger’s body

OEMs Seat manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 19
When it comes to flexibility, opinions differ, whereas there is
consensus on safety-related features
Relevance assessment (2 of 2)

RELEVANCE
LOW MEDIUM HIGH

12 Turnable, movable and exchangeable seats

13 Fast conversion to sleeper vehicles

Flexibility

14 Mobile office

15 Self-cleaning materials

16 Integration of workout elements

Safety

17 Smart connection of vehicle data and safety functions integrated in seats

18 Smart connection of seat data and safety functions integrated in seats

19 Usage of recycled/recyclable materials

Sustainability

20 Usage of lightweight materials

21 Efficient seating air conditioning

22 Skin foam

OEMs Seat manufacturers

Automotive seating report February 2020

Strategy& Source: Strategy& analysis, expert interviews 20
Contact us

Henning Rennert Dr. Alexander Timmer Martin W. Rauscher Christoph Faller Christian Hasebrink
Partner, Strategy& Director, Strategy& Senior Associate, Strategy& Senior Associate, Strategy& Associate, Strategy&
henning.rennert@ alexander.timmer@ martin.rauscher@ christoph.faller@ christian.hasebrink@
strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com

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practical strategists that is integrated within the PwC network of firms. For more about Strategy&, see www.strategyand.pwc.com.

Automotive seating report February 2020

Strategy& 21
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© 2020 PwC. All rights reserved.

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