Global Sales Strategies in the Automotive Electronics Industry

Thank you for your time, Dan. Shall we start with you telling us a little bit about yourself?

Dan McGregor, born and raised near Detroit, Michigan which remains the home of many North American automotive manufacturers and industries. I have worked for over 45 years in various aspects of automotive manufacturing, sales, and service. Working for several international Tier I automotive suppliers, sales firms and contract manufacturers has given me a great appreciation for the ever-changing automotive landscape. For the past 9 years, I have been with APAG CoSyst starting as the North American VP of Sales and now leading the global sales team.

Over the past decades, how has the electronics manufacturing industry evolved in terms of technology, customer demands, and competition?

From the ‘horseless carriage’ to the ‘self-driving vehicle,’ technology has come a long way. The speed at which new concepts are being introduced and implemented is staggering. For companies to stay relevant in this industry, they must continue to offer products and services that the customer wants and needs (and be very good at it).

The basis of a great sale is the relationship between the salesperson and the customer. Many years ago, the two would meet face to face, present the proposal, negotiate the deal, and finalize it with a handshake. A deal was made on trust, commitment and execution of the promises made.

This is still the concept today but it now includes, signing non-disclosure agreements, receiving (electronically) hundreds of pages or documents, submitting responses through customer portals, negotiating the terms and conditions of the sale, coming to terms on the price, delivery, logistics, quality and more. Email, internet, and video conferences have replaced the handshake deals of the past and prohibit the customer from getting to know their salesperson (and vice-versa). Sourcing decisions are no longer made by a buyer and now require several layers of approval.

As automotive (globally) is a multi-billion-dollar industry, there will always be multiple competitors in every space. It is important to know your competition to gain a better competitive advantage and this is yet another challenge for the sales team.

What are the key turning points that defined this evolution?
In attempts to make cars better, reliable, comfortable, safe, attractive, and more versatile the automakers have continuously changed products and processes through the years. We have come a long way since Mr. Ford said “You can have any color you like, as long as it’s black.” From diesel options to combustion engines, and now hybrids to fully electric vehicles offering multiple option packages and accessories, the interest and demands from customers are also continuously changing.

A strong sales team needs to follow the trends, the products and the implementation plans for new products as they relate to a multitude of current and potential customers. Expectations and demands vary greatly from customer to customer and each needs to be addressed in a way that meets their individual requirements. One size does not fit all.

What are your thoughts on effectively managing customer relationships?

All customers are not the same, it is true that all customers have a common expectation that the supplier will be the best in areas of QSTP – Quality (single digit PPMs), Service (responsiveness), Technology (latest state-of-the-art products) and Price (most competitive bid). If all competitors are equal in these areas, the differentiator is the relationship.

As companies grow and evolve, this is hard to manage. People change jobs, departments are moved, some companies are acquired by other companies through joint ventures or acquisitions and then the relationship changes again (or completely disappears).

A great rule here is to treat everyone from the janitor to the CEO with the same level of respect which everyone deserves. Maintain relationships with everyone possible so as they move to other departments or companies, they will remember the efforts you have made to help them get there. If your efforts are sincere (and they should be) it will make the difference in your wins and losses.

How has the economic landscape shaped the sales management strategies in the automotive industry?

Even with meeting all QSTP requirements, customer economic expectations have become more demanding over the years. Each has its own demands that directly relate to a supplier (and customer) making a profit. The expectations now include having the lowest price for the final product, in the cost of the resources to launch that product, in annual reductions after the sale, in ‘quick savings’ (payment to the customer previous to the nomination) and a commitment to review pricing annually for additional savings.

On top of this, customers these days are asking for payment terms of 75 to 90 days while raw material suppliers are asking to be paid in 30. This turns a company into an actual bank by having them literally ‘carrying’ the balance difference for 45 to 60 days. These factors play a significant role in calculating, proposing and winning business.

In what ways do currency fluctuations and trade policies impact sales in the automotive industry?

Currency fluctuations are something that every international company needs to deal with, as they affect all companies. This means that it is not a big issue, regarding competition, depending on where you manufacture (labor) or from where you purchase your components (material).

Depending on the customer’s location, many of them prefer fixing the price upfront and that there be no currency exchange agreements in the contract. But this is a ‘risk/reward’ activity in the fact that the currency can ‘swing’ into their favour (or out). By having an exchange rate clause in the contract no one loses, but no one wins, as the prices will change quarterly based on the exchange rate fluctuations.

Fixing currencies at the beginning of the program is a risky task for each side and the larger programs will usually have some type of exchange rate clause to mitigate the risk for both sides. Tariffs, on the other hand, are a different animal as they are imposed based on global trade, government involvement, and political standings. This will be an issue this year but will also apply to many electronic suppliers so the ‘playing field’ should remain relatively even with an anticipation that prices will go up. Currently, the Tariff threat is more posturing than real but the outcome is yet to be realized.

How is the rise of EVs influencing customer demand?

Although EV brings more opportunity for electronic content, with the exception of one EV manufacturer, the volume of product orders are nowhere near that of ICEs (internal combustion engines) orders we receive. The annual volume of the product, along with the expected yearly length of the contract, are two of the things that make automotive supply most attractive.

Each OEM has introduced their own versions of Hybrid and Electric Vehicles due to some customer demand but largely due to Electric Vehicle mandates imposed by various governments. Those mandates continue to change based on countries leadership changes. This adds yet another variable to the OEM’s (and sub-suppliers’) future planning of vehicle offerings.

Even with the ever-changing landscape, the automotive industry has been somewhat stable and strong for many years now. There is a trend to have a downturn in demand every several years. However, even through Covid times, the industry stayed relatively robust. Currently, with several countries having elections coming up with pending changing party preferences this year, we see the chance for another shift coming. However, the longevity of the auto industry is solid and for companies that can weather the ‘ups and downs’, it is still a great industry to be part of.

At APAG, our sales team is fortunate to be able to offer a variety of products and services from development support (electrical, mechanical and software), and access to a complete automation team (development, assembly and test) to fully certified, state-of-the-art manufacturing capabilities. We are diversified, flexible, and have a dedicated team.

With all the challenges that come with today’s sales efforts, having a full portfolio of products and services is a great foundation for selling. Having an innovative product base of electronic controls and specialized lighting has allowed us the pleasure to build a strong customer base and we intend to build on that momentum while continuing to look for new opportunities for growth.

APAGCoSyst is a leading supplier of electronics for the automotive, medical, and industrial sectors. Our state-of-the-art, high-quality production is flexible and responsive with products ranging from simple assembled PCBs to packaged and finished components. We specialize in designing and manufacturing electronic control units (ECUs), lighting, and electronic manufacturing services (EMS), as well as providing top-notch industrial automation services. We are driven to deliver excellence as a global partner for our customers. Join us and explore the world of electronic control units. To learn more about our services, please visit our website at www.apagcosyst.com. If you are interested in our services, please feel free to contact us via email at info@apagcosyst.com.