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About how much of your car is actually designed by the car company itself?

01/28/10

Show me the nugget

Just more than half

What: About 45 percent of the stuff in your car is designed, engineered, tested and built by parts suppliers. And experts say that number could go as high as 60 percent in the next couple of years.

Why: As the various components of vehicles have gotten more complex — think fancy computer and electrical systems — the cost of R&D has gone up. And even before the economic crisis, car companies couldn’t afford to invest all the money they needed to develop just one system. Plus, union workers on the assembly lines at carmakers get paid a lot. And it just wasn’t economical to pay them the big bucks to build a simple part.

Suppliers have responded by getting more and more specialized — so there are go-to companies for seats and interiors and power trains, etc. They recoup their R&D costs by selling to more than one carmaker.

Get this: There are somewhere between 2,000 and 3,000 suppliers in North America — and an automaker may use as many 3,000-4,000 suppliers. That number has dropped in the last several years, and the industry has been hit badly by the downturn in the auto industry overall. The industry association for suppliers says more than 50 suppliers filed for bankruptcy last year.

Learn more about parts suppliers’ role in Toyota’s recall of millions of vehicles this week. Alisa Roth has the story.

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