A Re-regionalized Industry

Suppliers will have a harder time keeping costs down if the automotive world moves away from global projects and platforms.

January 16, 2026

Michael Robinet

Recent geopolitical events in Venezuela, Ukraine and other hot spots are a stark reminder that the long-term planning environment is fraught with challenges and opportunities that suppliers cannot control. The initiation of U.S. tariffs on its trading partners and various embargos also underscored that we have to be flexible in how we dole out capital and the risk we are assuming. The supply base is at the end of that chain. Any issues upstream will reverberate exponentially.

It is obvious that the automotive world is re-regionalizing, and quickly. Why the concern? Some context. Until the ’70s, every region essentially rowed its own boat. While there were some exports from one major region to another, there were regional OEMs that were sponsored by national governments due to job creation, tax base considerations and bragging rights. The U.S, France, Italy, Germany, Japan, South Korea and a host of others wanted to build national OEMs that could drive scale and become a global force.

Once the ‘80s came around, trade pressures from various governments drove many OEMs to co-locate production to key export regions. Controlling costs, cutting inventory, and lowering trade exposure were the primary goals. As such, Europe, China and North America witnessed the growth of foreign OEM output through the use of global platforms. Common structures were built in multiple regions to reduce development costs, cut platform counts, and increase scale. Why re-invent the wheel? It was the blueprint that virtually every global OEM utilized to mitigate risk. According to the S&P Global Mobility Light Vehicle Production forecast, as recently as 2019, a staggering 68% of the world’s production was built in more than one region.

Fast forward to today. Several factors will see global platform production decline in the future. Firstly, the volume growth of several Chinese OEMs in China and on an export front has reduced Western OEM volumes in China. The vast majority was based on global ICE-based platforms. As Western OEMs face stiff headwinds in China, their volume has declined and will continue to fall in the future. Secondly, from an emissions regulation perspective, the major vehicle regions are diverging, not converging as once forecast. Recent downgrades in the U.S. and adjustments in the European Union emissions regulations through 2035 underscore that it will be more difficult to engineer one platform/propulsion system that is competitive in all major markets. Thirdly, increased competition is dictating faster development (driven by many Chinese OEMs) and rising need for market-specific vehicle customization – another knock against global platforms designed for all.

This ecosystem re-regionalization will have a clear impact on global OEMs and scale economies. The same forecast referred to earlier now has global platform volume share forecast to dip below 50% by 2030, down from 68% a decade earlier, as each major region charts its own course.

The supply chain impacts are significant. The loss of global scale, lower volume per platform/nameplate and greater complexity adds cost for suppliers. Additionally, a higher part number count drives more tools, with the possibility of lower quality as more processes are introduced. Previously, global suppliers could leverage volume in multiple markets to drive costs down and secure sourcing across many markets. As the advantages of global platforms wane, regional suppliers can better compete.

In the end, this shift will reduce vehicle scale economies and impact vehicle cost. Not in a positive way. It was a good ride for almost half a century, but now the shifting secular dynamics facing the global auto industry will reduce global coordination. Welcome to the new reality.