Complete Supply Chain/ Main Players involved

A Single passenger car has about 30,000 parts considering even the smallest parts such as
screws. No one manufacture can manufacture all the necessary parts required by itself
because of cost consideration, and gaining expertise in all areas of manufacturing. The 30,000
parts will require different raw materials along with distinct manufacturing processes, and
high-quality parts will require R&D costs, thus is effective to outsource these parts from
suppliers who possess expertise. Thus, an OEM has to rely on a network of suppliers to
provide with parts, systems/sub-systems, and components to manufacture a complete car.
Furthermore, it also depends on a distribution network to reach the end user, these dealers
will provide coverage in reaching a large of customers.
Let us explore the different players that are involved in the supply chain of automotive sector
in general and mention relevant details in Pakistan’s context as well.

OEMs
In automotive sector, OEMs are the manufactures of the original equipment i.e. parts and
systems installed and assembled during the manufacturing of a new automobile.
OEMs represent the last link in the overall production cycles that includes Tier-3, which is
closest to the raw materials, through Tier-2, which supply components to Tier-1, which in
turn supply the assembled parts to them,
Original Equipment Manufacturers do manufacture some unique equipment’s, but their core
areas include design, managing the suppliers from vendors, assembling the automobiles, and
delivering to the distribution network.
In Pakistan, we have Pak Suzuki, Kia, Indus Motors, Faw Al-Haj Motors, Nissan Gandhara
etc.

Tier-1
Tier-1 suppliers supply parts (or) systems directly to the OEM’s, and they usually supply
Powertrains, chassis, suspension system, and engines to the OEM’s thereby making up a
significant portion of the overall frameworks of cars. These suppliers supply to a variety of
OEMs and they often have strong relationships with them.