The Future of Automotive Procurement: Key Trends for 2025

As vehicles become increasingly reliant on software and digital solutions, automotive procurement strategies are no longer focused exclusively on physical parts or traditional commodities.

Instead of merely seeking the lowest price for traditional components, procurement leaders must now focus on finding technology partners that align with their future product needs. This would include providers that specialize in software platforms, cybersecurity solutions, and connectivity components. Suppliers who can provide ongoing innovation and robust digital platforms capable of supporting a vehicle's software needs—both now and in the future—will be critical.

The increasing prominence of software-defined vehicles (SDVs) has created unprecedented challenges in automotive procurement costing models. Traditional component pricing methodologies, which were built around physical parts with clear bill of materials and established amortization patterns, prove inadequate when applied to software.

The complexity stems from multiple factors: software's inherent scalability means its development costs don't follow traditional per-unit economics, its continuous update requirements create ongoing operational expenses rather than one-time costs, and its value proposition often lies in features that may be activated post-sale through subscriptions.

Regulatory obligations have become central for automakers, and they are under increasing pressure to adopt ethical sourcing practices. In 2025, we expect OEMs to actively work on implementing IT systems and business processes around the world to comply with upcoming regulatory requirements on sustainable sourcing.

As sustainable sourcing regulations become mandatory, different regions are implementing distinct but overlapping requirements. The European Union is leading this regulatory push through the Battery Regulation and Corporate Sustainability Due Diligence Directive (CSDDD), which will be mandatory for all vehicles sold in the EU market from 2026.

In North America, while federal regulations remain less stringent, individual states like California are implementing their own strict sourcing requirements, particularly for electric vehicle components and critical minerals.

China has established its dual-control policy on energy consumption and dual-credit system for automotive manufacturers, forcing compliance with specific sourcing and environmental standards.

Japan and South Korea are aligning their regulations closer to EU standards, creating an Asia-Pacific framework for sustainable sourcing.

This regional variation in regulatory requirements is particularly challenging for global OEMs, who must now navigate different compliance standards while maintaining efficient supply chains. The result is a complex matrix of requirements where vehicles destined for the EU market face the most stringent standards, while other regions follow with varying degrees of regulatory intensity and different implementation timelines.

Collaboration with suppliers is essential for optimizing sourcing strategies. In 2025, organizations will increasingly engage in collaborative relationships with key suppliers to drive innovation and improve supply chain performance, often enabled by emerging digital enablers.

OEMs are increasingly participating in cross-industry data exchange platforms, with the European-led Catena-X initiative emerging as a significant effort to standardize supply chain data sharing and traceability. In parallel, North American OEMs are expanding their participation in industry-specific cloud platforms for real-time component tracking and capacity planning, while Japanese manufacturers are strengthening their traditional keiretsu networks with digital overlays.

These collaborative platforms are becoming essential as OEMs seek to address critical challenges including semiconductor availability tracking, raw material traceability for sustainability compliance, and multi-tier supplier risk monitoring. The trend extends beyond mere data sharing to include collaborative planning systems, shared capacity management, and joint early warning mechanisms for potential disruptions, representing a fundamental shift from traditional arm's-length procurement relationships to deeply integrated digital ecosystems.