Navigating the new era of automotive procurement

In today’s automotive landscape, "business as usual" is no longer a viable option for direct procurement. Automotive manufacturers are confronting a severe convergence of structural cost shocks, shifting trade policies, and intense supply chain volatility. As average new vehicle prices have climbed from roughly $37,000 in 2020 to $49,000 in 2025, vehicle affordability headwinds are contributing to longer ownership cycles and intense margin pressures for original equipment manufacturers (OEMs).¹

Automotive direct materials procurement today is inherently complex and difficult to manage with traditional, fragmented solutions. New product programs can drive hundreds of sourcing activities across thousands of parts, all moving at high velocity and at different stages of the lifecycle. Procurement teams must coordinate closely with engineering, suppliers, and internal stakeholders, manage constant changes to specifications and demand, and run repeated supplier interactions and negotiations while evaluating increasingly complex responses (cost breakdowns, timing, tooling, etc.). At the same time, all of this activity must ultimately translate into structured, compliant contracts and downstream execution in enterprise resource planning systems—creating significant manual effort, limited visibility, and challenges in maintaining alignment across planning, sourcing, and contracting processes.

Addressing these domain-specific challenges requires more than an off-the-shelf software deployment; it demands a strategic alliance and a tailored approach. SAP and KPMG work alongside automotive manufacturers to co-innovate and design procurement ecosystems that fit their unique operational realities. Rather than forcing generic tools onto complex processes, we leverage the SAP Direct Materials Sourcing Suite (DMS) as a powerful, flexible foundation. Developed through co-innovation projects with automotive OEMs, this suite allows us to collaboratively integrate sourcing directly into the beginning of the product lifecycle. The suite also provides a common digital process platform that can generate clean and consistent data to fuel your agentic AI initiatives. Download this article to learn more.

¹ KPMG US Automotive Monthly Health Monitor, Volume 73