Tier 1 and Tier 2 suppliers are two distinct categories of manufacturers in the automotive industry. The primary difference is that Tier 1 suppliers manufacture parts and components directly in contract with OEM automotive companies – i.e. the companies that actually design and sell vehicles, such as Ford, General Motors, and Fiat Chrysler.

Tier 2 suppliers, on the other hand, are contract manufacturers that produce parts for Tier 1 suppliers. These are sometimes fully completed car parts or, more often, individual components (such as custom weldments metal stampings) which the Tier 1 supplier then further fabricates and/or assembles.

In other words, the essential difference between Tier 1 and Tier 2 automotive metal stamping companies is how closely they work, collaborate, and contract with OEM car companies.

An Overview of Tier 1 vs. Tier 2 Automotive Suppliers:

Tier 1 Automotive Manufacturers

At the top of the automotive manufacturing are Tier 1 suppliers – contract manufacturers who generally only work with one or a few OEMs. These vendors keep a close relationship with the OEMs, taking on some design responsibility for the products. Tier 1 manufacturers are responsible for producing large, major parts and/or more complex multi-component assemblies.

Tier 2 Automotive Manufacturers

Tier 2 vendors produce the parts and subcomponents used by Tier 1 providers. These contract manufacturers often work on a build-to-print basis with little or no design responsibility. Common products are smaller metal stampings and weldments known as “child parts” which go into larger automotive assembly. 

A Brief Guide to the Overall Automotive Industry Supply Chain:

The companies that design, assemble, market, and sell automobiles – your common everyday “car companies” such as Honda, Toyota, and Volkswagen. OEMs handle the design of the overall vehicle, the branding, as well as the scope of the project. A product, once completed and distributed by the OEM, is associated with the OEM company.

The top level of automotive part manufacturers that work directly with OEM companies. Tier 1 suppliers produce their own parts but also partner with Tier 2 providers for various contract manufacturing services such as metal stamping and production welding.

Alabama’s Leading Tier 2 Automotive Manufacturer

Founded in 1962, SPI is backed by a long history of delivering quality metal stamping and welding services to the domestic automotive industry. We specialize in the manufacturing of:

• Chassis related components
• Seating brackets and components
• Airbag system components
• “Body in white” components

Based in Gadsden, AL, we offer superior quality and a simplified supply chain to automotive providers throughout the nation.