European suppliers are shifting their business toward customers they like and making those they don’t like pay more for parts.
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And they showed clear preferences in an Automotive News Europe/SupplierBusiness.com survey: They like BMW and Toyota and really dislike Ford Europe, General Motors Europe and Fiat.
“The results show the difference between adversarial and collaborative relationships among automakers and suppliers,” said Colin Whitbread, editor of SupplierBusiness.com, a UK-based supplier newsletter that co-sponsored the survey, at the Automotive News Europe Congress.
“Those carmakers that suppliers prefer have a more collaborative model. They are easier to work with.”
In the key question of the 33 asked – “Which carmaker would you like to do more business with?” – 84 mostly Tier 1 suppliers who responded rated Toyota and BMW the highest. The same group said they wanted to do less business with Ford Europe, Fiat, GM Europe and Seat – the only negative scores among the 15 European brands.
The survey showed clearly:
– Suppliers have specific reasons for liking or disliking individual automakers. How suppliers rated automakers on key questions closely correlated to ratings on questions on suppliers’ return on investment and automaker’s support, accuracy of volume forecasts, willingness to reward cost-saving ideas and to protect suppliers’ proprietary technology.
– Suppliers have power. They are taking action, their answers show.
– Suppliers are shifting business away from less-favourite automakers to those they prefer. Suppliers identify those they are shifting business from as also having the most costly and time-consuming negotiating processes. That extra administrative time is priced into the prices suppliers charge those automakers, Whitbread said.
– Suppliers prefer premium brands. They rated most mass-market brands lower than luxury brands. Volvo scored better than its sibling, Ford. Within the Volkswagen group, Seat and Skoda scored lower than the VW brand and Audi got the best scores of the VW group members.
– Suppliers prefer automakers that are growing. Top-rated brands Toyota and BMW are also rapidly expanding European production. Those at the bottom of suppliers’ preference – Ford, Fiat, GM Europe and Seat – have flat or falling volume.
– The most profitable automakers have the best supplier relations, and vice-versa.
What the survey does not answer is cause and effect – such as whether Ford, Fiat and GM are unprofitable in Europe because they have poor supplier relations or whether their relationships are poor because they are unprofitable.
