PSA is to ask suppliers to refund money they had been given to allow for higher raw material prices.
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PSA’s head of purchasing Jean-Christophe Quémard was quoted as saying that prices were now back to last April’s levels and that the company wants to recover the additional payments as quickly as possible.
Quémard is not expecting to get all of the additional payments back. “Our first priority will be to profit from the change in raw material prices in 2009.” High raw material prices was the main reason that the company failed to meet its target of reducing costs by 6% a year during 2008, he said.
Quémard said the company was expecting to exceed overall targets to reduce administration and general costs. Targets originally set for 2010 would now be moved forward to the end of 2009. A significant part of that would come from new contracts for mobile telephones, travel and advertising.
PSA has around 800 suppliers who supply parts valued at around EUR30bn. Attention would focus on the 13 most important suppliers, which PSA would expect to reduce costs while also improving quality. Quémard said savings of several hundred euros per vehicle were possible.
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By GlobalDataPSA has also asked suppliers to renegotiate contracts with their own raw material suppliers.
