A new study has found that first tier suppliers are putting increasing pressure on their second tier suppliers, in response to price reduction demands from the vehicle manufacturers.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more


According to Automobilwoche, the study, conducted by the consultant Hans-Andreas Fein, and the US automotive consultants IRN, and now in its third year, looked at 188 price rounds. It found that relations between contractors and sub-contractors in the industry are at a new low.


“Two thirds of suppliers surveyed think that the atmosphere between companies is extremely hostile and even poisonous,” said Fein. Half of suppliers said that purchasers do not give suppliers any room for negotiation with their price reduction demands. A tench of supplires said that they found discussions with customers were ‘dictatorial’. Some even went so far as to say they are ‘cold, frosty and brazen’.


Only 10% of price rounds were considered constructive or conducted in a partnership manner. Just 8% were considered friendly, fair or cooperative.


The survey noted a difference in mentality between vehicle manufacturers that are family-owned and those that are pure public companies, BMW, Porsche and at times Peugeot, were considered more cooperative and less demanding in price negotiations. On the other hand those companies with shareholders to please were much tougher.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

On average vehicle manufacturers demanded price reductions of 4.2% while large suppliers demanded, on average, reductions of 7.1% from their suppliers.


Although Ford and Renault made amongst the most aggressive demands, they were not necessary the most successful in achieving cost reductions. Ford achieved cost reductions of on average 2.5%, while Renault had to content itself with 2.3%. Suppliers achieved reductions of around 2.9% in 2006.