The poor economic environment is affecting relationships between suppliers and vehicle manufacturers.
Industry analyst Willi Diez told German press agency dpa that the situation was similar to that of banks being unwilling to lend because of a lack of trust in these uncertain economic times.
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As vehicle manufacturers try to cut costs, suppliers are hurting. And yet vehicle manufacturers are increasingly dependent on supplier innovation, said Klaus Bräunig of the German vehicle manufacturers trade association, Verband der Automobilindustrie (VDA). They account for 75% of value added in the industry.
Suppliers are the industry’s innovators, but they often need bank credit to fund their research and development, said Diez. Vehicle manufacturers can sometimes be asked to guarantee loans but they are reluctant to do so at the moment.
The lack of trust goes even deeper. Suppliers are fearful of vehicle manufacturers’ financial situations and some are asking to be paid ahead of delivery.
Companies with money to invest in research and development will emerge stronger from the crisis than they were beforehand, according to Bräunig. But vehicle manufacturers will no longer leave innovation to suppliers, he said, citing the example of Daimler, which has decided to develop battery technology in direct competition with its supplier, Bosch.
