Survey Shows Price Pressure has Intensified in the Last Two Years

According to a survey of OE suppliers, nothing has changed for suppliers so much in the last two years as the pressure from OEMs to cut prices.
That theme was one of several that emerged from comprehensive surveys of parts makers conducted in 2003 by SupplierBusiness.com.
The surveys dealt with relations with five major OEM groups – General Motors, Volkswagen, BMW and the Renault-Nissan alliance.
Demand for lower prices was the most conspicuous change uncovered in the surveys. All five carmakers have intensified price pressure – GM most of all.
“The pricing environment is more difficult than I remember, apart from perhaps the Lopez period in he early 1990s,” said Hayes Lemmerz CEO Curtis Lawson.
Supplier companies were asked to rate changes at each carmaker on 15 key issues over the last two years, a time in which the car industry has faced severe pressure on volumes, and suppliers have struggled to maintain healthy margins.
SupplierBusiness.com is continuing its surveys of OEM-supplier relations.
Results covering other major OEM groups will be published throughout 2004.
The past two years have been tough ones for suppliers, the survey respondents made clear. Carmakers are less willing to pay for development costs and have made it harder for suppliers to earn an acceptable return on investment.
Meanwhile, suppliers say demands for better quality and for product liability guarantees have soared.
General Motors is the only OEM whose attractiveness as a business partner actually became worse in the opinion of suppliers. But parts makers saved some strong criticism for Volkswagen, too.