Suppliers and automakers clash over cost cuts and price reductions image

According to a new study made by IHS Automotive, carmakers and their suppliers are growing apart because of the constant pressure over the latter to intensify cost-cutting strategies that would lead to lower price offerings.

According to the report, the 2014 Global OEM-Supplier Relations Study, car manufacturers are asking part makers to shed as much as 10% off the price of components each year. Lead author Matteo Fini said in the report that – with few exceptions – even those automakers that have positive results are now increasingly stringent when it comes to cost controls this year. These measures might signal a general shift for automakers as they focus on cost control and increasingly leverage their advantages over their suppliers.

The five best-viewed automakers, as they were ranked by the part makers on a 1,000-point scale that considers among other areas trust, profit potential and demand for quality, are as follows: Toyota (627 points, up 5 from 2013); BMW (627, unchanged); Mercedes (617, -4); Jaguar Land Rover (602, +7) and Honda (595, -5). IHS contends that usually the yearly price reduction claimed by the carmakers varies between 2 and 3% – but recently cuts of 5% or more have been increasingly common. At the other end of the spectrum sit Chery, Changan, Mahindra, Tata, AvtoVAZ.

Via Automotive News Europe