Chrysler threatens to cut suppliers

2 July 2003
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03 July 2003 | Robin Parker

US car maker Chrysler has threatened to cut 132 domestic suppliers unless they lower prices.

Chrysler purchasers must help save $1 billion this year after it warned of $1.18 billion in losses for the second quarter, despite a predicted growth of $2 billion.

The company said prices should be brought down to the levels it pays to partly owned subsidiaries such as Mitsubishi. A cheaper model emerged by breaking down the basic elements of costs at suppliers throughout the group.

Dieter Zesche, chief executive of Chrysler, said that the 132 US suppliers are important to the company because they are generally able to guarantee quality and reliability of supply.

An industry study by Autopolis, a UK-based consultancy, predicts Daimler-Chrysler will cope well with a fragmented global market in which small manufacturers will see strong growth.

Porsche has also launched a programme in which it will instruct its suppliers to help it cut per-unit costs by up to 10 per cent.

· General Motors is in discussions with its Chinese joint venture partner Shanghai General Motors about its dealings with a Chinese car maker, Chery.

GM is concerned that Chery's QQ model closely resembles a GM product, the Spark. Chery claimed it was common for car makers to incorporate the "good features" of competitors' models.

SMjul2003

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