08 April 2009 | Martha McKenzie-Minifie
Two German automotive supply companies are joining forces in a bid to save up to ?400 million (£360 million) in two years through better purchasing.
The Continental and Schaeffler Group deal - agreed on 27 March - will open up each partner's purchasing expertise to the other.
It comes amid huge turmoil in the automotive industry, with latest figures from the UK Society of Motor Manufacturers and Traders showing new car registrations fell 30.5 per cent last month.
Schaeffler, which makes engine components and bearings, is the biggest shareholder of Continental, which produces tyres, brake and chassis systems, but this is the first large joint project between the two companies.
Under the agreement, announced this week, the companies said Continental's suppliers would get better access to global steel markets because they would benefit from the buying power Schaeffler developed from purchasing up to 1 million tons of steel a year. Schaeffler will benefit from Continental's large supplier portfolio.
The companies said their combined purchasing volume totalled about ?20 billion (£18 billion) last year. The annual purchasing volume that could benefit from the collaboration deal was about ?6.6 billion (£5.9 billion), with up to ?400 million (£360 million) potential savings between 2009 and 2011.
Schaeffler announced today it had signed a ?1 billion loan agreement with its banks.