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3 July 2013 | Andrew Allen
Automobile suppliers have ranked Porsche and BMW as their preferred customers in the latest annual IHS study on OEM-supplier relations, though these companies are becoming increasingly tough negotiators.
Both companies scored 627 in the SuRe (Supplier Relationship) index, a scale that measures the quality of relationship between suppliers and OEMs.
BMW topped the ‘pursuit of excellence’ category, which reflects how demanding OEMs are with regards to product technology, quality and operations.
The report found premium carmakers are becoming more price-conscious when they purchase parts from suppliers.
This trend means the profit opportunity gap between supplying premium and volume carmakers is closing, the report said. Overall OEM-supplier relations are improving according despite the manufacturers’ pressure on prices. Higher average ratings are driven by OEMs’ attempts to address long-standing issues trust and organisations, said the report, particularly by Ford and Hyundai. Improved long-term prospects from some customers such as Chinese OEMs have also raised overall relationship rankings.
Nonetheless, 11 carmakers out of the total 35 have recorded lower scores in the “profit potential” category, which is influenced by pricing, payment terms, reimbursement of tooling and development costs.
Lower profit potential figures came from premium carmakers such as BMW, despite its place at the top of the overall rankings, Daimler, Audi, Porsche and Jaguar Land Rover.
“It is clear that as premium OEMs start to see their profit dip, they will push suppliers to deliver critical savings to prop up their bottom lines,” said Matteo Fini, author of the study and senior consultant at IHS Automotive.
“What matters is the magnitude of the purchasing savings they try to achieve and whether suppliers are supported in finding ways to achieve these savings or they are asked to achieve them single-handedly.”
This year, the top of the SuRe index ranking is closer than in previous years with the ratings of BMW, Porsche, Toyota and Mercedes separated by only narrow margins. Throughout the study results often varied according to the distinctive approaches of OEMs towards different component sectors. “For example BMW emerges as more price-focused for powertrain components than for electrical and electronic parts,” said the report.
Bottom positions were occupied by Chinese and Indian manufacturers. “Carmakers in India and China do not seem to have supplier relations at the top of their agenda, although some positive signs are becoming apparent,” said the report, adding that Chinese carmakers Chery, FAW and Shanghai Auto recorded significant improvements.