The survey carried out by IRN of 130 suppliers to automakers in the US found that automakers requested price cuts averaging 3% this year on existing contracts but suppliers only cut their prices by 1.2% according to respondents.
Within this the likes of General Motors and Chrysler Group received an annual price cut of 1.3% while the Detroit 3, which includes Ford, saw a 0.9% reduction.
Kim Korth, an IRN principal and the survey’s author told autonews.com that suppliers are gaining pricing power at a time when capacity is starting to tighten, adding that demands for price reductions in addition to annual productivity price cuts “are very rare right now, because of the limited capacity that suppliers have”.
Korth said he expected automakers and suppliers were more likely to negotiate annual productivity reductions during the original contract negotiation, and then stick to that deal.
The survey also found that 37% of suppliers expect future contracts to be more profitable than their current business, which represented a large increase on last year’s survey when just 18% suggested the same thing.
