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      06-28-2010, 09:00 PM   #1
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BMW AG is favorite partner of European suppliers

From Autonews (Subscription required):

BILBAO, Spain -- BMW AG is the automaker that suppliers in Europe most want to do business with, a new survey shows. In contrast, the Volkswagen brand's relations with suppliers have taken a hit.

BMW rose to No. 1 from fifth in attractiveness as a partner for parts makers in the sixth annual Automotive News Europe/SupplierBusiness OEM-Supplier Relations Study. BMW was followed by German rivals Audi, Mercedes-Benz and the VW brand.

VW was singled out by suppliers as the customer that applies the most pressure to reduce prices.

Toyota Motor Corp. led in attractiveness last year but slipped to fifth in 2010. The world's largest automaker has been stung by the recall of more than 8.5 million vehicles to address safety issues such as unintended acceleration.

BMW's rise to the top in attractiveness as a customer is quite a turnaround. BMW had been slipping in the category since 2007, when purchasing head Herbert Diess was directed to cut 4 billion euros (then about $5.48 billion) in costs by 2012.

Ford Motor Co.'s North American division also made an impressive improvement in attractiveness, rising to No. 7 from No. 13 last year, while Ford of Europe slipped to No. 12 from No. 9.

Chrysler Group finished last in the category.

In the survey, conducted in May and June, executives at 192 automotive suppliers rated 21 automakers on factors such as pressure to reduce price, chance to make a strong return on investment, quality demands and trust. The European and North American arms of General Motors Co. and Ford were rated separately, as were VW Group's VW, Audi, Porsche, Skoda and Seat brands.

Of the supplier respondents, 50 percent have their company headquarters in North America, 41 percent in Europe and 9 percent in Asia.

The VW brand has replaced General Motors Europe as the unit that puts the most pressure on suppliers to cut prices. Leading in this category usually results in tense supplier-automaker relations.

"When it comes to purchasing, VW is the most hated automaker among suppliers. VW applies the highest amount of price pressure on its suppliers and provides the lowest margins," said an industry source who asked not to be identified because he works with the German automaker.

"Since the start of this year, VW has been asking many of its suppliers for price decreases as high as 10 percent on all of the parts it gets.

"Suppliers hate this, but nobody can say no to VW because if they fail to get a large contract, they can pretty much close down one of their plants."

VW Group's stated goal is to be the world's largest automaker by 2018, with annual sales of 10 million vehicles and a pretax profit margin of more than 8 percent.

Porsche put the least pressure on suppliers to reduce prices, followed by Jaguar Land Rover and Volvo, the survey found.

Audi rose to No. 1 in supplier responses to the question: Which carmaker makes the highest demands to achieve high quality? Audi ranked No. 4 in the 2009 study, while Toyota ranked No. 1.

Toyota slipped to No. 3 in the 2010 survey.

Audi's goal is to be the No. 1 premium car brand in the world by 2015, when it wants sales to rise to 1.5 million vehicles a year.

Porsche was tops when suppliers were asked to name which customer provides them the best opportunity to make acceptable returns on investments. Porsche was No. 4 last year in this category. Toyota slipped from No. 1 last year to No. 7.

When suppliers were asked which automaker they trust the most, Toyota repeated as No. 1.

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      06-29-2010, 02:35 AM   #2
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They must have built a very nice structure, nice relationship and engagement with their partners.
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