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Unsteady EV demand drives tension between suppliers and automakers, survey finds

Luke Ramseth, The Detroit News on

Published in Automotive News

Rising costs and unsteady demand for electric vehicles remain major sources of friction between automakers and their suppliers, according to a new Plante Moran survey examining supplier-automaker relationships.

"The number one tension right now is around the electric vehicle product plans and product cycles," said Dave Andrea, principal in Plante Moran's automotive and mobility consulting practice. "And that's a combination of both timing of those (EV) programs, as well as the anticipated volumes of the programs. And that's because that drives what the suppliers' investment requirements are."

The 2024 North American Automotive OEM-Supplier Working Relations Index Study collected surveys from 696 tier-one supplier executives from February to April. In its 24th year, the survey asks suppliers about their relationships with six major North American automakers across eight major purchasing areas.

Toyota Motor Co. once again got the highest marks from suppliers. Of the Detroit Three, General Motors Co. achieved the best supplier approval, slotting in at third overall, below Honda Motor Co. Ltd.

Ford Motor Co.'s overall score dropped, and it remained in fifth place, behind Nissan Motor Corp. but above Stellantis NV, which has ranked at the bottom of the Plante Moran study's results for several years.

All six automakers except Ford saw at least some improvement in their supplier relationships in this year's index. Ford dropped 22 points, and was down 70 points and two spots since 2016. A Ford spokesperson didn't respond to a request for comment.

 

Andrea noted Ford, which separated its electric vehicle business from its traditional operations two years ago, appeared especially stung in the survey by its recent EV challenges, and how those challenges have trickled down to affect suppliers. Both Ford's buyer metrics dropped, as did its business practice ratings.

"This is one of the things that the whole industry has to deal with: If we have that type of volatility in the marketplace (with EVs), and we're making this major transition that comes with its own set of major investments, the industry has to be flexible to deal with that uncertainty," Andrea said.

GM, unlike Ford, has seen a "continual increase" in its supplier scores, he said, even despite three recent changes of leadership for its purchasing and supply chain division. That shows that "the organization is putting supplier relations at the top of their list as a priority," he said, and also demonstrates how the company's engineering and manufacturing divisions are well-aligned with the purchasing and supplier side.

“We’re proud of the results GM achieved in the Supplier Working Relations Index and value our suppliers and the role they play in enabling us to deliver world-class vehicles,” Jeff Morrison, GM vice president of global purchasing and supply chain, said in a statement. “We will continue to collaborate and strengthen our supplier relations by enhancing communication, transparency, and accountability, while rewarding high-performing suppliers.”

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