It is official - the IRN pricing survey is now underway. In the last couple years, the results of our survey have illustrated the point that suppliers have continued to steadily gain both the willingness and the power to say no to a customer’s request for a price reduction. The consequences for refusal have continued to become less dire. But, as everyone who lives in the auto industry knows, things can change dramatically from one year to the next. As the overall economy teeters on the brink of a mild recession, what will we see in the results this year?
Hopefully, Toyota’s recent announcement that they are asking their suppliers in Japan to reduce prices or be replaced (by overseas suppliers) is not a foreshadowing of this year’s survey results. A return to the early days of our pricing survey results – the days where suppliers acquiesced to whatever demands the automakers placed on them – would be a disappointment, to say the least, after the significant progress that has been made. To be fair, Toyota’s move is largely necessitated by the appreciation of the yen against the dollar, which causes them to lose significant operating profit. In some cases the OEM is reportedly asking suppliers to reduce prices by up to 50%. Yikes!
We are eagerly anticipating the survey results this year to see what new trends are appearing. Please take a moment to weigh in on your experiences with customers and prices reduction requests by clicking on the link below and completing the survey. The survey is open for responses through Friday, October 28th.