Archive for the ‘parts suppliers’ Category
Parts Suppliers Rewrite Contracts;
Thursday, August 26th, 2010
A number of automotive parts suppliers have rewritten their contracts in order to reduce costs. Steep jumps in steel prices have increased the cost of many parts as the demand for steel increases throughout the world. Be sure to check Volkswagen Specials for discounts on VW models. The increase in steel prices may result in an increase in vehicle prices as well, however parts suppliers that supplier parts to vehicles sold at dealerships such as Cincinnati Ford Dealer businesses are doing everything they can to avoid increases in prices. The consumer may be hit with increased prices if the parts are increased in price permanently as the result of the latest price increases.
Greenfield Ford Dealers sell models which are priced very fairly, but other dealerships in the future might have to adjust prices for increases in steel costs if the price of steel keeps going up. Some parts suppliers however are exposed to price swings and as a result prices on some models may end up changing. About 55 to 60 percent of parts suppliers have contract terms that prevent against price surges in the cost of steel, however for another 40 to 45 percent of suppliers they do not have these terms and may be exposed to changes in prices.
One analyst said that, “Suppliers have done a great deal to protect themselves from materials price increases since when we last conducted this survey.” But, with the exposure to increases in prices, suppliers have to negotiate better with steel providers. Refusal to ship parts was once a common bargaining tactic used by parts suppliers, but it is now becoming less common. A quarter of suppliers said that they would consider stopping their parts shipments. The halting of price shipments would force their clients such as automakers to increase their prices, and as a result the end cost of the vehicle would increase. However, many suppliers are not going to do this. More can be read on Auto News.