Suppliers plan to pass on rising raw material costs to automakers

Sylviane de Saint-Seine, Automotive News Europe

As prices for oil, aluminum and other commodities increase sharply, major suppliers say they cannot continue to carry the cost burden.

Valeo CEO Thierry Morin referred to a "tsunami-like" inflation in raw material costs.

"This cannot go on," Morin said last week. "Commodity price increases will have to be passed on to clients."

The rising price of oil has made headlines, but Morin said the cost of other raw materials such as copper and zinc also have soared in the last 12 months.

Plastic Omnium Chairman Laurent Burelle expects raw materials, energy and transport costs to continue to remain high, or even increase.

"From now on, we'll have to pass on those cost increases to car manufacturers," he told Automotive News Europe.

Robert Bosch Chairman Franz Fehrenbach said he is more worried about the "extreme" rise in the price of copper than the rising cost of oil. He also said Bosch will try to pass on commodity price increases to its customers.

Fehrenbach said one positive effect of rising oil prices is that they may boost demand for more efficient fuel systems.

Klaus Probst, CEO of German cable maker Leoni, said the price of copper is a big issue.

Said Probst: "In the cable industry, it is common to pass on the material costs to the customers. In theory, there is no impact on profitability. But in reality there is an impact because in some cases we are not allowed to pass on this price directly. We have to pass on the price on an average of the last three months, for example."

Klaus-Dieter Flörecke, Edmund Chew contributed

From Automotive News Europe (A Crain publication)