New faces to affect component purchasing in Europe

By Alex Graham, Automotive News Europe

New personnel in key positions, more sourcing from low-cost countries and shorter life cycles are some of the key developments that will continue to affect component purchasing in Europe this year.

Other trends include the reliance on coachbuilders and the sharing of components between models. Both tactics are being used to cost-effectively create more models.

Impact players

Automakers' purchasing policies can be driven as much by the personalities of the top executives as by market conditions and other external factors.

Volkswagen's Wolfgang Bernhard is an example. He had a profound impact on relations with suppliers while chief operating officer at the Chrysler group from November 2000 until February 2004.

Those suppliers almost revolted over Bernhard's tactics in 2002, but the fruits of his efforts can be seen in Chrysler's recent success.

Bernhard left DaimlerChrysler last summer and is now a member of the VW group board. He will lead the VW brand group starting in 2006. “We expect something massive to happen and we expect it to be difficult for all those involved,” a VW supplier executive said.

At D/C, efforts are being made now to build more “one-on-one relationships” with suppliers, and “build integrity into those relationships,” said Peter Rosenfeld, Chrysler vice president for procurement and supply.

Seeking better deals

PSA/Peugeot-Citroen spends about €22 000 million a year on purchasing components from approximately 700 suppliers.

Jean-Philippe Collin, PSA's new purchasing manager, expects the French carmaker to get 30 percent of its parts from low-cost countries by 2007-2008 and to increase that number to 70 percent by 2010.

PSA expects its number of suppliers to stay about the same. “We have been selecting the best of them and encouraging mergers, thus cutting the number of our suppliers,” says Collin. “On the other hand, we have been adding new suppliers to our panel as part of our global sourcing policy.”

Shorter life cycles

Automakers are adjusting faster to meet the needs of the market. For instance, Toyota introduced the second generation of its Corolla Verso in 2004, a little more than two years after the first generation of the medium minivan debuted.

Toyota shortened the Corolla Verso's life cycle because it felt it needed a seven-seat vehicle to suit European tastes.

The first generation of the car offered five seats.

In another change for Toyota, the Corolla Verso, which is built in Adapazari, Turkey, gets a high percentage of parts from non-Asian suppliers.

Toyota usually relies heavily on Japanese partsmakers.

“Roughly 85 percent [by value] are European parts from our key partners,” said Seiya Nakao, chief engineer of Toyota's product planning division. “And 60 percent of that number comes from Turkish suppliers.”

Outside assembly

Carmakers' plants are getting more flexible, but capacity pressure and specialized design factors are helping contract assemblers increase their business.

Although BMW's plants are among the most adaptable in the world, contract coachbuilder Magna Steyr of Austria makes the X3 SUV. Meanwhile, Opel's first roadster with a folding hardtop - the Tigra TwinTop - comes from Heuliez.

The French company has carried over at least 50 percent of the Tigra's parts by value from other Opel vehicles. The shared components primarily come from the Corsa small-segment car, but the Tigra also gets some parts from the Meriva small minivan.

Renault also is reusing components to keep costs down on its low-cost Logan, which is targeted at developing markets but will sell in western Europe for about €7,500.

The Logan takes many expensive components from the current Renault Clio architecture, including engines and transmissions.

The Logan is built in Pitesti, Romania. Renault designed the Logan's body and the car's manufacturing process to take advantage of the country's low-cost labour.

The Logan is built using traditional steels that can be handled by Dacia's tooling, not high strength steels that require more sophisticated equipment. The car also was not designed to use modules for the cockpits or doors, said Odile Panciatici, engineering project manager for the car. “The concept of the module is interesting when you have a lot of diversity,” which is not the case for the Logan.

From Automotive News Europe