Suppliers demand more money from automakers for 2005

Munich. The 2005 price negotiations between automakers and their suppliers in Germany will be particularly tough this autumn.

Vehicle manufacturers are demanding price reductions of between 3 percent and 8 percent from their suppliers.

Suppliers, on the other hand, want full compensation for increased raw-material costs.

"For the first time we are talking about price increases," Arndt G. Kirchhoff, chairman of the board of directors at Kirchhoff Automotive in Iserlohn, told Automobilwoche.

"The cost cutting battles have to stop or else soon there will be no more suppliers."

Armin Ihle, sales director of Bavaria-based Hirschvogel Umformtechnik, expects negotiations for his company to be very tough.

Ihle is one of many suppliers who have the difficult task of passing raw-material costs on to their customers. In his case, that increase has been more than 30 percent.

Plastic parts manufacturers are faced with similar problems. The managing director of a south German supplier said the situation has gotten significantly worse this year.

The price for polypropylene, for example, has risen 20 percent in one year. The plastic-parts supplier aims to pass those costs on to customers. However, his customers are demanding price reductions of 7 percent.

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