That is one of the conclusions in a report, Auto Manufacturer Concession Demands 2004, from the Hans-Andreas Fein consulting firm and the market research company IRN. It was the firms' second report on the topic.
Automakers are developing just 6 percent of all components on their own, compared with 14 percent in 2002. They collaborate with suppliers on 31 percent of new-component development, down from 47 percent in 2002.
That means suppliers are taking on these expensive, creative processes by themselves for 63 percent of components.
The only way to develop new components at Ford, Opel and Renault is through the involvement of suppliers.
"Only Porsche seems to still be master of its own engineering," Hans-Andreas Fein said.
BMW also has above-average involvement in development.
This shift is dramatically affecting mid-sized firms because, for the most part, suppliers aren't repaid immediately for their investment in fixed costs.
In about 72 percent of the cases, there are upfront costs allocated to the price of the component. Spending on prototypes and tooling is recaptured in installments.
On average, customers still carry two-thirds of the investment costs. But the remainder only starts to be recovered after production begins. "So the suppliers are sharing in the manufacturers' sales risks," Fein said.
If a model flops, like the Smart Roadster and the Maybach, suppliers are stuck with costs they can't recover.
Many cost-cut rounds
In general, pressure on suppliers to cut costs has grown since 2002, the report said. And, said Fein, "the methods are becoming more sophisticated."
Reopened contracts and cost-reduction programs are cropping up every day.
The report documents 196 cost-cutting rounds by German automakers, Renault and PSA/Peugeot-Citroen.
The practice is especially popular at DaimlerChrysler, Volkswagen and Audi. At VW, a supplier can expect more than five cost-cutting rounds a year.
One bit of good news for suppliers is that automakers' purchasing managers have been getting smaller price concessions.
The average reduction in prices was 3.9 percent last year compared with 4.1 percent in 2002.
Ford, DaimlerChrysler, VW and Opel sought the biggest concessions last year, ranging from 4 percent to 6.1 percent of the original price.
The report said Porsche, Renault, BMW and PSA were examples of the most "moderate" manufacturers.
VW and Renault won the biggest concessions from suppliers because of the large production volumes they offer.
Even the moderate manufacturers are applying more pressure on their suppliers on material costs, and on using cheaper raw materials, like replacing steel with plastic.