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May 23, 2022

Stellantis ranks even lower among supplier base

Plante Moran study shows gains for other automakers

Lindsay Chappell
[email protected]

Stellantis’ relations with suppliers soured in the merged company’s first year of existence, plunging further below the rest of the industry in the annual Plante Moran report card released this week.


The Jeep and Ram parent has been on a bumpy road with its parts makers, as the entire industry wrestles with the unsettling transition to electric vehicles and factory shutdowns caused by the global shortage of microchips. On top of those crises, Stellantis riled up its supply base this year with abrupt changes to its purchasing terms and conditions before reversing course this month, after Plante Moran conducted its study.


“Stellantis has been going through a reorganization, and there’s been a lot of turnover in the purchasing department ranks,” said Dave Andrea, principal in Plante Moran’s strategy and automotive and mobility consulting practice, which conducts the North American Automotive OEM-Supplier Working Relations Index Study. 


“That’s not just a breaking of the relationship piece, of knowing who you’re dealing with. It really showed up in the purchasing department’s commercial knowledge because people were moving in and out. The push for cost reductions has also had negative effects.”

Meanwhile, the study indicates that other automakers — notably Nissan, which has struggled with bad supplier relations for years — managed to improve their supplier relationships during the same period. Honda Motor Co., which perennially scores near the top of the survey, also improved its standing.

 

The bottom
Stellantis dropped to the study’s lowest ranking for any North American automaker in more than a decade. It received 128 points on Plante Moran’s index, 42 points lower than its last-place score in 2021.


The automaker declined to comment on the study last week.


The numbers represent a composite picture of each automaker’s value as a customer, based on a survey of 673 sales representatives from 436 Tier 1 suppliers. 

 

The index considers various issues in automaker-supplier dealings, including whether suppliers believe an automaker sets realistic expectations for the supplier, whether it delivers on its commitments and whether it shares information with the supplier.

Picat: New head of purchasing 
for Stellantis

Toyota continued to sit at the top, followed by Honda and General Motors. Ford Motor Co., Nissan and Stellantis composed the lower-performing half of the industry. 


Nissan suffered through several years of aggressive supplier cost-reduction drives as then-Chairman Carlos Ghosn pushed for higher profitability and market share. That period has ended.


“As part of our Nissan Next business transformation plan, we have focused on changing our culture, including building stronger trust with our supplier partners,” Nissan said in a statement to Automotive News. 


“Suppliers have made significant contributions in the transformation of our product and technology portfolio and will continue to play a key role in our shared success well into the future.”

Deep dive
Stellantis has been on a bumpy road with its suppliers, and relations have plunged further below the rest of the industry in the annual Plante Moran report card.

Supply chain moves
In recent months, Stellantis indicated that it expected its supply base to shoulder more of the R&D cost of making the automaker competitive in EVs. And this year, it informed its suppliers that the company was adopting new terms and conditions in its contracts that could force North American suppliers to reduce prices whenever they achieve any cost savings and keep them locked into unfavorable contracts at the automaker’s discretion. 


Many suppliers protested the changes and sought exemptions. Stellantis, formed in 2021 by the merger of Fiat Chrysler Automobiles and PSA Group, backed off from most of the new terms this month, shortly after installing a new head of purchasing and supply chain.


Maxime Picat, who was COO of the automaker’s Enlarged Europe region, replaced Michelle Wen, who has left the company.

Suppliers all over the industry have struggled through the past two years of pandemic disruption and worldwide factory schedule interruptions as a result of material and part shortages, including microchips. 


While automakers have delivered enormous profit gains in many cases, despite the disruption, and even U.S. auto retailers have reported soaring profits despite shrunken vehicle inventories, suppliers have been unable to avoid large hits to their earnings.


“When you consider all the crises being thrown at the auto industry,” Andrea said, “from material shortages and price inflations, the workarounds from the chip crisis and plant closings and reopenings, you need positive personal relationships to manage through the disruptions.


“I believe what we see in this year’s study is that automakers are realizing that they need their suppliers working with them and not against them,” Andrea said, referring to Stellantis’ about-face on its contract changes and Nissan’s improved relations on the report card.

N. America, Europe take losses

After a reprieve the previous week, North American factories removed about 87,500 vehicles from their production schedules because of the microchip shortage, according to the latest weekly estimate by AutoForecast Solutions. Europe was the only other region to lose production: 4,200 units.


President Joe Biden last week toured the world’s largest semiconductor plant, owned by Samsung, outside of Seoul, alongside South Korean President Yoon Suk-yeol. 


Biden’s “recent trip to South Korea could help broker a long-term answer to the North American chip supply issue,” Sam Fiorani, AFS’ vice president of global vehicle forecasting, said in an email. “Tackling the semiconductor shortage is a long-term problem because there is no expectation of fewer chips being used in vehicles as they become more complex. In the short term, however, the automotive industry continues to compete for limited fab space with other fields where more profitable chips are the norm. Expectations for a solution this year have faded and 2023 may not see a full recovery either.”

— Omari Gardner

The breakdown
Number of vehicles eliminated from production schedules

 

Europe

North America  

Rest of Asia*

China*    

South America* 

Middle East/Africa*   

Total

2022 YEAR TO DATE  
787,700

527,100 

322,700

92,000  

71,600

10,800

1,811,800

2022 PROJECTED  
1,050,900

748,700 

531,500

197,200

73,300

20,800

2,622,300  

*No change from a week earlier     
Source: AutoForecast Solutions

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