General Motors has awarded Lear design, engineering and sourcing responsibilities for the automaker's future large and luxury car program, a contract valued at $825 million (E763 million) annually.
Lear will deliver interiors by mid-decade for two US models: the next-generation Buick LeSabre and Cadillac DeVille. It is the first time GM has given an interior supplier this level of responsibility.
The contract award to Lear is "the natural next step for GM," said GM spokesman James Parks. He said Lear was selected because it had helped GM improve the quality of interiors and reduce warranty costs.
Lear, of Southfield, Michigan, USA, confirmed the contract. The company ranked No. 4 on the Automotive News Europe list of top 150 original-equipment suppliers to North America with sales of $7.89 billion in 2001. Lear was No. 5 in Europe that year and held the same position globally.
Automakers are proceeding cautiously with programs to give suppliers responsibility for large portions of future vehicle programs. Suppliers tout potential cost savings from having control of a larger module on the vehicle. But the major US automakers fear the United Auto Workers union might resist outsourcing of system assemblies and worry about the ability of suppliers to deliver as advertised.
Lear's factories are 100 percent unionized, and the company is not likely to need new plants for the project. The supplier served as interior integrator for the current Chrysler Town & Country minivan.
Sources familiar with the award say GM's contract gives Lear greater control and content than it has on the Chrysler program. The GM program gives Lear responsibility for everything in the interior but heating and air conditioning, safety and restraint components.
Lear has lead responsibility for design and engineering. Instead of building to GM's designs, Lear brings proposals to GM and is working on clay models for the project.
Lear can provide much of the interior from its own plants. For other components, Lear will select Tier 2 suppliers from GM's approved bid list. Lear will negotiate prices with other suppliers, issue contracts and be responsible for total parts quality, delivery and warranty.