GENEVA -- Volkswagen said on Tuesday it was too early to quantify the earnings impact in 2005 from higher steel prices.
"We will act to compensate for it, but it is still too early to say how far we will be able to do that," VW's procurement chief Francisco Javier Garcia Sanz told Reuters on the sidelines of the Geneva car show, adding that the company's goal was largely to compensate for it.
He expected to be able to make a more specific forecast around the middle of the year.
"We're still in discussions with car parts suppliers and the steel makers about how far we can share the pain throughout the entire value chain," Garcia Sanz said.
He acknowledged that the steel companies themselves were faced with higher raw material prices, following Nippon Steel's agreement to pay Brazil's CVRD 71.5 percent more for iron ore in the fiscal year starting on April 1.
"This of course won't lead to a one-to-one price increase in steel, since the 71.5 percent affects only the some 10 percent share that iron ore has in the production of steel."
The VW purchasing head said that, while the group aimed to bundle together the number of car suppliers it has under contract -- 8,000 to 10,000 for the entire group -- this was not the top priority.
"Naturally we try to bundle, and our platform and module strategy brings with it automatically a consolidation," Garcia Sanz said.
"But car buyers pay in the end for competitive prices, so it doesn't matter how many suppliers one has as long as you can achieve this," he continued.