TOKYO -- When Japanese auto suppliers schemed to fix prices, it was as much about protecting market share as pumping up profits, an industry insider said.
In textbook Japanese fashion, in which consensus rule trumped individual agendas, rival companies agreed to protect the status quo, lest someone was pushed out altogether, said Mr. X, the executive who spoke to Automotive News on the condition of anonymity.
For any given nameplate, there was a formula for how to divide the business, said Mr. X, who was sent to prison for rigging bids to supply Japanese-brand cars being built in America. Past market share dictated future business.
If, for example, Company A supplied a component for the previous generation of a volume vehicle, suppliers to the vehicle would agree that company could keep that contract on the next. Company B might retain another part, while Company C might hold its lock on yet another.
"At that time in the bid meeting, we ask Company B or Company C, 'Can we keep this business?' If they say yes, then we make a price structure saying we'll submit $10, Company B submits $11 and Company C submits $12," said Mr. X.
The suppliers had a "share map" that outlined market share by model; one goal was to keep slicing the pie the same way, he said.
"They don't want to fight with each other to keep share," Mr. X said. "For a very popular car, suppliers normally accept the price-fixing offer because they want to keep steady, big volume business."
Sales managers stateside had little say in the process; the orders came straight from bosses in Japan, he said.