1. Automotive News Europe SupplierBusiness
Fourth Annual OEM-Supplier Relations Study
Automotive News Europe Congress
Turin, May 20th 2008

2. Overview Study conducted April – May 2008
Surveyed senior sales and marketing executives at suppliers
Asked to rate OEMs on a variety of topics, scoring on a five-point scale
We surveyed a range of representative suppliers, asking them to rate OEMs on a variety of different attributes. For example, the suppliers were asked how attractive it is for them to work for various OEMs. A rating of very attractive or very unattractive earned a score of 1 or 5 respectively, whereas a neutral rating earned a score of 3.
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

3. Respondent Demographics
Headquarters Location
Fourth annual OEM-Supplier Relations Study
134 suppliers responded
Company Size
This has been the most successful survey in terms of the number of respondents. The survey has grown each year.
Remember respondents can click multiple options for sector an this is often the case. That is why the total is greater than 134.
Respondents by sector
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

4. Choice of OEM
“How important is it for the long-term success of your business to choose the right OEMs?”
“Is this becoming more or less important?”
Most suppliers think OEM choice is important / very important
Supplier opinion remained fairly stable over the last 3 years
Most suppliers expect this to become more important
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

5. Choice of program
“How important is it for the long-term success of your business to choose the right program?”
“Is this becoming more or less important?”
Similar to choice of OEM, most suppliers think this is important / very important
Most suppliers expect this to become more important
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

6. OEM Attractiveness 2006 2008 Toyota and BMW maintain top positions
Rank
OEM
% of leader
1st
BMW
100
2nd
Toyota 94
3rd
Audi 71
4th
Mercedes-Benz 62
5th
Honda 55
Rank
OEM
% of leader
1st
Toyota
100
2nd
BMW 95
3rd
Audi 80
4th
Mercedes-Benz 78
5th
Honda 72
Toyota and BMW maintain top positions
But the gap is closing
“Which carmakers are most attractive to work with?”
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

7. OEM Attractiveness II Increasing attractiveness
“Which carmakers are most attractive to work with?”
Increasing attractiveness
The bars in red are to help you move between the bullet points and the relevant data on the graph.
I have put in speech bubbles on the slides, these show the questions the suppliers were asked
Japanese carmakers and high-end European brands dominant
Suppliers cautious about AvtoVaz and Chrysler
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

8. Change in attractiveness 2007-2008
Suppliers appear generally more negative
Some OEMs are viewed more positively, including Ford, GM and Fiat
“Which carmakers are most attractive to work with?”
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

9. Change in attractiveness 2006-2008
Change in attractiveness since 2006
These are graphs to illustrate change. So, in 2006 the graphs start at 0.
Chrysler, Volvo, PSA, BMW, Renault Jaguar/Land Rover declined the most
Most of Jaguar/LandRover decline over the last 12 months
Chrysler in the preceding 12 months
Fiat, Ford Europe shown steady improvement over the last two years, against the trend
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

10. Demands to reduce price
“Which carmaker makes the highest demands to reduce price? “
Increasing demands
GM still the toughest with regards to price
Ford become softer on contract negotiations
BMW has hardened its purchasing the most over the last 2 years
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

11. Return on investments Increasing opportunity
“How good is the opportunity to make acceptable return on investments with the following carmakers?”
Increasing opportunity
BMW considered most highly
GM Europe /North America and Renault performed the worst
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

12. How this opportunity changed since 2006
“How good is the opportunity to make acceptable return on investments with the following carmakers?”
GM/Ford’s significantly improving from a low position
Renault and BMW being viewed as less attractive prospect for ROI
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

13. Quality Increasing quality
“Which carmaker makes the highest demands to achieve high quality? ”
Japanese and high-end European brands dominate 12
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008 13

14. Quality: change from 2007 Consistent decline in focus on quality
Mercedes, Audi and Hyundai/Kia showed significant increase
“Which carmaker makes the highest demands to achieve high quality? ”
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

15. Product technology Premium carmakers perform the best
Increasing technology demands
Premium carmakers perform the best
Mercedes improved the most from 2007
“Which carmaker makes the highest demands for the best product technology?”
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

16. Trust
“How highly do you trust the commercial partnerships with the following carmakers?”
Increasing technology demands
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

17. Trust: change
The bullet points refer to other questions, e.g. “How good are the OEMs at keeping to price agreements?” These factors are likely to affect a supplier’s trust in an OEM, and so have been mentioned briefly here.
We have an extra slide on this, which we could refer to.
GM better at keeping price agreements and protecting IP
BMW got worse in those area, while Chrysler seen a much greater IP risk
“How highly do you trust the commercial partnerships with the following carmakers?” 16
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

18. Who wants to work with whom?
Suppliers' desire to work with the OEM
OEM's openness to new suppliers
Toyota
1st
22nd
BMW
2nd
9th
Audi
3rd
18th
Honda
4th
23rd
Mercedes-Benz
5th
20th
OEM's openness to new suppliers
Suppliers' desire to work with the OEM
AvtoVAZ
1st
19th
GM North
America
2nd
20th
GM Europe
3rd
16th
Ford North America
4th
18th
Fiat
5th
14th
These show how the suppliers ranked. Fore example, in the first table Toyota was the OEM with which most suppliers wanted to work. However, it ranked 22nd (near the bottom ) in terms of openness to new suppliers .
Consequently, there is an inverse relationship between the two.
Maybe best to identify this trend on this slide, but on the next slide ask “Why?”, and then refer to Edmund and myself.
“Which carmakers are most attractive to work with?”
“Which OEMs are most open to new suppliers in your product area?”
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

19. Who wants to work with whom?
Suppliers’ desire to work with an OEM
OEM’s openness to new suppliers
WHY is there an inverse relationship?
Refer to Edmund and myself.
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

20. Summary
OEM and program choice highly important to suppliers, and expected to become more so with time
Supplier’s opinion of an OEM’s long-term prospects correlates most closely with the OEM’s attractiveness
Toyota and BMW are still the suppliers’ choice, but the gap is narrowing
Suppliers perceive BMW to have adopted a tougher purchasing policy
Ford and GM improving in the eyes of suppliers
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

21. Acknowledgements
Thanks to everyone who participated in the 2008 OEM-Supplier Relations Study
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

22. Attractiveness related to long-term prospects
“Which carmakers are most attractive to work with?”
“How do you rate the following carmakers with regards to long-term prospects”
OEM
Attractiveness Ranking
Long-term prospects Ranking
Audi 3
AvtoVAZ 22 20
BMW 2
Chrysler 21
Fiat 15
Ford Europe 11
Ford North America 17 18
GM Europe 14 16
GM North America
Honda 5
Hyundai\Kia 9
Jaguar\Land Rover 19
Mercedes-Benz 4
Nissan 7 8
Porsche 10
PSA 13
Renault 12
SEAT
Skoda
Toyota 1
Volvo
How suppliers’ view the long-term prospects correlates most closely with attractiveness
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

23. Factors affecting attractiveness: changes 2006 -2008
Increasing
Decreasing
BMW
Ford Europe
Ford North America
GM Europe
GM North America
Demands to reduce price
Opportunity to make acceptable return on investments
Willingness to pay for development costs
Willingness to reward cost-saving ideas
Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008