The landscape of supplier relations in the North American automotive industry is undergoing significant shifts, as recently highlighted by the annual North American Automotive OEM Supplier Working Relations Index study conducted by Plante Moran. Toyota Motor North America has emerged squarely at the top of this index, achieving a score that reflects a ‘good to very good’ relationship with its suppliers. This places Toyota significantly ahead of its competitors, followed closely by Honda and General Motors, while stalwarts like Ford and Stellantis are losing ground.
In this year’s study—its 25th edition—Toyota scored an impressive 386 points, up from 338 the previous year, solidifying its leadership for the 14th consecutive year. Honda also showed positive movement, increasing from 331 to 344 points, while GM edged up slightly from 297 to 299. On the other end of the spectrum, Nissan, having once seen an uptick, has witnessed a drop from its previous high to 249 points. Ford’s situation is particularly concerning; it has been on a downward trajectory since 2020, with its latest score of 191 reflecting a ‘poor to very poor’ standing among suppliers. Stellantis recorded even lower, at 141, indicating a persistent pattern of relationship issues.
Angela Johnson, a principal at Plante Moran, attributed the success of the leading manufacturers to their established relationships with suppliers. She described how their capacity to effectively lean into these connections allowed them to better navigate recent uncertainties within the market. The disparity in supplier sentiment is stark; suppliers expressed feeling like a genuine partner 12 times more with Toyota, Honda, and GM compared to Ford and Stellantis. Such relationships count heavily in an industry facing a tumultuous economic climate, where trust and communication can directly influence the ability to react to challenges.
The study illuminated tangible benefits associated with strong communication and responsiveness in supply chains. This includes greater accessibility and engagement from manufacturers, crucial elements that allow suppliers to operate more efficiently. Johnson remarked on GM’s unexpected rise in rank, suggesting that despite facing similar market pressures as Ford and Stellantis, GM’s evolving practices since 2015 have enabled it to cultivate a more favourable environment for supplier collaboration. She pointed out that “history shows us that when the economy and the industry are struggling, OEMs will revert back to their embedded supplier management practices,” indicating that GM’s departure from traditional norms might signal a turning point.
Another layer impacting supplier relations is the fluctuating demand for electric vehicles (EVs). Suppliers have voiced concerns during previous surveys regarding OEM responses to the rapid changes in consumer interest towards EVs. According to Dave Andrea from Plante Moran, effective communication about EV investments is vital, especially as manufacturers expect suppliers to support a shift towards electrification while maintaining financial equilibrium amidst market uncertainties. He highlighted that discussions surrounding shared risk and costs are becoming increasingly poignant as the industry grapples with these transitions.
The influence of tariffs is also critical in shaping OEM-supplier dynamics. Mark Barrott, another principal at Plante Moran, noted that the timing of the study may have downplayed the impact of tariffs, but clarified that, ultimately, how suppliers perceive the OEMs’ financial support strategies will significantly shape their sentiments. Johnson added that while tariffs can strain relationships, suppliers remain primarily focused on cost and equitable behaviors, reinforcing the foundational need for financial consideration in these partnerships.
Opportunities for improvement remain on the horizon, particularly for OEMs like Toyota and Nissan. Johnson revealed that suppliers are seeking a balance between the stability they expect from Toyota’s Japanese headquarters and a desire for greater independence in their US operations. This comment underscores an evolving dynamic; suppliers are no longer solely constrained by traditional corporate structures but are also advocating for internal alignment across multi-regional operations.
As the automotive sector continues to adapt and evolve, the ongoing studies by Plante Moran underscore an urgent need for manufacturers to nurture their supplier relationships through enhanced communication and mutual trust, particularly during this critical transition period towards electrification.
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Source: Noah Wire Services
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