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Suppliers continuing to feel pressure from inflation, supply chain kinks

Stellantis COO Mark Stewart said the automaker is working with suppliers through the headwinds.

“We continue to work on efficiency programs together of how to altogether get the costs out of the operations so everybody can be profitable and everybody can win in this environment,” Stewart told reporters after an event this week at a new supplier plant in Detroit.

Still, the general approach of the automaker, whose North American headquarters is in Auburn Hills, with suppliers remains hard-line and the mantra is reducing prices.

“So, we continue to work with the supplier base again to get that cost out,” Stewart said. “Consumers can only take a certain level before things become unaffordable. The end customer is who is in mind … because that’s how we all live across our ecosystem.”

While financial pressure has yet to ease up, suppliers still see the light at the end of the tunnel, said Luke Junk, a Milwaukee-based senior analyst of vehicle technology and mobility at global financial advisory firm Baird.

Junk said steel, aluminum and other commodity prices are expected to normalize eventually, as are freight and logistic snarls. That will lead to the more predictable production cadence the automotive industry thrives on.

“There’s definitely going to be relief going forward,” Junk said.

Until that happens, though, suppliers will have to keep fighting for price increases to protect their business and investors while automakers do the same for theirs by pushing for price downs.

Wybo said he would expect to see at least a handful of major supplier bankruptcies or restructurings by the end of the year. Rapidly rising interest rates and the fear of a global recession are also cause for worry.

“Once we get through the pent-up demand, we have a longer-term issue with demand for vehicles,” Wybo added.

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