DETROIT (Reuters) - Fiat Chrysler (NYSE:FCAU) Automobiles (MI:FCHA) (N:FCAU) and Nissan Motor Co (T:7201) are lagging behind top North American competitors in the health of their working relationships with suppliers, an annual study found on Monday.
As in prior years, Toyota Motor Corp (T:7203) and Honda Motor Co (T:7267) ranked first and second in the study, which looked at the six biggest automakers in North America. Ford Motor Co (N:F) was ranked third and General Motors Co (N:GM) fourth.
Automakers' profitability is linked to good working relations with their suppliers, said study author John Henke, head of Planning Perspectives, a firm that focuses on company-supplier relations in various industries.
Major automakers spend 70 to 80 percent of their revenue on parts, components and materials from suppliers. Henke’s research has shown that automakers make more profit when they have better working relations with suppliers, in part by getting price concessions and gaining access to the best products.
"Strong, profitable industry-leading companies are those with the strongest, collaborative supplier relations," said Henke.
The study covered 2015 and does not offer a figure for profit lost due to poor supplier relations. A year ago, Henke estimated that in 2014, automakers collectively could have added $2 billion in operating profit by improving working relations with their suppliers.
Since the study began in 2002, Toyota has been first and Honda second in supplier relations, except for two years when the two Japanese automakers swapped the two top spots.
The study shows the results of surveys of 647 salespeople at 492 suppliers to the six automakers. The study uses survey responses to illustrate basic business practices and automaker behavior in buying and purchasing situations involving automotive materials, parts and components.
Using a point system devised by Henke and based on survey responses, the six automakers were ranked.
GM, which last year was tied for last place, improved the most in its relations with suppliers in the past year, Henke said. Fiat Chrysler was at the bottom of the six automakers studied, closely behind Nissan. FCA has been either last or next to last in the study since 2008. Nissan dropped the most in the past year, partly because Nissan representatives became adversaries with suppliers and applied intense pressure to drop prices, Henke said.