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Industrie 4.0

Automotive suppliers neglect pricing

Many automotive suppliers have not yet realized that pricing is the most important driver of corporate profit. This is the finding of a recent study by the PFH Private University of Göttingen. Processes should be professionalized.

04 Jun. 2018

The empirical study surveyed more than 100 managers from 80 different suppliers. It showed that their pricing and the associated strategic opportunities leave a lot of room for improve-ment. Contrary to what would have been expected, not all respondents consider pricing as very important. Compared to other profit drivers, such as the variable and fixed costs or the sales volume, pricing is even attributed the lowest level of importance.

A professional approach to pricing should nevertheless be particularly important for automotive suppliers, as they usually face a few large manufacturers with correspondingly high bargaining power. Among other things, the authors of the study recommend that organizational measures be taken to reinforce pricing in order to be in a better position to defy price pressure. Useful measures could include customer-related pricing, the formulation of a pricing strategy, the use of IT-based evaluation tools and the establishment of a pricing department or the appointment of a pricing manager.

The PFH's findings are all the more astonishing, if one includes a further study that the consul-tancy Simon-Kucher & Partners conducted in the past year. According to their study, 96% of automotive suppliers surveyed experienced increasing pressure on prices in the last two years – the second highest level out of all the 35 industries surveyed.