Supplier-OEM Relations Converge in U.S.

Toyota and Honda still have the best supplier relationships in North America. But their lead over Detroit's Big Three carmakers continues to shrink, according to this year's North America Supplier Working Relations Index.

The annual analysis by Planning Perspectives Inc. in Birmingham, Mich., rates the region's six largest carmakers according to how suppliers score them on communications, profit opportunities and willingness to help cut costs and boost quality.

PPI notes that the indexes for Toyota and Honda have been sliding steadily for five years. Toyota's rating fell from 415 in 2007 to 296 this year, including a 31-point drop this year. Honda's rating declined from 380 to 293, including a 16-point drop since 2011.

President John Henke tells Bloomberg News that Toyota and Nissan have slipped in part because they became more adversarial about pricing during the auto industry's recent slump.

Deomstic carmakers made progress in the PPI index since 2007, though not consistently. Ford surged from 162 in 2007 to 256 this year, General Motors rose from 174 to 251 and Chrysler advanced from 199 to 248.

Nissan scored 256 this year, down from 289 in 2007 but up four points from last year.

Henke opines that the scores could be construed to show that all six carmakers are "converging toward mediocrity." He says this year's industry average would earn only a "C" in academic-type scoring. He points out that 40% of suppliers still rank Chrysler, Ford, GM and Nissan as "poor" or "very poor."

Henke says domestic carmakers have been able to boost scores recently by fixing glaring relations problems late payments by Chrysler, for example. But he notes that the survey continues to find dramatic differences among purchasing groups within each company. To make further gains in their ratings, Detroit's Big Three carmakers need focus, discipline and continued attention to the issue, Henke adds.

PPI's survey has included the North American operations of BMW, Mercedes-Benz and Volkswagen since 2010. The firm says it does not include them in its "official" index because of a lack of historical data to explain the downward movement in their scores.

Unofficially, however, the 2012 ratings would put BMW (307) and Mercedes-Benz (300) at the top of the rankings. Volkswagen (247) would rate last.