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Suppliers Seek Price Increases from OEMs to Offset Increased Costs

Suppliers Seek Price Increases from OEMs to Offset Increased Costs

Suppliers have been battling severe inflationary pressure, despite some marginal improvements and are beginning to realize that a one-time price increase will have little to no benefit if this inflation rate continues. Suppliers need to adjust their contracts to include future price increases across a variety of areas, beyond just the major commodities. Without a shift in the way these contracts are drawn up, suppliers’ balance sheets will continue to suffer.

Suppliers look to OEMs for relief

In light of record-setting inflation, suppliers are beginning to pass price increases on to OEMs to offset the increased costs of materials. Our manufacturing specialists have been providing third party support in the form of material cost increase recovery projects for automotive suppliers. In the cases of any negotiations, OEMs are requiring proof of vendor price increases, and have agreed to allow third party “audits” to validate this information.

 

09/02/2022

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