Riekhof Mitschke Pricing at Automotive Suppliers 2018
Authors: Prof. Dr. Hans-Christian Riekhof and Maximilian Mitschke (M.Sc.)
The present study “Pricing Processes in the Automotive Supplier Industry” is another empirical pricing study by PFH Private University of Göttingen. With this study, the focus is placed on automotive suppliers for the first time. Due to often long-standing supply relationships between OEMs and suppliers, as well as very different power constellations and dependencies, it is expected that pricing in this area involves special challenges.
An important result should be mentioned here in advance: As the pricing studies from 2009 (Riekhof/Lohaus), 2012 (Riekhof/Wurr) and 2015 (Riekhof/Ha) were able to show, many companies have not yet recognized that pricing is the most important profit driver in the company – at least pricing surprisingly does not consistently receive a very high internal value.
This is no different for automotive suppliers: Price is given the lowest value compared to the other profit drivers (in addition to price, the variable and fixed costs as well as the sales volume). Suppliers see cost reductions and volume increases as more important for improved profitability than improved price enforcement. This is confirmed by the present study. But it also shows which elements of the pricing process offer automotive suppliers starting points to improve the enforcement of their own price strategy.
“Especially for automotive suppliers, who usually face a few large OEMs with correspondingly high negotiating power and long-term delivery perspectives, a professional approach in pricing is extremely important. Our study shows that not all of the surveyed suppliers have recognized the potential they can tap into by designing the pricing processes more carefully.”
– Prof. Dr. Hans-Christian Riekhof
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