Suppliers Overtake Carmakers, Says GM Europe President

Carmakers have lost their power in the automotive sector in the last few years, after the economic crisis forced most of them to reduce costs to minimum and cut workforce by even a half in most cases. This is the opinion of Carl-Peter Forster, currently working as GM Europe president, who also said that suppliers are becoming more important players in the industry because carmakers are relying on their technological resources.

"The fact is the balance of power has somewhat shifted," said Forster pointing to the fact that Magna International, a Canadian - Austrian partsmaker won the race for Opel.

"We all had the vision that the OEMs (original equipment manufacturers) should just assemble bits and pieces, do a little bit of marketing, a little bit of design and all the rest would be done by suppliers," he said. "That was a nice vision. It sounds very lean, but the profit making opportunity is also shifting to the ones that have the technological knowhow. That is in very many cases now the supplier industry."

Forster, who's currently seen as the favorite to be named Opel's new CEO, said that today's automakers have to focus on trends or building more advanced models rather than on managing costs.

"The difference between a right and a wrong product is a 10, 20 or 30 percent difference in margin per unit, it's a make or break. You have to focus everything on it," he said.

"Fortunately with every new product that is working fine, we see our revenue per unit going up 15 to 20 percent. This delta revenue typically has a margin of 50 percent. That's where you make your money," he explained.