German car industry baulks at supplier demands over energy hikes


German car suppliers must soon sign new power contracts for 2023


Carmakers reluctant to shoulder energy costs


Energy-intensive parts could be sourced from abroad


'There are no good options' - foundry association

By Victoria Waldersee

WOLFSBURG, Germany, Oct 14 (Reuters) - Germany's giant carmakers may have secured their own energy supplies but thousands of small suppliers faced with a squeeze from soaring bills risk upsetting production through the winter.

More and more suppliers are calling on the industry to renegotiate contracts to include energy clauses so they can cover the cost of rising bills.

Top carmakers BMW BMWG.DE , Volkswagen VOWG_p.DE and Mercedes-Benz MBGn.DE have all said their own energy supplies are secured – but if their supplier network fails, their production lines could screech to a halt.

"If we can't build a car because of one missing part, that hits all of us," Geng Wu, head of group purchasing at Volkswagen said at a supplier conference in Wolfsburg this week.

Facing a tenfold increase in energy costs and two weeks to commit to an energy contract that comes into effect on Jan. 1, Kron Solingen, a moulding metals and plastics manufacturer and supplier to the auto and electronics industries, is trying to renegotiate contracts and is running out of time.

"We're asking for help with raw material costs, for clauses incorporating inflation - but the red line is energy costs. If customers don't contribute to those, we can't go on ... we'll cancel the contracts ourselves," sales manager Christian Hofmann told Reuters.

The 112-year-old company, whose customers are mostly larger suppliers in the chain like Bosch , is busy calculating precisely how much electricity goes into each of its products to help in customer negotiations and establish what it could produce with less power, Hofmann said.

Bosch declined to comment on any contract negotiations as did BMW. Mercedes-Benz did not respond to a request for comment.

Volkswagen said it was in close talks with its suppliers over shared solutions, but could not share specifics.

"Our primary goal is to maintain production and avoid negative impacts on business operations," a spokesperson said.

Germany's government has yet to implement its planned relief package for small businesses' energy bills which would give a one-off payment worth one month's gas bill this year and implement a mechanism to limit prices from March.


While contracts in the automotive supply chain in Germany often include clauses that adapt prices according to the cost of raw materials, energy clauses are much less common. They can be problematic because they are complicated to calculate and require suppliers to share details on their margins, the production process and their energy contracts.

Even then, many smaller suppliers do not have enough liquidity to be able to pay energy bills for the 4-5 months it can take for invoices to be paid, said Max Schumacher, head of the Association for German Foundries.

"There are no good options," Schumacher said.

Carmakers and their main suppliers are themselves battling with higher costs and ongoing semiconductor shortages, but have been able to largely stick with financial goals by passing on costs to customers via price hikes.

Some have said in recent weeks they could source from suppliers in other countries with more stable energy supply to keep their production secure.

Soplast, a Portuguese autos supplier, said it was receiving higher than usual requests for quotes from German carmakers, who were increasingly interested in knowing their energy mix.

Still, in the automotive industry, establishing a new supplier can take at least six months, said Mauricio Morales, senior purchasing director at Wuerth Industrie Service - among the world's largest providers of screws, nuts and bolts to carmakers.

Even for an item as small as a screw, carmakers may need to run new crash tests on cars to ensure the component's quality.

"At a car manufacturer it's a lot of effort," he said, adding that his company only had energy clauses with a few important suppliers.

Suppliers who already have factories in multiple locations are expecting to move more energy-intensive production abroad in the long-term, said Christian Hennerkes, chief executive of a producer of thermal protection for batteries with factories in Asia, Europe and the United States.

Hennerkes' company Von Roll ROL.S , which supplies battery joint venture ACC - a joint venture between Mercedes-Benz, Stellantis STLA.MI and TotalEnergies TTEF.PA - has managed to negotiate energy costs into some of its contracts.

"Carmakers weren't willing to do this in the past, but they are now, if only for a limited period of time... it's not in their interests for their supplier network to collapse," Hennerkes said.

Von Roll is now negotiating with its workers' council to add extra shifts and produce as much as possible before a new energy contract kicks in next year, the chief executive added.

"These energy price increases are long-term," he said. "Short-term assistance from the government is only buying us time ... this isn't a wildfire, it's a drought."

($1 = 1.0320 euros)
Reporting by Victoria Waldersee;Editing by Elaine Hardcastle

دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔

ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔

کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔

ہم کوکیز کا استعمال آپکو ہماری ویب سائٹ پر بہتریں تجربہ دینے کیلیے کرتے ہیں۔ مزید پڑھیے یا اپنی کوکی سیٹنگ تبدیل کیجیے۔

خطرے کی انتباہ: آپکا سرمایہ خطرے پر ہے۔ ہو سکتا ہے کہ لیورج پروڈکٹ سب کیلیے موزوں نہ ہوں۔ براہ کرم ہمارے مکمل رسک ڈسکلوژر کو پڑھیے۔