With tariffs expected to have – at the very least – a modest impact on new vehicle pricing in the coming weeks, at least as it pertains to Ford – automakers are working to try and mitigate those impacts in any way possible. That includes working with suppliers in various ways, an area that The Blue Oval hasn’t always been highly rated in regard to various studies outlining supplier relationships. Now, as Ford and its peers look to offset the impacts of tariffs as much as possible, it’s also alternating supplier contract terms as away to do precisely that.
According to Crain’s Detroit Business, both Ford and Stellantis are forcing suppliers to sign more stringent terms, and in exchange, they’ll receive new business and tariff cost relief. For Ford, that move includes an attempt to roll back a decades-old provision that enables suppliers to opt out of their contracts each year, which has historically been used by those suppliers as leverage during negotiations. As for Stellantis, that automaker is handing out new term sheets that aim to solidify its ability to enforce contract terms following more than one legal challenge.
While Ford opted not to comment on this report – “we don’t comment on supplier issues or contracts,” spokeswoman Ursula Muller said in response – Stellantis didn’t provide much info, either. “(Stellantis’) effort to provide financial support to suppliers as it relates to tariffs is confidential,” Stellantis spokeswoman Jodi Tinson said in an email. “Our purchase orders have repeatedly and consistently been upheld by Michigan courts.”
To date, automotive suppliers have been adamant that they intend to pass down the costs of tariffs to consumers, as most operate on thin margins and could potentially go belly-up if they try to absorb those costs – which automakers like Ford are doing to a degree. As for The Blue Oval, its new terms sheets reportedly nix the aforementioned clause, and are being required for suppliers seeking new business.
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