European car makers and their suppliers: changes at the interface

The objective of this paper is to examine changes in the European car industry and in particular the impact these changes are having on the car makers and their relationships with their suppliers. With excess production capacity and the poor outlook for car sales, the European car industry requires structural changes to balance supply and demand. In an effort to address these problems, the car makers are re‐appraising their relations with their suppliers. They are now pursuing more intensive and interactive relationships with their suppliers, collaborating in areas such as new product development, supplier development, and information sharing on a range of issues. However, there is evidence to illustrate that there is a lack of trust between the car makers and their suppliers. It is argued that if the European car makers are to compete globally then there will have to be more trust and co‐operation between the car makers and the components industry.