WDK flags Toyota's fair-deal lifeline for rubber parts suppliers

Frankfurt, Germany – Toyota Motor Corp. is setting industry standards with its fair treatment of suppliers, according to the German rubber industry association the WDK.

The automotive major, said WDK, is currently supporting its suppliers “with billions of euros”: enabling wage increases and thereby "developing and protecting" its own supply-chain.

Furthermore, the Japanese car maker has also been accepting “justified price increases” from its suppliers since 2022, WDK president Michael Klein said in a 24 May release.

However, added Klein, the concept of 'fair cooperation', which made German automotive engineering successful in the past, no longer exists in the domestic industry. 

“The principle of fairness in contractual matters and in dealing with each other has fallen by the wayside due to the increasingly egocentric maximisation of earnings by car manufacturers,” he commented.

Despite “cost explosions” in energy, freight and raw materials over recent years, suppliers have had "hardly any concessions in delivery obligations to the automotive industry,” said Klein.

This makes the Toyota approach “all the more astonishing and significant," continued Klein, noting how component suppliers have had to absorb these cost burdens.

Furthermore, he warned that car makers are planning to use “massive Chinese overcapacities in the supplier sector to further increase the price pressure on the German supplier industry.”

"Since the costs, which are too high by international standards, cannot be passed on in the market, liquidity and equity are melting away,” Klein noted.

For many of the companies, he said, “the question arises as to whether Germany is still the right location.”

“The globally positioned corporations from our midst have already answered the question with 'no'," he added.

But, Klein said, Toyota is now showing that a partnership based on cooperation and fairness is sustainable and economical in the long term for everyone involved.

“And the Japanese carmaker is actually living up to its own advertising slogan: 'Nothing is impossible!'" concluded Klein.