Think of all the hundreds of components on a modern vehicle, and if you could drive the cost down by 5 cents on each one, it could add up to dollars per vehicle. Multiply that by the tens and tens of thousands that are made, and you are now potentially talking about millions of dollars.
I worked for a very large supplier to the auto industry. We were asked to reduce our price by 5 % annually; in fact one time we were presented with a demand for a 5 % retroactive price rebate by our biggest customer. In other words, they wanted a $8 million dollar check for parts that we had already sold them on cars they had already sold. We were told if we refused, all product many have be resourced to a competitor that would. One of our competitors did tell them no, and some of that product was sent to our plant instead.
Similarly, if you wanted to make a production process change to improve efficiency, you had to get their permission because you were changing something. Inevitably, if they thought it might improve your costs, they wanted a portion of that for themselves. It is a very tough industry to be in.
= new reply since forum marked as read