LONDON - The merger of Daimler-Benz and Chrysler is likely to accelerate the growth of systems and module suppliers in Europe.
Daimler is already on the leading edge of modularization in Europe with its Smart car. Chrysler led the industry's move to modules with its Jeep brand. Its most advanced move has been the rolling chassis supplied by Dana Corp. to its Dakota pickup truck plant in Curitiba, Brazil.
Global purchasing, headed by Chrysler executive Gary Valade, will be the first operation integrated at DaimlerChrysler.
Valade, currently Chrysler's chief financial officer, said the combined company will save $400-$500 million on purchasing costs next year.
Both companies already have a strong bargaining position for commodity components like tires and batteries. It will take several years to realize further benefits from rationalizing the supply base, and from using common platforms and modules. The integration plans call for $3 billion in higher sales and lower costs after three to five years.
A move toward common parts and purchasing synergies means that the number of direct suppliers will probably shrink. There is little overlap between the supplier bases of the two companies.
Top global suppliers like Bosch, Johnson Controls, LucasVarity and Valeo serve both carmakers. But there is a long list of companies that supply only one or the other.
Chrysler brought many US suppliers to support its Austrian assembly plant. Chrysler has encouraged North American suppliers like Dana and interior trim maker Collins & Aikman to set up in Europe to reduce the costs of qualifying new suppliers and transferring technology.
The future of some Chrysler suppliers in Europe might be threatened by the takeover. They include BMW's in-house plastics business, which suppliers fascias to Chrysler in Austria, and VM Motori, which supplies Chrysler with diesel engines for Europe.