Tier 1 suppliers were getting so big a couple of years ago that some observers considered them a threat to carmakers. And the pace of supplier consolidation hasn't slowed. In the past few weeks, Magneti Marelli and Bosch have joined their lighting businesses; TI has bought Walbro to make more extensive fule-line systems; and Visteon has acquired Plastic Omnium's interiors business.
But no one seriously believes anymore that suppliers are getting too powerful. Tier 1 suppliers are struggling to keep up with their customers - trying to operate at sizes proportionate to the carmaker supergroups created by the mergers, acquisitions and alliances of the past 12 months. Otherwise they risk becoming too dependent on single customers.
Look at what has happened in Japan. The close ties between vehicle makers and their suppliers that was such a strength in good times has created inflexibility. These ties have compounded the difficulties suppliers and carmakers are experiencing as they try to break out of their current problems. Such big names in the Japanese supply industry as Zexel, Jidosha Kiki and Izumi have fallen into foreign hands.
But as the old Japanese keiretsu breaks up, a new form of keiretsu is taking shape in the rest of the world. Global giants such as Renault-Nissan, DaimlerChrysler and Ford are making demands on component makers that in the long term could pull all but the strongest suppliers into a new kind of global keiretsu.
Ford's Full Service Supplier and Renault's Optima partners are being promised bigger and longer term relationships in return for more innovations and closer integration into the vehicle makers' product development.
Suppliers could be forced to choose which carmakers to offer their best technology, and to align themselves more tightly with core customers. These new linkages are still a long way from the web of financial and managerial ties between Japanese carmakers and their keiretsu. But the carmakers ought to consider just how far they want to go down this road.
Overdependence on a single customer is what Visteon and Delphi are running away from. A healthy balance of power between auto companies and Tier 1 suppliers is good for all.