In 1993 Ferdinand Piëch brought José Ignacio López from General Motors to Volkswagen. VW created a new board position for him, responsible for production optimization and purchasing. López forced the supplier industry into concessions it had never made before. With the suppliers he accepted, he fixed purchase prices in writing for the next five years, and the prices fell each year. He was called the Würger von Wolfsburg, the strangler of Wolfsburg. He left VW in 1996. His name stayed in the language. The López-Effekt does not mean savings. It means cheap and often defective parts.
The term names what came after the squeeze. Lower prices were followed by lower quality.