Automotive leather producer Schaffer Corp has forecast a drop in sales for the 2006 financial year of up to 10 per cent as prestige car maker BMW severed a 17-year relationship by failing to renew a contract with subsidiary Howe Leather.

The inability to secure work with BMW raises the pressure on the company to extend relationships with rival European car makers Land Rover and Audi, given that the BMW contract accounted for about 20 per cent of Howe's sales and volumes.