Toyota Motor Corp plans to buy Chinese parts to make cars in its operations in China as a way to cut costs, instead of shipping them in from Japan, reports Mark Rowe. Toyota would procure discount door parts and materials including steel sheet from China’s leading steel-maker, Shanghai Baoshan Iron & Steel. Toyota reckons that it will be able to save around 30 per cent of costs by procuring the parts locally.
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The move means that Toyota will become the first Japanese carmaker to use Chinese steel sheet and the company is also considering whether to also procure surface-processed steel sheet used for car bodies. From October, Toyota will use steel supplied by Shanghai Baoshan for subcompacts based on the Toyota Platz model to be produced with Tianjin
Automotive Xiali Co.
The two car-makers plan to produce 30,000 of the subcompacts a year, using 2,000 to 3,000 tonnes of the interior steel sheet from Shanghai Baoshan. The 50-50 joint venture has a total investment of US$100 million.
Toyota executives said they view the move as a natural progression in their investment in China. Toyota, along with Honda Motor Co and Nissan Motor Co is increasingly using China as a production base. Although China is the world’s most populous country with 1.2 billion people, it is viewed as a lucrative market ripe for expansion for both production and sales as there are only 14.7 million vehicles on its roads.
