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August 20, 2015

JAPAN: Toyota to seek price cuts from suppliers

Reports in Japan say that, following a one-year pause, Toyota is to ask suppliers to cut prices as it seeks to improve its competitive position.

Reports in Japan say that, following a one-year pause, Toyota is to ask suppliers to cut prices as it seeks to improve its competitive position.

Nikkei said the company has made the decision in spite of a forecast record operating profit for the current fiscal year.

Toyota usually asks its suppliers to join it in making cost and efficiency savings, but held off in the second half of fiscal 2014 as suppliers were hit by rising raw materials and energy costs. Automotive parts organisations in Japan have reported higher profits in the sector as a result.

However, normal service is apparently to be resumed and Nikkei said the requests for discounts from suppliers will be formally made in the ‘near future’.

The report noted that recent declines to raw material and energy prices will make the requests from Toyota easier to comply with. It also noted that much of Toyota’s recent financial boost is associated with currency gains and the company is eager to improve its competitive position globally versus major rivals such as Volkswagen Group.

Toyota’s latest quarter profits were up 10% on last year, boosted by a weak yen and cost reductions. However, the positive result came in spite of the company seeing lower overall unit sales in the quarter. It also warned on the outlook for sales in China.

Net income increased by 10% in the last quarter from 587.7 billion yen to 646.3 billion yen. Operating income increased by 63.2 billion yen.

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