Toyota cutting supplier expenses by 30%, probably means using cheaper parts

Toyota cutting supplier expenses by 30%, probably means using cheaper parts

Filed under: Plants/Manufacturing, Toyota, Earnings/Financials



As with every other automaker - heck, almost every other company - Toyota wants to save more money. Japan's Asahi business daily revealed a Toyota initiative to lower its parts expenses by 30% over the next three years, and it is one that we're all too familiar with: Toyota told its suppliers to cut their prices by 30-40%. Can anyone guess how suppliers will most likely remove one-third the cost of their parts? If you said "use cheaper materials," we have your prize backstage...

A Toyota spokesman said the company had given "various suggestions including cost reductions" to the affected portion of its supplier base, which makes it sound like at the very least the company didn't just say "Here's less money, make it work." There are more than 200 vehicle components involved the move - that might sound sizable on its own but it's a tiny fraction of all the parts in a car.

Ultimately, Toyota wants to ensure its competitiveness in emerging markets and guard against a strengthening yen. Assuming the initiative is carried out, the parts in question will be used for cars arriving for the 2013 model year. We hope that by 2014 it is clear that Toyota chose the right bets for this game of parts roulette.

[Source: Reuters via TTAC | Image: TOSHIFUMI KITAMURA/AFP/Getty Images]Toyota cutting supplier expenses by 30%, probably means using cheaper parts originally appeared on Autoblog on Thu, 24 Dec 2009 07:59:00 EST. Please see our terms for use of feeds.



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Here we go...

maybe their suppliers cost has just gone down.