Saturday, 8 October 2011

Toyota said to tell parts makers to slash prices or be replaced





Toyota Motor Corp. is telling parts suppliers in Japan to slash prices or face being replaced by overseas rivals as the yen's value appreciates, four people involved with the discussions said.

Toyota, which loses 34 billion yen ($443 million) in operating profit for every 1 yen appreciation against the dollar, told parts makers it intends to increase procurement in emerging markets in cases where domestic suppliers can't match overseas prices, according to the people, who declined to be identified because the talks are private.


The carmaker told parts suppliers that it plans to procure more parts from emerging markets in cases where domestic suppliers can't match overseas prices, according to the report. The company requested to cut prices by as much as half to some of its suppliers, the report said.


“The high yen must be pressuring Toyota to review its supply chain and to seek cheaper options,” Hiroshi Ataku, an analyst at IHS automotive in Tokyo said.


The yen rose to postwar high in August, forcing President Akio Toyoda to focus on cost cuts. He had earlier pledged to make quality the company’s top priority in response to recalls of more than 10 million vehicles for problems related to unintended acceleration.


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