In a move to help regain profitability, Toyota Motor Corp. plans to cut auto parts procurement costs by approximately 30% over the next three years. The reduction will come via a switch to less expensive materials, and requests to suppliers to cut prices of parts by 30%-40%.
Toyota faces its second consecutive annual operating loss, and is attempting to sharpen its competitiveness as relevant to pricing in emerging markets. This is largely contingent upon the reduction requests made by the company; the largest made in ten years.
The continued strength of the yen and growing concern thereof have also motivated the move.
– By: Stephen Calogera
Source: Automotive News (Subscription Required)