Japanese carmakers getting parts from overseas

TOKYO, Dec 26 (ANN): Japanese automakers, which are being squeezed by the extreme rise in the yen's value, are seeking to cut production costs by buying more parts from overseas. Some economists fear Japanese parts makers will be forced to relocate plants overseas or go out of business if the trend continues. Economists say this could lead to the complete hollowing-out of the Japanese automobile industry. Toyota Motor Corp. in August invited officials from about 40 South Korean parts makers to its head office in Toyota, Aichi Prefecture, to display their companies' technologies. Toyota held the event to determine the technological capabilities of South Korean makers. In mid-December, Toyota held a similar event in Seoul. Toyota is already using parts from South Korea in some domestic assembly lines. A Toyota executive said, "South Korean makers' technological capabilities and product quality are high. And their parts are also 20 percent to 30 percent cheaper than parts made by Japanese makers." Toyota aims to cut costs by increasingly turning to parts suppliers in South Korea. Nissan Motor Kyushu Co. in Kandamachi, Fukuoka Prefecture, plans to use only parts made overseas or in Kyushu in the future. Fuji Heavy Industries Ltd. plans to raise its percentage of parts procured from overseas from its current level of about 13 per cent to 30 per cent by fiscal 2015. Mitsubishi Motors Corp. also plans to raise the percentage of foreign-made parts from 18 per cent in fiscal 2010 to 25 per cent in fiscal 2013. Domestic automakers have increased procurement of foreign-made parts in the hope the cheaper parts will allow them to protect jobs and technological capabilities at home by keeping domestic car production going. The effects of moves overseas by domestic automakers have spread to parts makers. Akihiko Shido, vice chairman of the Japan Auto Parts Industries Association, said, "Not only major parts makers but also midsize and small firms are accelerating their moves overseas." Toyota executive vice president Satoshi Ozawa said he was shocked to learn, in the wake of flood damage in Thailand, that some electronic parts widely used to manufacture cars are not produced in Japan.