According to Reuters, Japanese car makers such as Nissan, Toyota, and Honda are striving to increase the localization of vehicles sold in the Chinese market and are increasingly relying on Chinese local parts.
Reuters said that in the Chinese market, "simple" low-priced cars that cost less than 10,000 US dollars belong to the major market segments that attract new-generation car buyers, and sales are expected to increase by nearly 40% in the next two years. Japanese automakers will compete with local automakers and other foreign automakers in this segment of the market, and must control costs in this price-sensitive region, and therefore need to seek to promote local production in China.
According to Shouhei Yamazaki, vice president of procurement of Dongfeng Passenger Vehicles, Nissan’s joint venture subsidiary in China, “Whatever you think about it, Chinese suppliers have lower costs. GM and Volkswagen are using local Chinese parts suppliers (control prices) if we If they compete, they will be defeated unless we also begin to use Chinese local parts and components." Take Nissan's own joint-venture brand Qi Chen in China as an example. Using tail lights produced in China can reduce this price by about 40 percent.
Japanese car companies originally relied mainly on Japanese parts suppliers or their component parts, but price factors prompted Japanese car makers to shift more to Chinese parts. Honda and Nissan said they can achieve more than 90% of the localization of parts in China.
In addition, parts produced by Japanese component suppliers in factories built in China are still more expensive than components in China, because expensive materials imported from Japan are often used.
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