(Japan, 3rd) Japanese automaker Toyota Motor is sourcing more lower-cost Chinese-made auto parts for its production line in Thailand to boost the price competitiveness of a new electric vehicle model slated for launch in 2028.
On Saturday (August 2), Nikkei Asia quoted informed sources as reporting that Toyota has undertaken a comprehensive initiative to purchase electric vehicle components manufactured by Chinese companies. Toyota has connected Summit Group, a major parts supplier in Thailand, with China's Wuhu Yuefei New Soundproofing Materials Company, facilitating the formation of a joint venture between the two firms this January. The plan is to build a local factory in Thailand to manufacture parts for Toyota.
Toyota's largest production hub in Southeast Asia is located in Thailand, and this joint venture marks the first time a Japanese automaker has introduced a Chinese component manufacturer into the automotive supply chain in Southeast Asia.
For many years, Japanese automakers have held a dominant position in the Thai market, accounting for about 90% of new car sales. However, BYD and other Chinese electric vehicle makers have recently been launching competitively priced electric and hybrid vehicles, grabbing market share. In the first five months of this year, Japanese carmakers held a market share of about 71%, while Chinese carmakers accounted for 16%.
The market trend is prompting Japanese companies to rethink their supply chain strategies in order to increase competitiveness. Toyota's latest move could mark a key strategic turning point for Japanese automakers in the region.
On Saturday (August 2), Nikkei Asia quoted informed sources as reporting that Toyota has undertaken a comprehensive initiative to purchase electric vehicle components manufactured by Chinese companies. Toyota has connected Summit Group, a major parts supplier in Thailand, with China's Wuhu Yuefei New Soundproofing Materials Company, facilitating the formation of a joint venture between the two firms this January. The plan is to build a local factory in Thailand to manufacture parts for Toyota.
Toyota's largest production hub in Southeast Asia is located in Thailand, and this joint venture marks the first time a Japanese automaker has introduced a Chinese component manufacturer into the automotive supply chain in Southeast Asia.
For many years, Japanese automakers have held a dominant position in the Thai market, accounting for about 90% of new car sales. However, BYD and other Chinese electric vehicle makers have recently been launching competitively priced electric and hybrid vehicles, grabbing market share. In the first five months of this year, Japanese carmakers held a market share of about 71%, while Chinese carmakers accounted for 16%.
The market trend is prompting Japanese companies to rethink their supply chain strategies in order to increase competitiveness. Toyota's latest move could mark a key strategic turning point for Japanese automakers in the region.
Toyota continues to encourage local Japanese suppliers to use products from Chinese companies, including Zhejiang Kaihua Mould Co., Ltd. and Kingfa Sci. & Tech. Co., possibly as part of cost-cutting measures.
Many of the parts for the bZ3X EV, Toyota’s low-cost electric vehicle launched in China this March, are the same as those used by many local automakers.
A Toyota insider told Nikkei Asia that the company plans to launch a new model in Southeast Asia in 2028 and by using Chinese parts suppliers, "Our goal is to reduce costs by about 30%."
According to industry data, Thailand has more than 3,100 auto parts manufacturers, around 1,400 of which are Japanese companies, while only about 190 are Chinese companies; however, that number has quadrupled since the end of 2017.
A manager at a local parts manufacturer said that Chinese companies' costs are 20% to 30% lower compared to Japanese firms, forcing some Japanese players to either exit or scale down operations.
Many of the parts for the bZ3X EV, Toyota’s low-cost electric vehicle launched in China this March, are the same as those used by many local automakers.
A Toyota insider told Nikkei Asia that the company plans to launch a new model in Southeast Asia in 2028 and by using Chinese parts suppliers, "Our goal is to reduce costs by about 30%."
According to industry data, Thailand has more than 3,100 auto parts manufacturers, around 1,400 of which are Japanese companies, while only about 190 are Chinese companies; however, that number has quadrupled since the end of 2017.
A manager at a local parts manufacturer said that Chinese companies' costs are 20% to 30% lower compared to Japanese firms, forcing some Japanese players to either exit or scale down operations.