News Room - Steel Industry

Posted on 24 Sep 2008

Toyota to Cut Steel Costs

Toyota Motor Corp. is set to cut its steel procurement costs by working closely with steelmakers, informed sources told Jiji Press Thursday.

 

Major steelmakers, including Nippon Steel Corp. and Sumitomo Metal Industries Ltd., have given Toyota a list some 300 proposals that they believe will help the automaker cut costs, according to the sources.

 

Based on the proposals, the top Japanese automaker will consider taking specific steps to reduce its production costs, thereby limiting the impact of higher materials prices and boosting its competitiveness, the sources said.

 

The proposals include the use of the same steel products in different auto models. The steelmakers also proposed that Toyota improve its production methods and reduce the use of steel products with low cost performance.

 

Toyota is now studying the proposals and intends to run trials for six to 12 months before full implementation, the sources said.

 

A passenger car requires about one ton of steel, which accounts for about 10 pct of total production costs.

 

Toyota accepted steel price hikes of some 30 pct in spring this year. This means that production costs will rise by roughly 30,000 yen per vehicle.

 

With the prices of other materials, such as glass and resins, also rising, Toyota's fiscal 2008 material costs are expected to total about 400 billion yen, far higher than the firm's estimate.