(Repeats to additional subscribers)
* Toyota aims to cut costs with local hybrid parts
* No dilution of quality standards
By Yoko Kubota and Norihiko Shirouzu
CHANGSHU, China, April 22 Toyota Motor Corp
wants locally procured parts to make up at least half
the components in the gasoline-electric hybrid propulsion
systems for the Corolla and Levin cars it plans to start making
in China next year.
Shinichi Matsumoto, Vice President for Toyota Motor
Engineering & Manufacturing in China, said Toyota needs that
level of local content in order to bring down prices of hybrids
and to generate more sales in the world's biggest auto market.
Toyota, which currently pays costly tariffs and transport
fees for bringing key components from Japan to assemble hybrid
vehicles in China, aims to slash costs by using many locally
procured materials and parts, Matsumoto told reporters on
"My feeling is that unless the local procurement ratio
reaches 50 percent, we can't call it 'localised'," he said at a
research and development centre in Changshu, about 80 kilometres
(50 miles) west of Shanghai. He was referring to number of
parts procured specifically for the hybrid system.
"Ultimately, our goal is to localise 100 percent."
Matsumoto also said that using parts procured in China for
its new hybrid cars does not mean it is lowering quality to
pursue higher sales. Toyota plans to keep the system's quality
equal to that achieved in Japan, he said.
The world's biggest auto maker said this week that it will
start manufacturing and selling Corolla and Levin sedans for
China in 2015 with a locally made hybrid system including the
battery and the motor, the first time it will make hybrids
outside of Japan using key components procured locally.
But made-in-China components does not necessarily mean
made-by-Chinese companies. While localizing parts is going more
smoothly than Toyota had expected, much of that output currently
comes from Chinese units of Japanese parts makers with
manufacturing operations in China, Matsumoto said.
Toyota is also procuring from several Chinese companies, he
In a gasoline-electric hybrid like Toyota's Prius, a
battery captures energy from the brakes to provide a supplement
to the combustion engine, boosting overall mileage, particularly
in stop-and-go city traffic.
Toyota, which already assembles the Prius and Camry hybrids
in China with component and system kits brought in from Japan,
said it is trying to educate Chinese customers about hybrid
technology. For instance, some people think they must be
re-charged like electric vehicles, which is not the case.
While Toyota is not the only firm trying to localise
production of the hybrid system, it is the furthest ahead.
Honda Motor Co is also trying to start procuring
key components in China, including motors and lithium-ion
batteries, Takahiro Hachigo, an executive at Honda's Chinese
operations, said in a news conference in Beijing on Sunday. The
firm plans to start making hybrid cars in China by 2016.
"As corporate average fuel emission standards get stricter,
we believe that hybrids will become the mainstream among green
cars," Seiji Kuraishi, Honda's Operating Officer and COO for the
China region, told the same news conference.
In Japan, the Prius' starting price is around $20,500 before
subsidies. In China, the car starts selling at $36,900 and most
buyers do not receive subsidies except in certain cities.
Toyota said on Tuesday that it sold 26,800 hybrid vehicles
in China in 2013, up 55 percent from a year earlier. It has not
said how many hybrids it aims to sell in China in the future.
($1 = 102.5700 Japanese Yen, 6.2274 Chinese Yuan)
(Editing by Keiron Henderson)