Taiwan's car makers jointly buy steel materials to cut costs

Taipei, April 19, 2005 (CENS)--Several automakers in Taiwan are tying up with their local partners to procure steel materials abroad in a bid to counter the impact of rising steel prices.

Yulon Motor Co. (which locally produces Nissan car models) has cooperated with affiliated local China Motor Corp. (Mitsubishi) to make joint steel-material procurement from different steel suppliers in a bid to hedge against possible risks.

Yulon president Liu Yi-chen said that a joint procurement team between Yulon and China Motor just signed a one-year steel-supply agreement with material suppliers.

Liu said that Yulon aims to cut the overall costs by 3% to 5% in auto production this year by changing product designs, adjusting production processes, developing thinner but stronger sheet-metal parts, and modifying the assembly process to cut labor costs.

Hota Industrial Manufacturing Co., Ltd. (Toyota) has joined Toyota's Southeast Asia procurement system to deal with the rising steel prices, according to Yang Hsiang-chuan, a manager of the firm.

Mazda Motor Taiwan Co.'s president K.C. Hu admitted that his company is worrying about the lingering rise of steel prices. He said the insufficient supply of auto engines from Mazda Japan is also affecting his company's delivery of new cars to local consumers.