Carmakers to trim expenses

Japans Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. are scrambling to slash expenses by more than ¥600 billion (US$5.55 billion) this fiscal year, hoping this huge reduction will allow them to absorb skyrocketing material costs instead of passing them on to customers. Toyota plans to review the design of its entire line-up for the first time in 15 years to wring out cost savings of at least ¥30 billion (US$277 million) in the next six months or so. By changing parts designs and reducing the use of steel and other materials, the leading Japanese automaker aims to cut costs by more than ¥330 billion (US$3.05 billion) in fiscal 2008. This translated into a rough ¥120 billion (US$1.11 billion) improvement in its group operating profit. But sharp rises in material prices this fiscal year, as typified by steel’s surge of 30% or more, will likely counteract most of the ¥300 billion (US$2.77 billion) in cuts it achieved last year. The carmaker plans to chop the variety of parts it uses in half, focusing on seat belts and other interior components. (May 31, 2008)