Shanghai. December 10 (Gasgoo.com) – As carmakers continue to slash their prices, production cost is becoming more and more important for Chinese automakers. As a result, local sourcing of auto parts has become instrumental to reduce production costs and increase profitability.
The localization index (the percentage of locally-made auto parts used in a completely built-up vehicle) for most joint venture automakers in China are averaged at 75 percent, with the highest at over 80 percent and the lowest at over 40 percent, according to a Xinhua News report.
“When the localization index goes up, the production costs will be reduced and the profitability will be improved,” said Rao Da, a senior auto expert from China Association of Automobile Manufacturers.
Winfried Vahland, president of Volkswagen China Group, indicated that Volkswagen has a so called “Olympics Plan” to reduce costs of automobiles produced by its joint ventures in
Chinese automakers may lose 40 billion yuan ($54.03 B) in profit growth due to repeated car price slashes this year. The total amount of profits with
