Honda Motor Co plans to move procurement of automobile parts to emerging markets from developed nations, and consolidate purchases to cut costs by 10 percent, the Nikkei business daily reported.
Initial savings from the consolidation of parts suppliers are estimated at 100 billion yen ($1.08 billion) annually, the paper said without citing sources.
Honda's transactions with parts suppliers in China, India, Southeast Asia, Brazil and other emerging countries are expected to increase, the report said.
Honda makes automobiles at 25 factories in 16 countries and regions, and parts are received from some 2,200 facilities. Each component type, such as brakes or upholstery, comes from seven to eight plants.
Under the shift, Honda will narrow this down, procuring parts from three to four plants mostly in low-cost regions, the report said.
The automaker will start selecting new suppliers in 2011 and aims to complete the shift from suppliers in developed nations by 2013, the Nikkei said.
The move will help the company prepare for stiff pricing competition in the emerging markets, where demand for low-priced vehicles is rising, the business daily said.
Honda procures an estimated 3-4 trillion yen in parts annually, the paper said.
