China carmakers look to joint purchase of steel

Shanghai, March 13 (Gasgoo.com) Five Chinese automakers are planning to start joint procurement of steel materials and tires in an effort to cut their purchasing costs, Chinese newspaper China Automotive News reports.

The five homegrown automakers include Jianghuai Automobile Co, Geely Automobile Holdings, FAW Haima Motor Co, Great Wall Motor Co and Lifan Automobile Co. Executives of the automakers were reported to have hold talks on the matter at a recent conference in Beijing.

A company official who attended at the meeting said that talks were continuing but that the joint procurement deal was still under discussion.

Anyway he believed the deal would yield a desirable result despite the fact that local automakers are still not quite familiar with the process of joint procurement. 

Dong Jianping, deputy secretary general of the China Association of Automobile Manufacturers, said "such a deal is feasible because substantial savings can be made through reduced procurement costs by combining actions."

The joint move, if put in practice, would become the first time that China's homegrown automakers had planned any purchasing cooperation.

Before this deal only VW's two joint ventures, Shanghai Volkswagen Automotive and FAW-Volkswagen Automotive, managed to reduce purchasing costs through joint procurement, which greatly helped to bring down high purchasing costs.