Japanese-Affiliated Automakers:

Management Practices Related to Purchasing Parts

T-NSIAD-92-5: Published: Nov 14, 1991. Publicly Released: Nov 14, 1991.

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GAO discussed the concern that Japanese-affiliated auto assemblers would only buy parts and components from traditional Japanese suppliers, focusing on Japanese management practices related to purchasing parts. GAO noted that: (1) the number of Japanese vehicles produced in the United States has increased by 400 percent; (2) the vehicles produced in the U.S. by Japanese-affiliated automakers contain a larger proportion of imported parts than those produced by traditional U.S. automakers; (3) of 30 U.S. auto parts suppliers reviewed 15 had done business with at least one Japanese-affiliated automaker; (4) difficulties U.S. auto part suppliers encountered in obtaining business from Japanese-affiliated automakers included overcoming preexisting relationships between Japanese automakers and their suppliers and surmounting language and cultural differences; (5) U.S. companies that have been successful in selling parts to Japanese-affiliated automakers have used such approaches as entering into licensing agreements, starting joint ventures with Japanese-affiliated suppliers, and establishing a representative presence in Japan; and (6) Japanese automobile companies are committed to total quality control, require their suppliers to deliver the exact number and kind of parts precisely when they are needed, have longer-term relationships with their suppliers and involve them in parts design, production, and supply, and source a higher percentage of parts from outside of the company.

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