Nissan Parts-Shops in China, India
June 25, 2007

Nissan will buy more components from China and India to cut costs.

The automaker will raise global parts purchases from low-cost countries to as much as 24 percent of the total, from as much as 14 percent now, said Carlos Ghosn, Nissan's chief executive officer, in an interview with Bloomberg News in Singapore over the weekend.

Buying parts made in countries where wages are 5 percent of those of Japan would help Nissan's profit margins, which lag behind Toyota and Honda, Bloomberg noted.

Plus, Nissan wants to build a $3,000 car for India. Cheaper parts will be essential to bring that vision to fruition.

Exports of Indian-made parts may rise almost sixfold to $40 billion by 2015 from about $6.7 billion in 2003 because of demand from automakers, including General Motors, according to McKinsey & Co. as cited by Bloomberg. GM plans to buy $1 billion worth of parts a year from within four or five years. GM estimates the cost of Indian-made parts is half the cost of European-made ones.

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