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Business

Japanese carmakers take different roads with supplier networks

Nissan plans to sell its stake in Calsonic Kansei, its largest group supplier.

TOKYO -- Japan's big three automakers are taking different tacks with their networks of parts suppliers, with Nissan Motor looking to broaden its horizons while Toyota Motor and Honda Motor forge closer ties with their respective groups.

Nissan Motor plans to sell its 41% stake in Calsonic Kansei -- the largest supplier in its keiretsu, or web of interlinked companies -- to U.S. investment firm Kohlberg Kravis Roberts. KKR aims to acquire the autoparts maker via a tender offer.

The merger of Calsonic, which specialized in air conditioners and heat exchangers, and gauge maker Kansei was announced in March 1999. Nissan later partnered with France's Renault and tried to dismantle its keiretsu. But it ended up strengthening its relationship with Calsonic Kansei, making the manufacturer a subsidiary in 2005.

Calsonic Kansei played a key role in supporting Nissan's overseas expansion with its ability to produce parts at Nissan plants. But once a parts maker moves into a factory, it becomes tougher to make changes. Calsonic Kansei's reliance on Nissan for more than 80% of sales also raised concerns about the impact on the overall group's cost-competitiveness.

Breaking away from Nissan and moving under the umbrella of an investment fund will let Calsonic Kansei sell to other automakers more easily. Nissan aims to fortify the autoparts company through competition with rivals while continuing to treat it as an important supplier.

Toyota Motor, meanwhile, is reshuffling its keiretsu with a focus on competitiveness. It combined the brake development and production operations of Aisin Seiki, Denso and other suppliers, as well as the seat businesses of Aisin Seiki, Shiroki and Toyota Boshoku. Production of such parts as diesel engines and manual transmissions is also being transferred to group companies and consolidated.

But this is only half the equation. Toyota is using outside suppliers selectively to keep keiretsu members on their toes. The automaker sourced parts for a collision avoidance system from Germany's Continental, to the consternation of rival Denso. This carrot-and-stick approach is intended to maintain competitiveness.

Honda Motor took a similar approach as Nissan starting around 2012, going outside its group and dealing with European megasuppliers such as Robert Bosch as it strove toward its annual sales goal of 6 million vehicles. But its focus on rapid expansion led to quality issues. Honda is turning to its keiretsu again to correct the problem. The process of trial and error at Japanese automakers continues as they try to strike the right balance.

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