Research On The Group Of North Automotive Component Company's Strategy Of Cost Reduction To Improve Profitability

Cost reduction to improve profitability,using the cost optimization ways to improve the company's profitability.As Chinese government promised to open the vehicle market to global OEMs which lead to fierce competition among auto industry.Auto components companies plan a key role between raw material suppliers and OEMs,they will face fierce problems of cost competition?industrial transformation and upgradation.So cost reduction to improve the profitability will be a serious problem and task to be faced and resolved by companies.As a typical joint venture automotive company of North Group,the operation issues appeared gradually during this transition phase.Firstly,for the joint venture company with famous international companies faced a supply chain with limited capability to control,which can't use the big volume of North Group to negotiate the price.Secondly,core technology was controlled by the partner,high-tech product will not introduce to joint venture company,it lead to joint venture company's products upgrade period longer?low end technology and operation cost higher and then make lower profitability?no competitiveness and difficult to get more market share.At meanwhile,market extension limited by the contract defined,no opportunity to get business chance with contract defined the OEMs,which turnover will be declined yearly.Lastly,joint venture company's partner have more internal supplier business,the transfer price can't be controlled which also make a lower profitability.So cost reduction to improve profitability became an important task of North automotive components group.This article selected the most representative company-North Group of Automotive components as the objective of study,which expectation is to show the issues existing on cost reduction to improve profitability to other component enterprise as experience and lessons learned.During the investigation progress,after analysis and summary the whole value chain of provider?maker?seller and financial,hoping we can use financial indicators to drive the cost improvement,commercial?technical?raw material and operation continue improvement as an implement path,identify the key improvement elements to make cost reduction as a cost improvement system and finally structured cost improvement culture.