In today's fiercely competitive market, cost reduction has become a top priority for automotive parts manufacturers. As vehicle makers continue to demand lower component prices, parts companies are facing an increasing "cost crisis." To stay ahead, effective management and continuous cost optimization have become essential strategies for maintaining competitiveness. Recently, several executives from parts companies shared their insights with reporters, emphasizing that managing costs effectively is the key to long-term success.
During interviews, it became clear that many parts companies are focusing on reducing costs through technological upgrades and improved management. They believe that innovation isn’t just about new ideas, but also about refining existing technologies and processes to achieve greater efficiency and quality.
Jiang Yongyu, vice president of Jiangsu Songlin Automotive Parts Co., Ltd., explained how the company is implementing an iron mold sand reforming process to improve casting efficiency. They are also adopting link expansion and breakage technology, commonly used in high-end foreign vehicles, which reduces both production steps and costs while improving product quality.
Similarly, Hubei Danjiangkou Danchuan Automobile Transmission Shaft Co., Ltd. has restructured its production process by heat-treating after rough forging. This change ensures uniform hardness and lowers heat treatment costs, demonstrating how process optimization can lead to significant savings.
Many parts companies are not only innovating in technology but also investing in their own equipment and testing tools. This allows them to maintain product quality while cutting costs. High-precision machines from Europe, the U.S., and Japan are now common in these facilities, as they ensure consistent quality and accuracy—key factors in overall cost control.
Beyond technology, waste reduction plays a crucial role in cost management. Many companies have introduced systems for recycling scrap materials, such as reusing metal shavings or turning waste into raw materials. One driveshaft manufacturer reduced material waste by adjusting product strength to meet actual needs rather than over-engineering.
5S management and militarized organization have also become popular in workshops. At Zhejiang Yinlun Machinery, every part is placed in a fixed location, each station has a designated number, and time limits are strictly followed. Such meticulous organization minimizes inefficiencies and supports lean manufacturing.
Some companies are building industrial parks to streamline production. For example, Zhejiang Zhongma Transmission Co., Ltd. established a China-Malaysia Industrial Park, bringing together more than 50 supporting companies. By integrating processes like heat treatment and surface finishing, they reduce costs and improve product quality.
Cost-saving efforts extend to daily operations. Many companies adjust electricity usage to avoid peak hours, using low-cost off-peak energy for power-intensive tasks. Fuyang Bearing Co., Ltd. saves significantly by running heat treatment at night when electricity rates are lower.
Internal management practices are also being refined. Some companies implement strict budgets for travel, office supplies, and hospitality, with accountability systems that reward efficiency and penalize waste. Outsourcing services like canteens and fleets has also helped reduce overhead. A company in Hubei saw improved food quality and employee satisfaction after introducing competition among two canteens, while outsourcing fleet services led to better service and lower costs.
Overall, the focus on cost reduction is not just about saving money—it’s about creating sustainable, efficient, and competitive businesses. Through technological innovation, process optimization, and smart management, parts companies are finding ways to thrive in an ever-challenging industry.
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