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Geography 3422A/B Study Guide - Keiretsu, List Of Auto Parts, Carlos Ghosn

Course Code
GEOG 3422A/B
Milford Green

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Auto Keiretsu Wracked by Antitrust Probes3/24/2013 12:58:00 PM
Auto Keiretsu Wracked by Antitrust Probes
Japan's auto industry keiretsu, networks of parts suppliers closely
allied with companies including Toyota and Honda, appeared as a
black box to outsiders
o There was a lot going on behind the scenes and some of it
wasn't legal
Some areas of the Japanese auto-parts business were
rife with bid rigging and collusion
o The cases haven't attracted a lot of attention, but a US official
calls the probe the "largest price-fixing investigation ever" by
number of companies and executives involved
Prosecutors claim the mostly Japanese but also German and
Swedish firms conspired to boost the costs of some of the best-
selling vehicles on the road
There has been quiet pushback from industry officials in Japan who
dispute prosecutors' contentions that US and other consumers paid
more for their cars because of the antitrust violations
o They say that any collusion was more of a bid for survival
than for outsize profits
Japanese auto makers see keiretsu as a way to ensure quality over
the long term by building trusted relationships with suppliers
o The brand-name companies often own significant stakes in
keiretsu parts makers and enjoy the right of first refusal for
newly developed technology
o They work closely from the design stage onward, sharing
proprietary technology
Those relationships changed more than a decade ago when France's
Renault took a controlling stake in Nissan and sent a Brazilian
executive known as "Le Cost Killer," Carlos Ghosn, to run it
o Nissan disbanded its keiretsu and shifted to open-source
bidding among suppliers, many based outside Japan
Under pressure to stay competitive, Honda and Toyota capied
Nissan, especially at US and other overseas plants
o Even if they intended to keep their Japanese suppliers, the
non-keiretsu bids served as a benchmark for driving down
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