Toyota Reportedly Outsourcing Some Hybrid System Assembly to Aisin Seiki Subsidiary

9 January 2006

The Nihon Keizai Shimbun reports that Toyota is outsourcing the production of gasoline-electric hybrid systems—mainly for use in the Lexus GS hybrid (to be released in the spring) and the LS Hybrid (due in 2007)—to transmission manufacturer Aisin AW Co. The outsourcing move is reportedly in response to increasing demand.

The Aisin Seiki Co. subsidiary will begin production of the systems at its new plant scheduled to begin operations at the end of January.

Toyota will provide Aisin with components such as electric motors and inverters. The paper reports that Aisin plans to produce about 100,000 systems for rear-wheel-drive hybrid systems annually by 2010.

Although President Katsuaki Watanabe announced that the automaker aims to sell such 400,000 units worldwide this year, production has not kept up with demand because of a shortage of components.

Toyota decided to outsource the production of key systems to Aisin AW because it aims to establish a structure for mass production, with the help of group firms as well, in order to achieve its goals, according to a Toyota official.

Aisin AW has been supplying 20,000 hybrid systems to Ford Motor since 2004, and was featured in some corporate grumbling from Ford late in the summer of 2005 that they were being squeezed out of critical hybrid systems by Toyota, which owns 23% of Aisin. Aisin said it was unable to keep pace with Ford’s scaling up of hybrid production due to its own production constraints. (Earlier post.)