Current Status and Challenges of Parts Transaction Optimization in the Japanese Automotive Industry

Summary of the transaction status of the Japanese automotive parts supply chain based on interviews.

**Key Points of This Report** - This report presents the progress and challenges in the optimization of transaction practices in Japan's automotive industry, based on interviews with key persons from both ordering and receiving companies (Tier 1/Tier 2). - To deepen the understanding of the policy side's recognition and efforts, hearings with relevant government ministries were also conducted. - It organizes legal amendments aimed at promoting the optimization of transaction practices, such as the significant revision of the Subcontract Act and the revision of standards under the Small and Medium-sized Enterprises Promotion Act. Since the announcement of the "Future-Oriented Transaction Practices (Seko Plan)" in September 2016, efforts to optimize transaction practices have steadily progressed in five key areas: the proper determination of prices, improvement of payment terms, optimization of mold transactions, protection of intellectual property and know-how, and prevention of the burden shifting due to work style reforms. However, in recent years, amidst rising prices, there has been a particular focus on the proper determination of prices, specifically price transfer. It is hoped that this report will serve as a reference for both ordering and receiving companies in negotiating fair prices and achieving transaction conditions, as well as for building good relationships with business partners, contributing to the business development of those involved.

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