Component Standardisation
Japan Inc turns to shared parts in fight against China
Toyota's Koji Sato is asking Japan's seven carmakers to standardise the parts drivers never see, from wiring looms to steel grades, as Chinese rivals erode market share and force a rethink of decades-old rules of competition.
Koji Sato has never been shy about naming the problem, even when he stops short of naming the country behind it. "Unless things change, we will not survive," Toyota's Chief Industry Officer told suppliers at the company's annual meeting in March. Four months on, in his other role as chairman of the Japan Automobile Manufacturers Association (JAMA), Sato is proposing what may be the most consequential act of industrial cooperation Japan's car industry has attempted in a generation, a shared standard for the parts nobody sees.
A crisis measured in market share
The numbers behind Sato's urgency are stark. In May, a bloc of Chinese brands, Geely Group, SAIC Motor, BYD, Chery Automobile and Leapmotor among them, outsold their Japanese counterparts in Europe for the first time, according to data from the European Automobile Manufacturers' Association. Their combined 138,140 units eclipsed the 130,424 managed by Toyota, Suzuki, Honda, Nissan, Mazda and Mitsubishi put together. In China itself the picture is worse still. Toyota's sales there fell 17 percent in the first half of the year, while Honda's dropped 35 percent.
Honda's troubles have since shown up on the balance sheet, with the company booking a net loss of roughly ¥423.9 billion ($2.6 billion) for the fiscal year to March, its first annual loss since it listed in 1957, driven largely by writedowns tied to a stalled electric vehicle push.
"We have a strong sense of crisis that the Japanese auto industry is in a massive period of transition," Sato said. "Now is exactly the time to further develop and evolve with the challenges and reform initiatives that the auto industry as a whole must face."
Right now, the most important theme facing the Japanese auto industry is improving international competitiveness. We aim to strategically create 'areas of cooperation' to improve efficiency, thereby accelerating coexistence in the essential areas of competition
What Sato actually wants standardised
The plan is narrower than it might sound. Sato is not proposing shared vehicle designs, shared platforms or mergers. Instead he wants Japan's seven manufacturers, Toyota, Honda, Nissan, Mazda, Subaru, Mitsubishi and Suzuki, to agree to common specifications for commodity components that customers never notice, among them wiring harnesses, hoses, connectors, certain plastics and steel grades. The scale of the current duplication is what makes the case.
Suppliers across the industry currently produce some 70,000 distinct variants of wiring harness alone to satisfy each brand's separate engineering demands, a fragmentation Sato argues drags down productivity and ties up capital that would be better spent elsewhere.
"Right now, the most important theme facing the Japanese auto industry is improving international competitiveness," Sato said of the plan. "We aim to strategically create 'areas of cooperation' to improve efficiency, thereby accelerating coexistence in the essential 'areas of competition.'" The production logic is based on an important insight. Money and engineering hours freed from reinventing wiring looms and connector housings could instead flow into batteries, software architecture, driver assistance systems and faster charging, the fields in which Chinese rivals have opened a lead.
Competition Leads To Production Collaboration
Component standardisation
Chinese brands overtake Japan in Europe
Combined May sales for the first time favoured Chinese manufacturers, the backdrop to Toyota's push for an industrywide parts standard
Europe passenger car sales, May 2026 (units)
*Geely Group, SAIC Motor, BYD, Chery, Leapmotor †Toyota, Suzuki, Honda, Nissan, Mazda, Mitsubishi
JAMA members under discussion
What would actually be standardised
- Wiring harnesses and connectors
- Fluid hoses
- Steel grades
- Certain plastics and commodity components
- Styling, dynamics and interiors remain brand specific, per Toyota's Koji Sato
Sources: European Automobile Manufacturers' Association; Automotive News; Honda Motor Co. FY2026 results. Compiled by Automotive Manufacturing Solutions.
A precedent, and a health warning
Parts sharing is, however, a well established practice rather than a novel idea. Volkswagen Group's MQB architecture became the defining example of cross brand platform sharing in the 2010s, underpinning models sold under half a dozen marques. Toyota and BMW jointly engineered the current Supra and Z4, and Mazda's MX-5 donated much of its underpinnings to the Fiat 124 Spider.
But what Sato is proposing differs in scale rather than in kind. These examples were based on bilateral joint ventures between two willing partners, whereas his plan would ask seven independent, normally - fiercely competitive companies to align on standards across an entire national industry, with suppliers expected to build to a common "Japan standard" rather than a patchwork of bespoke specifications.
We are really talking about what we can do together, because we do see that other industries in other countries or other parts of the world are better organised than us. We will see a lot more collaboration among Japanese OEMs
But the precedent also carries a warning. Volkswagen's platform strategy has long attracted accusations that its brands feel too similar behind the badge, and any move to standardise components across Toyota, Honda and their rivals will invite the same scrutiny. Sato's answer is that the commonality stops well short of the surface.
Styling, driving dynamics, interiors and brand character would remain each company's own, since the parts under discussion are not the ones that give a car its identity in a showroom or on the road.
Espinosa's endorsement, and the winding road still ahead
Sato is not alone in making the case. Nissan's chief executive, Ivan Espinosa, has echoed the call for closer cooperation among Japan's carmakers. "We are really talking about what we can do together, because we do see that other industries in other countries or other parts of the world are better organised than us," Espinosa said. "We will see a lot more collaboration among Japanese OEMs."
Whether that collaboration materialises at the scale Sato envisions is another matter. Getting seven separate manufacturers, each with its own engineering culture, supplier relationships and production lines, to agree on common standards is a formidable coordination problem, and getting the wider supply base to retool around them is a second one.
Toyota and Subaru already collaborate on parts of their model ranges, showing the mechanics can work between two willing partners. Extending that discipline across an entire national industry, while Chinese rivals keep gaining ground, is the test Sato has now set for himself and his rivals alike.
