This article discusses challenges for localization of parts supply in automotive industry in Kyushu from the perspective of production system. By viewing production system as multiple layers of vehicle design, production design and production operations, four attributes, which will affect localization of parts supply, are indicated: independency of vehicle and/or parts design, separability of vehicle/parts design and process design, cost structure of production process, and interdependency among production processes. Taking into account of these attributes and the fact that Kyushu is production site without R&D functions, the article suggests implications about improvement of production competitiveness of local suppliers, optimization of chain of production processes, integration of parts, and enhancement of R&D functions in automotive industry in Kyushu.