Japanese suppliers to build new plants in Russia and Eastern Europe

Asahi Glass, Daido Metal, Tokai Rubber, Toray, Toyota Boshoku, Bridgestone, and U-Shin all planing e

2013/01/17

Summary

 The number of passenger cars registered within 18 European countries between January and November of 2012 dropped 7.2% from the previous year to 11.69 million units. Under these circumstances, Japanese suppliers in Europe are targeting European passenger car OEMs, especially Volkswagen (VW) and German high-end vehicle manufacturers, as their target for expanding their businesses. New plants and production capacity expansion to existing plants are mostly constructed in Eastern Europe where labor is cheaper, but are also built in the U.K., France, Germany, and the Netherlands.

 There are suppliers which acquired or established joint ventures for the purpose of strengthening product engineering capability (Asahi Glass, Mitsubishi Rayon, Sumitomo Electric Industries/Sumitomo Wiring Systems), to achieve a global top-level market share (U-Shin and Nisshinbo Brake), to utilize European OEM sales channels owned by the local partners (Asahi Glass and Howa Textile Industry), and to establish a production base for the European, Middle Eastern, and African markets (Sumitomo Rubber).

 Some reorganized business structures by upgrading their local office to local subsidiary in order to strengthen their sales capability (Tokai Rubber), by establishing a sales company (Pacific Industrial), or by establishing a European holding company (Keihin). Others established new facilities such as an R&D site in France (Akebono Brake) and a designing office in Italy (Toyota Boshoku).


 The sales volume in Russia is estimated to increase by 9.4% from the previous year to 2.9 million for 2012. The production volume is also expected to show a constant increase of 11.5% y/y to 2.22 million units. Non-Japanese automakers are also partnering with local OEMs to expand their production structures.

 In the situation given, the Japanese suppliers are constructing new plants, securing production sites through acquisition, and expanding capabilities of their existing plants. The suppliers are not only constructing their own plants (Yokohama Rubber, Unipres, and Takata), but also producing parts at the Nissan plant (Calsonic Kansei and Kasai Kogyo). Many suppliers are shipping parts to AvtoVAZ (Takata, under a Toyota Tsusho's project, and Sanoh). Daido Metal increased its production capability in response to the increased orders from European OEMs' local plants. Bridgestone, U-Shin, and Yorozu are in consideration of constructing new plants.

 Jatco, which will be supplying parts to AvtoVAZ for the first time, established a local office and KYB established a subsidiary for import and export sales covering the entire Russia and former CIS regions in order to strengthen their sales structure.