Japanese suppliers in Southeast Asia: Abundant opportunities for growth
Development of plants and export hubs in Indonesia, Vietnam, Malaysia and Philippines
This report summarizes activities of Japanese parts suppliers in the Southeast Asian region (excluding Thailand) in the 10 months up to late March 2015.
Indonesian vehicle sales in 2014 were 1.19 million units, down 0.4% year-over-year (y/y). This marked the first negative growth in five years since 2009. In addition to the economic growth slowdown, the decline was caused by the interest rate remaining at a high level, associated with the depreciation of the rupiah, and higher fuel prices. Sales continued to decline in January and February 2015, dropping by 15.2% y/y to 177,000 units. Under such unfavorable conditions, some Japanese suppliers are cancelling or suspending construction of their plants.
In the medium term, however, major Japanese OEMs such as Toyota, Nissan, Honda, and Daihatsu expect the Indonesian market to grow and thus plan to establish export hubs in this country. As each automaker is engaged in expansion of production capacities, launch of strategic vehicles for emerging markets, and construction of engine plants, Japanese suppliers are following suit to build new plants and expand existing plants. Some Japanese suppliers that already have own plants in Indonesia are also working to develop their existing plants into export hubs.
In Vietnam, Japanese suppliers are enhancing the production capacities of their plants so that the plants can serve as global export hubs. Harada Industry and Yazaki Corporation both constructed their second plants for automotive antennas and wire harnesses, respectively. Yokowo expanded its car antenna plant and transferred production of some products from China. Mitsuba is also enhancing its production capacity for relays. Yamashita Rubber completed the construction of a research & development (R&D) center for anti-vibration parts in August 2014 and gradually transferred basic research and development functions from its headquarters to this new center.
Also in Malaysia, Japanese suppliers are establishing their export hubs. Ube Industries constructed a new plant for polybutadiene rubber, a raw material for energy-saving tires. New plants were also constructed by Showa Denko for aluminum castings and by Nippon Kayaku for airbag parts. In the field of production capacity enhancement, Toyo Tire & Rubber expanded its passenger car tire plant for the U.S. market while Nippon Electric Glass is expanding its plant that produces glass fiber for reinforcing high-performance resin.
Japanese suppliers in the Philippines are also enhancing their capacities to produce products for export. Second plants were constructed to expand the production capacity for switches by Tokai Rika, antennas by Harada Industry, wire harnesses by Furukawa Automotive Systems, and engine shafts by Nakayama Seiko. As for expansion of existing plants, Nippon Ceramic increased the production capacity for sensors used on collision controllers, while Mitsuba and the Yokohama Rubber are enhancing their capacities for small motors and tires for passenger cars and sports utility vehicles (SUVs), respectively.
In Cambodia, Denso will construct an oil cooler plant and NHK Spring is constructing a sewing plant for seat covers. Both companies will export products from the new plants to their existing plants in Thailand. In Laos, Toyota Boshoku will transfer all fabric seat processes from its Thai plant to its Lao plant. Activities of Japanese suppliers in Thailand will be provided in a different report.
Japanese suppliers Related Reports:
the U.S. (Mar. 2015)
China (Part 2): East/North/Northeast regions and overview (Feb. 2015)
China (Part 1): Southern, Central and Southwestern regions (Jan. 2015)
India (Nov. 2014)