Japanese parts manufacturers in China: Increased production capacity at existing plants
Trends of companies including Alpine, Kasai Kogyo, Kobe Steel, Seiren, Jatco, and Toyota Industries
Huazhong, Xin’an area
This report covers trends of Japanese parts manufacturers in China in a roughly seven month period from late October 2015 to July 2016.
In 2015, 24.5 million automobiles were produced in China (year-over-year (y/y) increase of 3.3%), and automobile sales increased by 24.6 million vehicles (y/y increase of 4.7%). Tax-reduction measures that began in October 2015 reversed a decline and lead to an increase in sales. From January to June 2016, production volume was at 12.87 million vehicles (y/y increase of 6.5%), and sales were at 12.8 million vehicles (y/y increase of 8.1%), indicating stable growth.
By vehicle, sales of SUVs, MPVs, and luxury cars are continuing to show rapid growth. Furthermore, new energy vehicles (such as EVs and PHVs) have almost doubled in terms of y/y growth partly as a result of government subsidies, with production between January to June 2016 at 177 thousand vehicles, and sales at 170 thousand vehicles. The Chinese government has announced it will extend its subsidization policy until 2020.
Meanwhile, among Western automakers, GM has indicated it is pursuing an active expansion strategy, and is planning to increase its production capacity by one million or more vehicles by 2018. VW is being cautious with its plans to construct capacity for production of five million vehicles by 2019 due to market weakness in the first half of 2015, but is aggressively pursuing its new vehicle launch plans. Japanese OEMs are also increasing annual production capacity. Dongfeng Nissan has a long-term plan to expand production by 1.75 million vehicles at facilities such as its Dalian Plant. Toyota plans to increase its vehicle production capacity from approximately 1.05 million vehicles in 2015 to 1.13 million vehicles by 2018 through expansion production line expansion at its Tianjin and Guangzhou plants. In 2015, Honda’s third Guangzhou plant, which has an annual production capacity of 120 thousand vehicles, came online, increasing the OEM’s annual production capacity to 1.13 million vehicles. In 2017, there are indications Honda will start investigating the establishment of a third Wuhan plant, which it chose to pass on in 2015.
Additionally, Chinese automakers as well as their Japanese and Western counterparts are looking to step up activities related to new energy vehicles.
Given these trends, Japanese automobile parts manufacturers are expanding their production capacity in order to support increased demand from Japanese, Western, and Chinese OEMs, as well enhancing supply systems and developing new business partners. Moreover, work to augment equipment and open new plants in order to produce new technologies as well as high-value-added products, such as parts for turbo vehicles, EVs, hybrids, weight reduction, environmental regulation support, safety, and onboard information equipment.
Trends among Japanese parts manufacturers in China
|New production items at existing plants||[Guangdong province] Jatco (newly developed CVT), Mitsui Mining & Smelting (catalysts for automobiles)
[Jiangsu province] Calsonic Kansei (newly developed built-in oil coolers/warmers)
[Shanghai, Jiangsu province] Shinmei Electric (automotive relays)
[Hebei province] Kyowa Leather (olefin-based synthetic material)
|Increased production capacity||Expansion of production lines and facilities||[Jiangsu province] Kobe Steel (wires for cold-coiled suspension springs), Teijin Frontier (base fabric for air bags)
[Shanghai] Mitsubishi Heavy Industries (turbocharger cartridges)
[Guangdong province] H-one (molds), TS Tech (seats: transferred to new plant), Marui Industrial (automatic coating line)
[Hubei province] H-one (extra-high strength steel products: press machine), TS Tech (seat frames: introduction of new construction method)
[Hebei province] Kyowa Leather (polyvinyl chloride: expansion of one line)
[Henan province] Unipres (pressed parts)
|Plant expansion, building expansion||[Jiangsu province] Toyota Industries (compressors for air conditioners: new plant established and transferred), Mitsuboshi Belting (power transmission belts: second plant), U-Shin (key systems: new plant established and transferred)
[Shanghai] Mitsubishi Heavy Industries (turbochargers: third plant)
[Zhejiang province] Ogura Clutch (clutches for automobile air conditioners: exclusive plant established, Fujikura Rubber (plug covers: second plant)
|New companies (plants) established, constructed/online||[Anhui province] Yaskawa Electric (electric drive system for EVs: joint venture)
[Jiangsu province] Kotani (high-performance springs), Panasonic Ecology Systems (catalytic filters for diesel exhaust gases), Primearth EV Energy (nickel-hydrogen batteries for HVs: joint venture)
[Shanghai] Alpine (EV battery management system: joint venture), Pioneer (advanced driver assistance systems: joint venture)
[Zhejiang province] JFE STEEL (small-diameter electric resistance welded steel pipes, etc.)
[Hubei province] Kasai Kogyo (new production facility for ceiling interior materials), Keihin (new air conditioner), Koito Manufacturing (illuminators)
[Hebei province] Seiren (seat materials, airbags)
[Liaoning province] Panasonic (lithium-ion batteries for HV/EV: joint venture)
[Region unknown] Yorozu (suspension parts: third facility)
|Strengthening of business structure (joint ventures, sales structure, transfer and acquisition of companies, development facilities)||[Hubei province] Chuo Spring (springs: joint venture made)
[Shanghai] Sanden Automotive Components (electric compressors for PHVs and EVs: enhancement of sales expansion structure)
[Liaoning province] GS YUASA (lead-acid storage batteries: acquisition of a Panasonic subsidiary)
[Beijing] FUJI OOZX (transfer of joint venture)
[Region unknown] Nidec Elesys (development facility)
|Shelving of capital investment||[Guangdong province, Anhui province] Ahresty (engine parts: machining center)|
|Transfer of production to overseas||[Nationwide in China] Sumitomo Electric (wire harnesses), TS Tech (trim covers): Chinese plants for both companies now specializing in domestic demand|
Japanese Supplier Reports:
- Japanese Parts Manufacturers in Southeast Asia: Indonesia, Vietnam, Malaysia, The Philippines, Laos (Jul. 2016)
- Japanese Parts Suppliers in India: Supporting Increased Automobile Production (Jun. 2016)
- Japanese Suppliers in the U.S. and Canada: High demand leads to rising production (May 2016)
- Japanese suppliers in China (Part 1): East/North/Northeast regions (Oct. 2015)
- Japanese suppliers in China (Part 2): South/Central/Southwest regions (Nov. 2015)
- Japanese suppliers in Thailand: Strengthening production capacity and R&D function (Sep. 2015)
- Japanese suppliers in Europe: Targeting more business with European OEMs (Aug. 2015)