Japanese suppliers in Europe: Strengthening production, sales, and development functions

Starting operations at new plants and improving production in Eastern Europe

2016/10/11

Summary

  According to LMC Automotive, sales volume of light vehicles in 17 Western European countries increased by 8.9% year-over-year (y/y) to 13.18 million units in 2015, and rose by 7.2% y/y to 9.34 million units in the period January to August 2016, showing a continued upward trend. Under these circumstances, many Japanese parts suppliers have been striving to win more orders from European and U.S. OEMs and parts suppliers in Europe. The building of plants and business structures to produce carbon fiber products or develop safety technologies is especially noteworthy.

Across Europe: Strengthening sales and development bases and shedding some businesses

  Akebono Brake will increase the number of sales and development staff to receive more orders from big-volume manufacturers. Nidec Elesys plans to establish a development center for advanced driver assistance systems (ADAS). Toyota Boshoku will sell its interior businesses except for the operations targeting Toyota and high-end models.

Germany: Strengthening sales functions, reorganizing or expanding plants, and building business structures to focus on carbon fiber or safety technology areas

  Parts suppliers are aiming to win more orders from European OEMs. Activities being undertaken for this purpose include establishment of sales offices targeting German OEMs (by Asahi Kasei, Ashimori Industry, and Piolax), and integration and strengthening of production capabilities (Sumitomo Rubber: consolidation of three local subsidiaries and establishment of a new development center; Nisshinbo Brake: consolidation of two plants and construction of a new building; and Musashi Seimitsu: M&A). Some suppliers are enhancing their production capacities for carbon fiber products (Teijin: integrated production system dealing with materials through moldings; Mitsui: equity participation in a local engineering company; and Mitsubishi Rayon: new plant to produce an intermediate material for mass-produced cars). Denso established a new company to develop image recognition technologies for advanced safety.

Western Europe (other than Germany): Boosting production capacities, reorganizing plants, acquiring manufacturers, and bolstering sales operations

  Parts suppliers are aiming to expand business primarily to European OEMs. Calsonic Kansei and Unipres are increasing their respective production capacities for cockpit modules and body frame components in the U.K. Sekisui Plastics increased its production capacity for resin foam materials in the Netherlands and plans to build a new molding and processing plant in Germany (candidate). JTEKT is reorganizing its bearing plants in Europe to strengthen its profit base. Alpha acquired a Swedish car lock business group. Toray acquired an Italian carbon fiber prepreg manufacturer and Hi-Lex bought an Italian window regulator manufacturer. Topy Industries will reinforce its capital alliance with an Italian steel wheel manufacturer. Yorozu set up a European office in a suburb of Paris to bolster its sales operations.

Eastern Europe: Starting operations at new plants, boosting production capacities

  To meet orders from Japanese and European OEMs, some suppliers will start operations at new plants (JSR: high-performance synthetic rubber; Sumitomo Riko: hoses; and Hi-Lex: door modules). Others are boosting production capacities (Nidec: motors; Hi-Lex: wind regulators, etc.; and Sanden Holdings: launch of a new production line for air-conditioning systems).

Russia: Starting operations at new plants despite shrinking market

  Vehicle sales in Russia between January and August 2016 decreased 14.9% y/y to 900,000 units. The country's monthly vehicle sales have fallen y/y for 20 straight months since January 2015. Russian production volume between January and June 2016 remained low at 610,000 units, down 16.2% y/y. Despite the unfavorable market conditions in Russia, some Japanese parts suppliers that had continually postponed launches of new plants started operations there in 2016 (Daido Metal: truck engine bearings; and Hi-Lex: control cables, etc.).

Morocco and Turkey: Building a new plant and starting operations there, investing in a local company and boosting production

  In Morocco, Asahi Glass will establish a new joint venture (JV) plant to manufacture automotive glass. In Turkey, GS Yuasa acquired a 50% stake in a local manufacturer and plans to boost production of lead-acid batteries. Sumitomo Rubber's JV started producing passenger car radial tires at its new plant in Turkey.

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