Japanese suppliers in ASEAN: Components and materials for electrification on the rise

Responding to increasing regional demands and exports, production shifting from China

2019/08/20

Summary

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Map of automotive plants in Thailand (Click to see a map of facilities)
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Map of automotive plants in Indonesia (Click to see a map of facilities)
For countries and regions other than Thailand and Indonesia please refer to the map entitled 'OEM Plants Interactive Map'

  In Thailand, vehicle production in 2018 reached 2.168 million units, reflecting a healthy growth of 9.0% over the previous year. In January through June of 2019, vehicle production was 1.066 million units, representing a slight increase of 0.9% compared to the same period in the previous year. Domestic vehicle sales, buoyed by a strong economy, increased by 19.2% year-on-year (y/y) to 1.039 million units, the second consecutive year of double-digit growth. Vehicle sales in the first six months of 2019 continued its growth trajectory: 524,000 vehicles sold for a 7.1% y/y increase. Exports of complete vehicles increased 0.1% in 2018, to 1.141 million units, but in a worsening export environment, exports of complete vehicles from January through June of 2019 dropped slightly to 560,000 units, reflecting a 0.4% y/y decrease

  Under these circumstances, the shift toward eco-cars and electrification is also progressing. The Thai government has approved applications for participation in its electric vehicle investment incentives program for investment projects submitted by Toyota, Nissan, Honda, and Mazda for hybrid vehicle (HV) production, by Mercedes-Benz, BMW, and SAIC Motor-CP for production of plug-in hybrids (PHV), and by EV start-up FOMM for electric vehicles (EV).

  In the volatile Indonesia market, motor vehicle sales in 2018 grew 6.9% over the previous year to 1.151 million units, but sales from January through June 2019 slumped to 482,000 units, a sharp 13.0% y/y drop. There was a significant increase in vehicle production in 2018, a 10.4% y/y increase to 1.344 million units, but production fell by 6.7% y/y in the first 6 months of 2019 to 592,000 units. On the other hand, sales of SUVs and MPVs (multi-purpose vehicles) continued to grow.

  The government of Indonesia is developing policies for vehicle electrification. The various OEMs seem to be progressing with preparations for the introduction of electric vehicles as they prepare to launch new models such as LCGC (low cost green car) compatible vehicles that have been promoted up to now.


  With an expected increase in mid-term demand and production in the ASEAN countries, the Japanese automotive component suppliers are moving forward to strengthen their production capacities and with plant automation. In addition, responding to the increased demand stemming from more stringent environmental and safety regulations, as well as the movement toward electrification, the companies are moving ahead with investments in parts and materials.

  In Indonesia, business activities utilizing the country's resources can be seen, such as Sumitomo Metal Mining’s construction of a nickel smelter for EV battery materials, and Hanwa’s investment in a joint venture for nickel-cobalt compounds for lithium-ion batteries.

  In Thailand, Kuraray plans to build a new plant for heat-resistant plastics. Daiichi Kigenso Kagaku established a sales company for compounds used in automotive exhaust gas catalysts. Regarding lightweight materials, Sekisui Plastics will newly produce high-performance plastic foam molded products, Nippon Steel and JFE Steel will proceed with preparations for the production of 1.2 gigapascal-grade high-tensile steel, and UACJ will establish a new plant for manufacturing aluminum materials for heat exchangers.

  Other activities related to materials include Ube’s expansion of production capacity of synthetic rubber for high fuel economy tires in Thailand and Malaysia. Furukawa Electric is planning to increase its production capacity of aluminum wire for harnesses in Vietnam. In Singapore, Denka is also planning to increase its production capacity of heat dissipating materials used in electric vehicles such as EVs. In Malaysia, Idemitsu Kosan is planning to establish production facilities for engineering plastics, the demand of which is increasing for electrical components for electrified and autonomous driving vehicle applications.

  As for electrical components, in Vietnam, NOK is planning to build a plant for flexible printed circuit boards and Kyosha is planning a plant for double-sided printed circuit boards. In the Philippines, EM-Devices will increase its production capacity of in-vehicle power relays and Rohm will construct a new building at its plant site to manufacture transistors and diodes for small-signal semiconductors.


  There is also a movement to transfer production from China to ASEAN. Because of rising labor costs in China, Yokowo transferred the production of components for Japan and the U.S. to its plant in Vietnam, moving forward its plans to carry out the transfer of its production of antennas for the U.S. market which were the subject of the tariff sanctions and trade friction between the U.S. and China. For the export of aluminum wheels from China to the U.S., Topy is considering changing to Thailand for production and export. Foster Electric, against the backdrop of increasing labor costs in China, is enlarging its Myanmar plant and expanding production of automotive speakers. Sanyo Chemical, being adversely affected by the increased stringency of environmental regulations in China, will build a new plant in Thailand and begin the production of resins for electrodeposition paint materials, transferring most of its China production to Thailand. In response to the transfer of production by automotive suppliers, Toray will set up a marketing base in Vietnam for its plastics business. As a result of increasing orders, Mitachi will expand the production capacity of its electronics manufacturing service (EMS) subsidiary in the Philippines.


  The activities of Japanese automotive suppliers in the ASEAN region, including the establishment of new plants, plant capacity increases, expansion of product line-ups, and strengthening of sales and development organizations are presented below (activities recorded during the 14 month period from April 2018 to May 2019).

 

ASEAN multiple countries, ( ) indicates products, * indicates new products

Production capacity enhancement, production line expansion, new product introduction Aichi Steel Corporation (Forged parts: Thailand, Indonesia)
Ube Industries, Ltd. (Synthetic rubber for tires: Thailand, Malaysia)
JFE Steel Corporation (* 1.2 GPa (gigapascal) grade ultra-high tensile strength steel: Thailand, Indonesia)
Hitachi Metals, Ltd.(Harnesses for electric parking brakes: Vietnam, Thailand)
Sales Service Increment P Corporation (High-precision digital map service: all 10 ASEAN countries)

 

Thailand

New entry, investment Kuraray Co., Ltd. (1. Automotive heat resistant plastics: joint venture; 2. Isobutylene derivatives)
JFE Shoji Trade Corporation (Investment in local Japanese suppliers in automotive motor business)
Suminoe Co., Ltd. (Automotive floor mats)
Zeon Corporation (Acrylic rubber)
Nohara Denken Co., Ltd. (Sensor components)
Production capacity enhancement, production line renewal, introduction of new products, establishment of development facilities, etc. <New plant construction>
Sekisui Plastics Co., Ltd. (Second plant for high-performance plastic foam molded products)
<Plant enhancement, facilities expansion>
Asahi Kasei Corporation (plastic compounds)
Ezaki Industrial Co., Ltd. (Automotive pipes)
Komatsuseiki Kosakusho Co., Ltd. (Diesel engine fuel injector components)
Sanyo Chemical Industries, Ltd. (*resins for electrodeposition paint materials: transfer production from China)
ShinMaywa Industries, Ltd. (* Telescopic cylinders, etc.)
TE Connectivity Ltd. (Connectors for wire harnesses)
Tanaka Seimitsu Kogyo Co., Ltd. (Engine components)
Topy Industries, Ltd.(Aluminum wheels: transfer production from China) Nippon Steel Corporation (* 1.2GPa grade ultra-high tensile strength steel)
NGK Spark Plug Co., Ltd. (Precious metal spark plugs)
Hiruta Kogyo Co., Ltd. (Metal parts for SUVs)
Marujun Co., Ltd. (Building a network in Japan, China and Thailand for die manufacturing)
Mitsui Chemicals, Inc. (Polypropylene compounds)
Yamagen Co., Ltd. (Press parts)
UACJ Corporation (1. Aluminum plates (fins) for heat exchangers; 2. Establish R&D facility for aluminum materials
Establishment of sales organization, business suspension Aisin Seiki Co., Ltd. (Capital tie-up with local company for sales of aftermarket parts)
Daiichi Kigenso Kagaku Kogyo Co., Ltd. (Sales company established for zirconium compounds used in automotive exhaust gas treatment catalysts)
TBK Co., Ltd. (Suspension of operations of brake friction materials plant)

 

Indonesia

New entry, acquisition, investment NTN Corporation (Constant velocity joint: joint venture plant)
Sumitomo Metal Mining Co., Ltd. (Nickel smelting facility for stainless steel, EV battery materials, etc.)
Diamond Electric Holdings Co., Ltd. (Ignition coils)
Topre Corporation (Press parts) Hanwa Co., Ltd. (Investment in joint venture plant for nickel-cobalt compounds) Mitsubishi Chemical Corporation (Acquisition of PVC compound supplier)
Production capacity increase, introduction of new products, establishment of development base <New plant construction>
Toyoda Gosei Co., Ltd. (*Joint venture for curtain and side airbags: second airbag plant)
<Plant expansion, development facilities>
H-ONE Co., Ltd.
(In-house die manufacturing)
Cataler Corporation (Exhaust gas catalysts)
Tatsumi Corporation (Electrical components, brake parts)
DIC Corporation (Pigments for paint: establishment of development facilities)
NSK Ltd. (Small diameter bearings)
Strengthen sales organization Tokyo Radiator Mfg. Co., Ltd. (Exhaust components such as EGR coolers for trucks

 

Vietnam

New entry: plant, sales & marketing company NOK Corporation (Flexible printed circuit boards)
Kyosha Co., Ltd. (Printed circuit boards)
JSR Corporation (Import/export and domestic sales of automotive components)
Takeda Printing Co., Ltd. (Metal masks for electronic components processing)
Central Automotive Products Ltd. (Aftermarket suspension components: manufacturing and sales joint venture)
Toray Industries, Inc. (Plastics business marketing office)
Nihon Plast Co., Ltd. (Steering wheels, airbag modules) Honda Tsushin Kogyo Co., Ltd. (Automotive connectors: transfer production from China)
Production capacity increase, new product introduction <New plant construction>
Sumitomo Wiring Systems, Ltd. (Fourth wire harness plant)
<Facilities expansion, adding to product line-up>
Tanoi Mfg. Co., Ltd. (High precision parts for automotive turbochargers)
Fujikura Composites, Inc. (Automotive parts)
Furukawa Electric Co., Ltd. (Aluminum wire)
Yokowo Co., Ltd. (*Antenna products for US marker: transfer production from China)

(References: Companies’ PR materials, news articles)

 

Related Reports:
Thai government approves nine OEMs’ investment projects for electrified vehicles (Jul. 2019)
Indonesia: Considering measures for the introduction of electric cars, automakers seeking incentives (May 2019)
ASEAN: Thailand accelerates EV production; new plants to be built in Malaysia and Vietnam (Mar. 2019)

<Japanese Supplier Reports>
  East China: Responding to NEV market expansion (May 2019)
  Central and Eastern Europe: Responding to orders from European OEMs (Jun. 2019)
  Western Europe: Meeting increasing demands for electrification and others (May 2019)
  India: Meeting tighter emissions and fuel economy regulations (Nov. 2018)
  Mexico: Focusing on Changes to NAFTA (Oct. 2018)
  U.S. and Canada: Strengthening of operations (Sep. 2018)
  ASEAN: Responding to the increase in global market demand (Aug. 2018)