Japanese Suppliers in East China: Increasing Capacity for NEV Market
Adjusting capacity due to market decline and COVID-19 pandemic, and ...
2020/09/15
- Summary
- Shanghai: Joint development with Chinese companies (Teijin, Renesas Electronics, Rohm), facilities expansion (Showa Denko), business reinforcement (Horiba, Idemitsu Kosan, others)
- Jiangsu Province: New plants (Daikin Industries, Mitsubishi Heavy Industries) plant expansion (AGC, Envision AESC, others), facilities expansion (Cataler, Toyota Industries, Nichicon, others), business reinforcement (Kobe Steel)
- Zhejiang Province: New company operations (Aisin AW, Hanwa Kogyo), plant expansion (Showa Densen, Toda Kogyo, Nidec, Meidensha), business enhancement (Aichi Steel, JFE Shoji), withdrawal from business (Nippon Steel)
- Anhui Province: Facility expansion (TPR), production adjustment (Ahresty)
Summary
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| Map of automobile plants in China (click to open site map) East China automobile plant map |
This report presents the activities of Japanese suppliers in East China. (Based on sources dated over the 16-month period from April 2019 until July 2020.)
In 2019, China produced 25.72 million vehicles (down 7.5% year-over-year (y/y)) and sold (ex-factory) 25.77 million units, down 8.2% y/y for the second consecutive year. The main reasons for the decline include the effects of U.S.-China trade friction and changes in the exhaust emission standards.
In 2020, with the spread of the COVID-19 (new coronavirus) pandemic, sales of new automobiles (including NEVs) fell significantly: in January, sales fell 18.6% y/y, in February 79.1% y/y and in March 43.2% y/y. However, from April, the OEMs gradually reopened their plants, and production and sales recovered with increases of 2.3% and 4.5%, respectively, over the same month in the previous year. Afterwards, this growth continued: cumulative production for the period January through July was 12.31 million units (reflecting a decrease of 11.8% y/y) and sales for the period were 12.37 million units (a decrease of 12.7% y/y), reducing the cumulative contraction rate.
As an effect of the COVID-19 pandemic, Aisin AW postponed the start-up of two new joint venture plants to manufacture 6-speed automatic transmissions for front-engine front-drive (FWD) vehicles. Ahresty had to cut production several times at its die-cast products plant in 2019 due to the declining market, and closed the plant until the beginning of February 2020 due to the COVID-19 pandemic. The plant gradually resumed operations, recovering to the previous year’s level of production from April to June. Although Aichi Electric has postponed the scheduled start of operations of its new motor plant in April 2020, it will not change its medium- to long-term policy to strengthen its supply system for new energy vehicles (NEVs).
Production of NEVs such as EVs (electric vehicles) and PHVs (plug-in hybrid vehicles) for the full year of 2019 was 1.242 million units (down 2.3% y/y) and sales were 1.206 million units (down 4.0% y/y). In the first half of the year, production was a strong y/y, but with the impact of the reduction or suspension of government subsidies applied to NEVs from July, sales volume in July fell 2.0% y/y, turning to the first y/y monthly decrease. Sales continued to decline, falling 48% y/y in October, 44% y/y in November, and 30% y/y in December.
For NEVs, from January through June 2020, both production and sales were lower y/y, but in July production volume recovered with an increase of 15.6% y/y to 100,000 units and sales rose 19.3% y/y to 98,000 units. The Chinese government's measures to support the sales of NEVs as part of its efforts to boost the economy have been successful.
The East China region is home to many major OEMs and emerging automakers that develop and manufacture NEVs and other next-generation vehicles. The major Chinese OEMs in the region include SAIC-VW, SAIC-GM, Geely Automobile, Chery Automobile, and Anhui Jianghuai Automobile Group, while emerging EV manufacturers include NIO Inc. and WM Motor (Weltmeister Motor Technology Co., Ltd.). Local governments are stepping up their financial support for emerging EV manufacturers. At the end of 2019, Tesla began operations of its independently financed EV plant in the Lingang district of Shanghai. And, Toyota has a plant for electrified vehicle components and a development center in Changshu City in Jiangsu Province.
In response to these activities, Japanese automotive components manufacturers are expanding the production and sales of parts and materials for EVs and PHVs. Nidec, whose plant dedicated to E-Axle started operations in 2019, began to develop and supply products for Geely Automobile in addition to its main customer, GAC New Energy Automobile Co., Ltd. Other activities associated with the introduction of new products as a result of plant expansion include Showa Electric’s sealing materials for hybrid vehicle generator motors, Toyota Industries’ electrically-driven compressors for hybrid vehicle air conditioning systems, SWCC Showa Holdings wire harnesses for electric vehicles, Nichicon film capacitors for electric vehicles, Meidensha motors and inverters for electric vehicles, and Yodogawa Hu-Tech gaskets for lithium-ion batteries. In terms of strengthening its business structure, Teijin has begun developing separators for LIBs for EVs under a licensing agreement with Shanghai Energy, and Rohm has established a joint research center with a Chinese venture company to strengthen development of SiC-based inverters for EVs.
Activities of Japanese Suppliers (* denotes introduction of new product)
| New company (plant) establishment / commencement of operations | Jiangsu Province | Aichi Electric Co., Ltd. (*Establishment of new plant for the manufacturing of electric compressors for vehicle air conditioning systems) Sekisui Chemical Co., Ltd. (*Start of operations of production line for polyolefin foams for vehicle interiors) Daikin Industries, Ltd. (Establishment of joint venture company, 2nd manufacturing plant for fluorine compounds for semiconductor and battery materials) Mitsubishi Aluminum Co., Ltd. (*Considering the establishment of a joint venture for the production of products such as bumpers and onboard battery cases) Mitsubishi Heavy Industries, Ltd. (*Established new company for the manufacturing of electric automotive air conditioning compressors) |
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| Zhejiang Province | Aisin AW Co., Ltd. (Commenced operations at new joint venture plant manufacturing 6-speed automatic transmissions for front-engine, front-drive vehicles; production plan for 2020 revised downward.) Hanwa Co., Ltd. (Commenced operations at joint venture coil center to process ordinary steel and stainless steel) |
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| Production capacity expansion New product launch | Expansion of production lines and equipment, building expansion | Shanghai | Showa Denko K.K. (*New production to begin the supply of BMC sealing material for hybrid vehicle generator motors) |
| Jiangsu Province | Isolite Insulating Products Co., Ltd. (*Began regular production of 1400℃ heat resistant biosoluble fibers) Cataler Corporation (*Upgraded equipment for the production of high performance activated carbon sheet) Toyota Industries Corporation (*Established new line to produce electric compressors for electric vehicle air conditioning systems) Nichicon Corporation (*Facilities expansion and construction of dedicated production building for electric vehicle film capacitors) Nippon Piston Ring Co., Ltd. (Expansion of facilities and introduction of automated line for piston rings) Mitsubishi Chemical Corporation and Ube Industries, Ltd. (Considering the enhancement of production capacity of lithium-ion battery electrolytes) Yodogawa Hu-Tech Co., Ltd. (*Production line for gaskets for lithium-ion batteries) |
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| Anhui Province | TPR Co., Ltd. (Expansion of production line for commercial vehicle diesel engine cylinder liners) | ||
| Plant expansion | Jiangsu Province | AGC Inc. (*New plant expansion for cover glass for large 3D and complex-shaped onboard displays) Envision AESC Japan Co., Ltd. (*Establishment of prototype production line, new plant, and Shanghai development center for new type secondary batteries) Ondo Corporation (Allocation of production processes between existing site and newly constructed plant for the manufacturing of core components of automotive transmissions) Nichirin Co., Ltd. (Completion of construction of new plant and transfer of production from Shanghai plant for air conditioning and brake hoses) Ryobi Limited (*Built third plant for production of chassis components for next generation vehicles) |
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| Zhejiang Province | SWCC Showa Cable Systems Co., Ltd. (*Increased investment in local subsidiary and built a new plant to manufacture electric vehicle wire harnesses) Toda Kogyo Corporation (New plant construction for magnetic compounds for motor magnet bonding materials) Nidec Corporation (*Began supply of 150kW E-Axle to Geely Automobile. Operations at second plant are scheduled to begin.) Meidensha Corporation (*Building new plant with added investment for production of motors and inverters for electric vehicles) |
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| Enhancement of business structure (license agreements, research and development centers, added investments to form subsidiaries, establishment of sales companies, etc. ) |
Shanghai | Aisin Seiki Co., Ltd. (Established a sales company for clutch, engine, and transmission replacement parts) Idemitsu Kosan Co., Ltd. (Established financial management investment company for China Group company; manufacturing lubricants and materials for electronics) Taoka Chemical Co., Ltd. (Established sales company for EV electric components materials) Teijin Limited (*License agreement and development with Shanghai Energy New Materials Technology Co., Ltd. for lithium-ion battery cell separators for electric vehicles) Horiba, Ltd. (Establishment of a new site for integrated facility that includes development, manufacturing, and after-sales service) Renesas Electronics Corporation (*Establishment of joint research center with SAIC-VW for in-vehicle apps) Rohm Co., Ltd. (*Established joint research center with a Chinese venture to develop SiC-based inverters for EVs) |
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| Jiangsu Province | Aisin AW Co., Ltd. (Management integration of two subsidiaries conducting powertrain and software development) Kobe Steel, Ltd. (Formation of a subsidiary through increased investment in investee company, for non-general-purpose compressors) |
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| Zhejiang Province | Aichi Steel Corporation (Forming a consolidated subsidiary through increased investment, for motor magnet processing) JFE Shoji Corporation (Investing in local subsidiary of French components manufacturer, for electromagnetic steel sheets and other motor components) |
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| Transfer of production to overseas location, withdrawal from business, reduction of production, etc.) | Shanghai | Nichirin Co., Ltd. (Transferring production of curved hoses to Indonesia and Japan) | |
| Zhejiang Province | Nippon Steel Corporation (Withdrawal from production, closing plant for specialty steel for automotive components) | ||
| Anhui Province | Ahresty Corporation (Reduction of production in 2019, temporary suspension of operations until February 2020, for diecast products) | ||
(Source materials: Public relations materials of each company, various newspaper reports)
Related reports:
Revisions to China NEV (New Energy Vehicle) Credit Policy (Sep. 2020)
China Market H1 2020: Sales of New Vehicles Fall to 10.23 Million Units (Aug. 2020)
Major Chinese OEMs： Production and Sales Recovery in May-June 2020 (Jul. 2020)
Teardown Analysis: Nidec’s E-Axle Inverter Installed on GAC Aion S (Jun. 2020)
Development Strategy for China’s Smart Car Innovation (May 2020)
＜Japanese Supplier Reports＞
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Japanese suppliers in Western Europe: Responding to advancements in CASE technologies (Apr. 2020)
Japanese suppliers in India: Responding to stricter emission regulations and EV policy (Nov. 2019)
Japanese suppliers in U.S. and Canada: Expanding CASE business and local collaboration (Sep. 2019)
Japanese suppliers in China: Expanding the supply of parts and materials for NEVs (Jun. 2019)
Japanese Suppliers in East China: Responding to NEV market expansion (May 2019)
Japanese suppliers in Central and Eastern Europe: Responding to orders from European OEMs (Jun. 2019)
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