Japanese Auto Parts Suppliers in ASEAN: Responding to Mid-Term Demand Growth

Consolidation of production in Thailand and Indonesia, semiconductor production in Malaysia, etc.

2021/11/18

Summary

  This report summarizes the investment and business trends of Japanese parts and materials manufacturers in ASEAN countries. (The data used in this report was recorded for the approximate one year and eight months period from February 2020 until September 2021.)

  Thailand's vehicle production in 2020 was 1,427,000 units, down 29.1% year-over-year (y/y), sales were 804,000 units, down 21.8%, and exports were 736,000 units, down 30.2%. From January to September 2021, production volume was 1,212,000 units, up 25.9% y/y, sales volume was 532,000 units, down 0.5% y/y, and exports at 677,000 units were up 29.9% y/y; except for domestic sales, the Thai industry is recovering.

  Indonesia's vehicle production in 2020 was 690,000 units, down 46.4% y/y, and sales were 532,000 units, down 48.5% y/y. From January to September 2021, production volume was 794,000 units, up 64.4% y/y, and sales volume was 628,000 units, up 68.7% y/y, representing a significant recovery.

 

Postponement of business plans due to the COVID-19 pandemic, and responses to mid-term increase in demand

  Due to the lockdowns resulting from the the COVID-19 pandemic, some Japanese suppliers were forced to shut down their plants in ASEAN countries and postpone their business plans. Toyobo planned to build a new factory in Thailand to produce raw yarn for airbags, but construction was unable to proceed because engineers could not be dispatched from Japan, so it established a joint venture with Thailand's Indorama in November 2020 to move forward with the new plant. NTN also started the production of constant velocity joints (CVJ) in 2021 at its new joint venture plant in Indonesia, which was delayed due to similar circumstances.

  Conversely, efforts are being made to strengthen the production system in anticipation of an increase in demand over the medium term. Nihon Plast will launch its Vietnam plant in 2021, positioning it as its main plant in Asia and as a pilot plant for the launch of new products at its Indonesia plant, and will increase the production capacity of plastic parts and other products at its Thailand plant. In Thailand, Zeon's new acrylic rubber plant will start operations, and MinebeaMitsumi will build a new plant on the site of its existing plant to increase production of miniature and small-diameter ball bearings. Chuo Spring plans to expand its facilities for chassis spring products, while Kobe Steel plans to increase its production capacity for high-grade steel in the next two to three years. In Vietnam, Sumitomo Riko established a new company as its second manufacturing site for automotive hoses, and Kyocera is expanding production facilities for ceramic and organic packages at its existing plant and planning to build a new plant building.

  The movement to consolidate production in ASEAN countries is also progressing. Nachi-Fujikoshi will consolidate the production of general-purpose bearings in Japan and Taiwan to a new plant in Thailand. Sanyo Chemical transferred the production of raw materials for electrodeposition coatings for automobiles from its plant in China to Thailand and increased the plant's capacity. Mitsubishi Heavy Industries Engine & Turbocharger consolidated the production of turbocharger component cartridges in the Netherlands to its plant in Thailand. Fine Sinter plans to further transfer the production of shock absorber parts from Japan to its plant in Indonesia.

  In Thailand, manpower savings and the automation of factories are also being promoted. Mitsui Kinzoku ACT, a comprehensive door latch manufacturer, will introduce Information & Communication Technology (ICT) on the assembly line in 2021. Fine Sinter will promote digitalization, automation, and manpower savings in its Thailand plants after Japan and other developed countries. Hiraoka Sangyo (E&H Precision), which manufactures parts for injectors, brakes, and turbochargers, plans to promote production reform, automation, and manpower savings at its Thai factory, which is positioned as a mother factory, to enhance cost competitiveness as sales decline due to the COVID-19 pandemic.

 

Support for electrification and mobility services

  In response to electrification, JATCO will be commissioned by Nissan to produce e-POWER motors, starting production at its plant in Thailand in 2021. Sumitomo Electric will increase the capacity of its Thai plant to manufacture harnesses for in-vehicle motors and batteries, and will build a new plant in the Philippines. NSK plans to build a new plant to produce small bearings for in-vehicle motors in ASEAN (Vietnam or the Philippines as candidate sites) as early as 2022. In Malaysia, Denso will expand its existing plant to produce advanced automotive semiconductors starting in 2021. Fuji Electric plans to increase production capacity of power semiconductors for EVs through additional investment in its existing plants.

  In addition, Pioneer will participate in autonomous driving field testing under 5G environmental conditions in Malaysia. To deal with traffic congestion, SmartDrive, a mobility service company, established a local subsidiary in Malaysia and started collaboration with Japanese companies for traffic safety services. In addition, Nippon Koei and the municipal government of Makassar, Indonesia are planning to conduct demonstration experiments using traffic data to alleviate traffic congestion.

map map
Map of automotive plants in Thailand
(Click to see a map of facilities)		 Map of automotive plants in Vietnam
(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'

 

Related reports:
ASEAN Vehicle Sales and Production Update (Q3 2021) (Nov. 2021)
Thailand: Acceleration as EV hub, increasing battery production (Nov. 2021)
Indonesia: Battery production for 400k EVs in 2025; state and private enterprise collaboration (Oct. 2021)
The global market for motorcycles: India, China and ASEAN countries (Jul. 2021)
ASEAN: Thailand and Indonesia building EV and battery production facilities (Jun. 2021)

＜Japanese Supplier Reports＞
 Japanese Auto Parts Suppliers in India: EV-related Investment also Increasing (Oct. 2021)
 Japanese suppliers in Mexico: Response to increasing orders for EV materials, etc. (Jul. 2021)
 Japanese suppliers in the U.S. and Canada: Increasing facilities for electrification (Apr. 2021)
 Japanese suppliers in Central and Eastern Europe: Meeting demand with new plants and acquisitions (Dec. 2020)
 Japanese suppliers in China: Strengthening production and development of parts for NEVs (Oct. 2020)
 Japanese Suppliers in East China: Increasing Capacity for NEV Market (Sep. 2020)
 Japanese suppliers in ASEAN: Investment trends centered on Thailand and Vietnam (Jun. 2020)
 Japanese suppliers in Western Europe: Responding to advancements in CASE technologies (Apr. 2020)

 

This report is for paid members only. Remaining 9 chapters remaining.
Free membership registration allows you to read the rest of the article for a limited time.

Click here for a free trial.