Daihatsu shortens product development cycle to react to market demand

Daihatsu Move launched in December 2012 (achieving the best fuel economy among height wagons at 29.0 km/L at the time)

 Daihatsu posted record sales of 653,000 mini vehicles in FY2012, registering new record highs in revenues (JPY 1,076.49 billion) for two consecutive years, in operating income (JPY 13.3 billion) for four consecutive years, and in net income for three consecutive years. Daihatsu estimates posting new records in revenues and profit in FY 2013 as well. However, because of intensified competitions in the mini vehicle market it expects only a slight increase of revenues (JPY 1,080 billion) and operating income (JPY 135 billion).

 Daihatsu has held the top share of the mini vehicle market since FY2006. Yet, due to the launch of the Honda N BOX and of a model that Nissan and Mitsubishi jointly developed, competition for higher fuel efficiency is particularly intensifying. Daihatsu will build an integrated engine development facility in Fukuoka, Japan, with plans to shorten the development lead time.

 Additionally, Daihatsu will apply technologies for low fuel consumption and low-cost production that it has accumulated in its mini vehicles in Japan to the development and production of multiple types of vehicles in Japan and compact cars in Indonesia and Malaysia.

 In Indonesia, administrative procedures for a Presidential Executive Order are under way for a Low cost green car　(LCGC) by the Indonesian government. Daihatsu is scheduled to launch Daihatsu AYLA between the end of August and the beginning of September (Daihatsu will also produce its sister model Toyota AGYA).

 In Malaysia, anticipating the country's entry into the TPP, Daihatsu will build a new vehicle plant and an AT plant, enhancing the competitiveness of its local subsidiary Perodua.

Daihatsu management strategy: Advancement/evolution of the reform policy

Source: Daihatsu's presentation on FY2012 Financial Results

Related reports: Two million mini vehicle sales expected in Japan in 2012 (posted in November 2012)

 In FY2012, the Japanese mini vehicle sales volume achieved the second highest (1.97 million units) following FY 2006, supported by the eco-car incentives in the first half and each OEM's launch of new models. The mini vehicle market accounted for 37.9% in the automotive market in Japan. In April-June 2013, its share increased to 40.9%.

 Daihatsu achieved the largest market share in the mini vehicle market in FY2006 and has retained the top position for seven years in a row.  In 2011, Toyota entered the mini vehicle market through Daihatsu OEM supply, thus all the eight OEMs competing in the market. In December 2011, Honda launched the first N series model, the N BOX, boosting sales in FY2012 to 2.2 times year-on-year. In June 2013, Nissan and Mitsubishi launched the first models that they jointly developed, the DAYZ and the eK Wagon. These new model launches  led to a fierce competition in the mini vehicle market.

 In April 2013, Daihatsu estimates that the mini vehicle market in FY2013 will shrink to 1.8 to 1.9 million units due to the termination of eco-car incentives in August 2012. The company initially planned to sell 630,000 mini vehicles. Yet, Honda and Nissan/Mitsubishi new models boost demand in the market. In addition, there are expectations for last-minute demand before the expected introduction of a consumption tax hike in April 2014, Due to these reasons, Daihatsu revised its FY2013 demand forecast for mini vehicles to 2.0-2.1 million units in July 2013. Daihatsu has not revised its sales plan of 630,000 units, saying that it intends to sell more than 630,000 units.

Vehicle market in Japan: Mini versus non-mini vehicles

Source: Japan Automobile Dealers Association

Mini vehicle market: Daihatsu/Suzuki/Honda sales and market share

Source: Japan Light Motor Vehicle and Motorcycle Association
(Note) In FY2013, Daihatsu says that it will win out the increasingly competitive mini vehicle market through measures including (1) enhancement of multiple core models (pursuit of low fuel consumption and creation of product appeal), (2) expansion of the use of Smart Assist, and (3) an increase in the number of directly-managed dealers from the current 670 by up to 80 mainly in urban centers.

 In September 2011, Daihatsu launched the Mira e:s, which achieved fuel economy of 30km/L (JC08 mode). Suzuki launched ALTO ECO, which delivers fuel economy of 30.2km/L in November 2011. Since then, Daihatsu has been exposed to fierce competition with Suzuki.

 Suzuki featured ENE-CHARGE system for the first time in the Wagon R launched in September 2012, ENE-CHARGE is a system which regenerates energy with a lithium-ion battery. The company is  increasing the number of models featuring ENE-CHARGE.

 Since the launch of the Mira e:s, Daihatsu has been gearing toward low fuel consumption by fully using conventional technologies at low cost and has also worked on energy regeneration by utilizing a lead battery. Daihatsu featured CVT thermo controller in the Move launched in December 2012, achieving the best fuel economy among height wagons at that time at 29.0km/L.. It also announced that it would advance the e:S Technology (Energy Saving Technology) in the Mira e:s, which will be refreshed in August 2013. The company aims to achieve the best fuel economy among gasoline vehicles of 33.4km/L.

 Daihatsu will pursue the above direction until it achieves a fuel economy of 35.0km/L, saying that in the next step, it is currently considering the adoption of a capacitor for energy regeneration.

 Daihatsu plans to utilize its low fuel consumption technology it accumulated for mini vehicles for the marketing of compact cars outside Japan.

Competition for fuel economy in mini vehicle market (2011-2013)

(Note) In the above table, mini passenger cars are classified into three types, 5-door hatchback, height wagon (Daihatsu Move, Suzuki Wagon R, and the like), Super height wagon (Daihatsu Tanto, Suzuki Spacia, Honda N BOX, and the like).

<Major fuel efficiency technology featured in Daihatsu model>

Daihatsu features crash-avoidance assist system (Smart Assist) in mini vehicle for the first time

 Daihatsu has featured a crash-avoidance assist system "Smart Assist" in the Move launched in December 2012. Daihatsu plans to enhance safety features to win customers who trade in their larger cars for mini cars and male customers with a plan to use the system in other models when they are upgraded.

 Suzuki also featured the similar system "Radar Brake Support" in the Wagon R launched in July 2013. Daihatsu and Suzuki have lowered the cost of the system through a reduction of functions to adjust the price to mini vehicle users. Daihatsu sets the price of the system at JPY50,000 and Suzuki at JPY 42,000. About 60% of the users of Daihatsu Move choose this option..

Daihatsu and Suzuki crash-avoidance assist system

 Daihatsu will build an R&D center for engines in Fukuoka, Japan. The center is located in the adjacent site of its engine plant in Kurume, Fukuoka, to establish an integrated structure for production and development of engines.

 Competition has become fierce to improve fuel efficiency of mini vehicles; Suzuki introduced multiple new models while Honda and Nissan/Mitsubishi launched new models. Daihatsu shortens the development time of engines and new vehicles, aiming for a quicker launch of models with new technology.

Daihatsu enhances engine development/production in Kyushu, Japan

(Note) Daihatsu plans to increase parts procurement from outside Japan including China and Thailand with a plan to assess these parts at its Kurume development center.

To shorten engine and new vehicle development time

(Note) Daihatsu spent five years developing the KF engine used in its mini vehicles and started commercial production in 2005. It uses the 2nd-generation KF engine upgraded in 2011 on the Mira e:s and the Move.

 Daihatsu has been steadily increasing production and sales in Indonesia for the last few years. It estimates that the scale of the market in Indonesia will grow from 1.13 million units in FY2012 to 1.25 million units in FY2013.

 The Sunter plant of Daihatsu subsidiary, Astra Daihatsu Motor has a production capacity of 330,000 vehicles per year. The plant produces the Toyota Avanza/Rush, boasting the largest production volume in Indonesia.

 In October 2012, Daihatsu completed its Karawang plant as a second vehicle plant with a production capacity of 120,000 vehicles a year. It had planned to produce Daihatsu AYLA and Toyota AGYA that meet the Indonesian government's LCGC (Low cost green car) measure at the new plant. Yet, the government has not announced LCGC officially and the new plant is not able to start full-scale production of green cars under LCGC. Instead, the Karawang plant is currently producing primarily the Toyota Avanza/Daihatsu Xenia, which are enjoying strong sales.

 However, the Indonesia government has determined the contents of LCGC and the administrative procedure of the Presidential Executive Order is under way in July 2013. Daihatsu says that it is scheduled to launch Daihatsu AYLA in late August to early September.

Daihatsu: Sales volume in Indonesia

Daihatsu: Production volume in Indonesia

Source: Daihatsu 2012 financial results and DATA BOOK 2012

Daihatsu develops Daihatsu AYLA/Toyota AGYA based on technology for Mira e:s

Toyota: starts production and marketing of the Etios Valco in March 2013

 Daihatsu estimates that the scale of the market in Malaysia will grow slightly from 627,000 units in 2012 to 630,000 units in 2013. It estimates GDP will grow by 5.3% (estimated by Asia Development Bank on April 9). In 2013, expecting the steady automotive market under a stable economy. Daihatsu's local subsidiary, Perodua expects sales will grow by 4% from 189,000 units in 2012 to 197,000 units. Perodua continued to hold the top share of the market in Malaysia with 30.0% in 2011 and 30.2% in 2012.

 Malaysia is currently participating in the TPP negotiations. Daihatsu will build a vehicle plant and an AT plant to prepare for more severe competition, and aims to increase profit through the enhancement of cost competitiveness and the improvement of quality.

Daihatsu: sales volume in Malaysia

Malaysia: new vehicle plant and AT plant

 In FY2012, Daihatsu boosted revenues for two consecutive years, posting record revenues of JPY 1,764.9 billion ( up 8.2%) and increased operating income for four consecutive years, registering an operating profit of JPY 133 billion ( up 15.2%). Daihatsu posted record revenues and income in all stages.

 In FY2013, Daihatsu expects more severe competition as each OEM launches new models in the mini vehicle market in Japan. Daihatsu estimates that revenues will decline to JPY 800 billion (down 7.3 %) in Japan while overseas revenues will increase to JPY 420 billion (up 16.9%) through an increase in sales in Indonesia. It estimates consolidated revenues and operating income will slightly increase to JPY 1,800 billion and JPY 135 billion, respectively.

 In FY2013, Daihatsu will make the largest capital investment ever of JPY 115 billion including the establishment of an engine development center in Kurume City, Fukuoka Prefecture, Japan and construction of a new vehicle plant in Malaysia. It will also boost R&D expenses by about 20% from the level of the last few years.

Source: Daihatsu FY2012 Financial Results

Production by commissioning and OEM

Models produced by commissioning and for OEM

Source: Daihatsu 2012 Financial Results
(Note) Volume in FY2011 production volume (models sold 30,000 units or more).

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