Daihatsu shortens product development cycle to react to market demand

Applies mini vehicle technologies to compact cars

2013/08/20

Summary

Daihatsu Move
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

Technological development To apply technologies that it has accumulated for Mira e:s/Move to the AYLA produced in Indonesia and multiple models in Japan.
* To develop more fuel-efficient and affordable models
* To create new attractive models ⇒ To create  new demand (To launch models with diversified features including "fuel efficiency," "convenience," and "fun for driving." )
Speed up
these items
Production  To Apply low-cost production method at Daihatsu Kyushu to Astra Daihatsu Motor in Indonesia and Perodua in Malaysia.
*To achieve low cost, high efficiency, and high quality, and to launch a most localized plant.

Source: Daihatsu's presentation on FY2012 Financial Results



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



Daihatsu expects Japanese mini vehicle market to expand to 2.1 million in FY2013

 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

FY2009 FY2010 FY2011 FY2012 Apr.-Jun.
2012
Apr.-Jun.
2013
Y-O-Y ratio
Non-mini volume 3,182,073 2,972,348 3,064,336 3,237,690 762,495 699,177 91.7%
Mini volume 1,698,101 1,628,711 1,688,896 1,972,542 497,406 484,459 97.4%
ratio 34.8% 35.4% 35.5% 37.9% 39.5% 40.9%
Total volume 4,880,174 4,601,059 4,753,232 5,210,232 1,259,901 1,183,636 93.9%

Source: Japan Automobile Dealers Association

 

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

Mini vehicle sales Market share
Industry Daihatsu Suzuki Honda Others Daihatsu Suzuki Honda
FY2006 2,030,616 616,228 605,506 283,313 525,569 30.3% 29.8% 14.0%
FY2007 1,893,043 612,754 587,330 223,773 469,186 32.4% 31.0% 11.8%
FY2008 1,808,877 619,357 579,383 189,101 421,036 34.2% 32.0% 10.5%
FY2009 1,698,191 596,166 554,488 158,432 389,105 35.1% 32.7% 9.3%
FY2010 1,628,787 568,432 520,731 154,190 385,434 34.9% 32.0% 9.5%
FY2011 1,688,937 602,735 515,759 165,658 404,785 35.7% 30.5% 9.8%
FY2012 1,972,600 652,569 586,462 362,329 371,240 33.1% 29.7% 18.4%
Apr.-Jun. 2012 497,423 175,063 147,700 81,135 93,525 35.2% 29.7% 16.3%
Apr.-Jun. 2013 484,460 157,597 148,014 90,669 88,180 32.5% 30.6% 18.7%
FY2013 Forecast as of Apr. 2013 1.8-1.9 mil. 630,000
as of Jul. 2013 2.0-2.1 mil. 630,000
or more

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.

 

 



Mira e:s with fuel economy of 33.4km/L launched in Aug. 2013

 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)

Five door Hatchback Height Wagon Super Height Wagon
Daihatsu Suzuki Fuel
economy
(JC08
mode)
Daihatsu Suzuki,
Nissan/
Mitsubishi
Fuel
economy
(JC08
mode)
Daihatsu Suzuki Fuel
economy
(JC08
mode)
Sep. 2011 Mira e:s 30.0km/L
Dec. 2011 Alto Eco 30.2km/L
Sep. 2012 Wagon R 28.8km/L
Dec. 2012 Move 29.0km/L
Mar. 2013 Alto Eco 33.0km/L
Mar. 2013 Spacia 29.0km/L
Jun. 2013 Nissan
DAYZ/
Mitsubishi
eK Wagon
29.2km/L
Jul. 2013 Wagon R 30.0km/L
Jul. 2013 MR Wagon 30.0km/L
Aug. 2013 Mira e:s 33.4km/L
Fall 2013 Tanto yet-to-be
announced

(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>
Mira e:s
(launched in 2011)
 The Mira e:s launched in September 2011 has achieved low fuel consumption through improvement of combustion efficiency and reduction of mechanical loss, further improvement of power transmission efficiency of CVT, weight reduction by about 60kg, adoption of start/stop system that stops the engine at 7km/h, and improvement of efficiency of regenerative braking. The price of the base model is JPY795,000.
Move
(launched in 2012)
 The Move features CVT thermo controller that optimizes the temperature of the engine and CVT and a new Eco Idle that stops the engine at 9km/h or less.
Mira e:s
(launched in 2013)
 The freshened Mira e:s will be launched in August 2013. The improvement has been made in the 3 major features of the e:S technology: (1) advancement of powertrain, (2) advancement of vehicle, (3) energy management. The price of the base model is expected to be lowered from the current JPY795,000 (tax included).
(1) Advancement of powertrain: The cooled i-EGR (improved i-EGR) improves combustion efficiency and a low-friction timing chain reduces friction loss.
(2) A floor lower cover adjusts air flow turbulence under the floor to reduce aerodynamic resistance, with a low suspension, the height of the vehicle is reduced by 10mm, and wind under the floor is reduced.
(3) Energy management: Eco Idle is advanced. The start/stop system can be activated at 11km/h before the vehicle is stopped. An alternator with high generation efficiency improves generation level at deceleration.

 

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 Smart Assist Suzuki Radar Brake Support collision mitigation brake
Model Move launched in December 2012 Wagon R launched in July 2013
Low speed collision avoidance  At 4 to 30km/h, the radar detects a vehicle ahead. When the risk of collision is high, the system warns the driver. Then, if no avoidance maneuver is made and the risk becomes higher, the system applies the emergency braking. This will avert a crash when relative speed is around or below 20km/h, or assist in reducing damage at approximately 20-30 km/h.  At about 5 to 30km/h, the laser radar detects a vehicle ahead. When the system judges the collision is unavoidable, it automatically applies the brake to avoid collision or to mitigate damage. The system will avoid a collision at a relative speed of up to 15km/h (which is different from 20km/h of Daihatsu's system based on their philosophy of safety).
Other functions  Gas pedal mistaken operation control and Inform of motion of vehicle in front  Gas pedal mistaken operation and emergency stop signal
ESC ESC is integrated into each system
Price  JPY50,000 (tax included)  JPY42,000 (tax included)
(Note) 1. Denso supplies the radar system for Daihatsu and Continental for Suzuki.
2. Subaru Stella, an OEM model of Daihatsu Move, features Smart Assist starting in January 2013.

 

 



An integrated structure for engine development and production in Kyushu, Japan

 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

Enhancement of engine production capacity at Kurume plant  In May 2013, Daihatsu invested about JPY7 billion in its Kurume engine plant to increase the number of production lines from one to two. Thus the company boosted production capacity (in 2-shift) from about 216,000 units to 324,000 units a year.
 Before the new production line started operations, Kurume plant did not have engine production capacity enough to meet a demand increase in vehicle production at its Oita (Nakatsu) plant. Daihatsu Shiga plant filled the gap.
Construction of an engine plant in the adjacent site of an R&D center  Daihatsu announced that it would build its development center, Kurume Development Center, dedicated to development of engines for mini vehicles. It will be located in the adjacent site of its Kurume plant (announced in December 2012). The total investment is worth JPY 14 billion. Operations are scheduled to start in March 2014.
 Daihatsu plans to open a laboratory building for engines and transmissions in March 2014. The company will also open a laboratory building and a test-run course for engines mounted on a vehicle in December 2014. Daihatsu will build a new development structure where production and development are integrated. It is also said that the company is planning to gradually transfer its engine development functions, currently concentrated in the Kansai area in Japan, to the Kyushu area.

(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
Shortening  engine development period  Daihatsu is reported to set a target to shorten the development time of engines to six months. By shortening the development time, Daihatsu aims to establish a structure in which new engines with the latest technology will be introduced in a timely manner. Specifically, it will increasingly use the CAE system. In addition, the development and the production divisions will cooperatively work from the design stage, to promote concurrent engineering.
Speeding-up new vehicle development  Daihatsu plans to accelerate new vehicle development by forming a small-scale team. By revamping vertical organizational structure and by enhancing the cooperation of each development stage, Daihatsu will build a structure that rapidly responds to the changing needs. The development team at the Kurume development center has already started working under a new organizational structure.
 Daihatsu has been minimizing R&D expense and capital investment. The company will increase investment for R&D function, in view of the development plan in the next few years. By accumulating technologies, the company will be able to respond to the changing market trends in a timely manner.

(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.

 

 



Indonesia: AYLA to be launched in late Aug. to early Sep. 2013

 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

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Forecast
Daihatsu vehicles 55,176 78,469 83,560 123,418 144,071 165,000 210,000
Daihatsu: Production volume in Indonesia
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
Daihatsu vehicles 55,495 84,239 88,582 136,719 157,919 176,000
Toyota vehicles 106,569 136,238 149,790 184,168 229,641 281,000
Total 162,064 220,477 238,372 320,887 387,560 457,000

Source: Daihatsu 2012 financial results and DATA BOOK 2012

 

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

 In September 2012, Daihatsu and Toyota announced that they had developed small passenger cars, Daihatsu AYLA/Toyota AGYA, that meet the Indonesian government's LCGC (Low cost green car) measure. Astra Daihatsu Motor (ADM) produces the models at its new plant (Karawang plant, 120,000 units/year  in 2 shifts).
 AYLA/AGYA is developed based on the technology for low fuel consumption and low cost which Daihatsu gained through the Daihatsu Mira e:s; ADM also participated in the development. AYLA/AGYA is an entry-family car that comes with a 1000cc engine.
 Under LCGC, the following: displacement is possible: gasoline engines: 980-1200cc, diesel engines: 1500cc or less, fuel economy: 20km/L or less, price (tax not included): up to IDR95 million (about JPY 940,000), allowed additional 10% price for AT models and additional 15% price for models with safety features.
Toyota: starts production and marketing of the Etios Valco in March 2013
 In March 2013, Toyota started production and marketing of the Etios Valco at its new Karawang second plant. The model comes with a 1200cc gasoline engine. The price starts at INR 135.5 million. The Etios Valco targets one rank higher middle-class customers than the AGYA. The Etios is Toyota's strategic model for emerging countries Toyota started producing in India at the end of 2010 and in Brazil in September 2012.

 

 



Malaysia: New vehicle plant and AT plant built to enhance competitiveness

 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

FY2007 FY2008 FY2009 FY2010 FY2011 2012(CY) 2013(CY)
plan
Daihatsu vehicles 172,905 170,668 180,118 189,161 181,226 189,000 197,000

 

Malaysia: new vehicle plant and AT plant

Construction of a new vehicle plant  Daihatsu announced that it would build a new vehicle plant in Malaysia (announced in December 2012). Perodua Auto Corporation (owned 41% by Daihatsu), a holding company in the Perodua group, led the establishment of a new operating company and will be operated independently from Perodua's existing plant (production capacity: 230,000 units a year). The new plant will have a body, painting, and assembly lines. The new company is capitalized at MYR 2 million (about JPY 5 billion at the exchange rate then). The total investment is worth JPY 20 billion.
 The new plant will start production with a production capacity of 100,000 units in mid 2014. The management of the new plant is separated from the existing plant. The design method of the latest, small, efficient plant acquired at the Oita plant has been introduced to cut costs, and low-cost small cars with low fuel consumption will be produced.
Local production of AT  In Malaysia, Daihatsu established a joint venture, AKASHI KIKAI INDUSTRY (M) SND. BHD. (an AT production plant) jointly with its subsidiary, Akashi Kikai Industry Co., Ltd,  in December 2012. The joint venture is owned 51% by Akashi Kikai, 39% by Daihatsu, and 10% by Perodua. It will start producing high-quality and low-cost ATs in November 2013.
 This is the first time AT has locally been produced in Malaysia including other OEMs. Daihatsu says that in anticipation of stiffer competition in Malaysia it will boost the local procurement ratio and further enhance cost competitiveness.

 

 



Consolidated results: Daihatsu to increase revenues and profit slightly in FY2013

 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.

 

Daihatsu consolidated results

(JPY 1 million)
FY2009 FY2010 FY2011 FY2012 Apr.-Jun.
2012
Apr.-Jun.
2013
FY2013
Forecast
Daihatsu vehicles
Japan
Overseas
1,085,200
788,500
296,700
1,113,700
786,600
327,000
1,137,800
814,200
323,500
1,222,000
862,600
359,400
326,100
232,000
94,000
303,100
208,500
94,500
1,220,000
800,000
420,000
Consigned production/OEM 489,400 445,700 493,400 542,900 122,500 148,600 580,000
Net Sales 1,574,727 1,559,412 1,631,320 1,764,976 448,650 451,788 1,800,000
Operating income
Ordinary income
Net income
40,747
43,842
21,162
103,443
112,215
52,555
115,462
128,223
65,138
133,040
148,173
81,406
37,837
40,556
20,555
43,250
48,053
23,277
135,000
150,000
82,000
R&D expenses
Capital investment
Depreciation
43,734
36,745
72,900
38,227
40,614
63,700
33,830
69,336
61,000
35,700
73,100
56,200
7,700
15,800
13,700
10,200
18,300
13,700
42,000
115,000
62,000

Source: Daihatsu FY2012 Financial Results

 

Daihatsu global sales volume

(1,000 units)
FY2009 FY2010 FY2011 FY2012 Apr.-Jun.
2012
Apr.-Jun.
2013
FY2013
Forecast
Mini vehicle
596 568 603 653 175 158 630
Small vehicle
7 5 3 3 1 1 4
Japan Total 603 573 606 655 176 158 634
Overseas Total 325 367 368 387 96 98 433
Daihatsu vehicle Total 928 940 973 1,042 272 257 1,067
Production by commissioning and OEM
Japan 240 176 222 219 60 57 218
Overseas 161 192 236 581 71 78 356
Total 400 368 458 500 131 135 574
Models produced by commissioning and for OEM
Production in Japan For Toyota  Probox/Succeed van (47,109 units), Passo (56,190 units), Sienta (33,196 units), Rush, bB, mini vehicles (Pixis series)
For Subaru  Subaru mini vehicle (total: 33,071 units)
Overseas production (Indonesia) For Toyota  Avanza (186,406 units), Rush (31,092 units), TOWN ACE/LITE ACE(supplied for export to Japan)

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

<Automotive Industry Portal MarkLines>