Daihatsu: Innovations in the competitive mini and compact car market

Establish research and development organization in Indonesia and Malaysia

2014/10/09

Summary

 Daihatsu lead the mini vehicle market for seven years, between 2007 and 2013. However, in the aggressive competition with hit products like Honda's N Series and Suzuki's Hustler, Daihatsu was overtaken by Suzuki from April 2014 in terms of unit sales. Amidst this severe competitive environment in the mini vehicle market, Daihatsu is aiming to recover in the second half of the fiscal year ending in March 2015 (FY2015) by launching new models developed and engineered with a focus on fuel efficiency, roomier cabin interiors, and the appeal of its proprietary products. Within the Toyota Group, Daihatsu is in charge of development and production of low fuel consumption and low-cost vehicles for both brand of Daihatsu and Toyota. In addition, production for Toyota accounts for a large percentage in whole Daihatsu productions.


Related Report:
Suzuki: Plans to sell 3 million units in India and increase local ASEAN production (Oct. 2014)
Toyota: Implements strategy to launch fourteen new engines in two years (Sep. 2014)



Competing to be top in fuel economy in mini vehicle market

 Daihatsu and Suzuki are fiercely competing to be the No. 1 OEM in terms of fuel efficiency, as both are working to lower their fuel-consumption figures in the mini-vehicle segment in which economical efficiency is crucial. In order to compete with Suzuki's Alto-Eco that was launched in December 2013, Daihatsu launched its Mira-e:S in July 2014, which has even better fuel efficiency based on a duel injector, improved intake port, and an Atkinson cycle engine. As a result, Daihatsu recaptured the number one position. In response to this, Suzuki announced it will exceed the fuel efficiency of the 35.2km/L engine mounted on Mira e:S, further continuing the fierce competition.

Changes in most fuel efficient mini vehicles

Month/Year Vehicle Fuel efficiency
figures
(JC08 mode)
March 2013 Suzuki Alto-Eco 33.0km/L
August 2013 Daihatsu Mira e-S 33.4km/L
December 2013 Suzuki Alto-Eco 35.0km/L
July 2014 Daihatsu Mira e-S 35.2km/L
Mini vehicle fuel consumption competition
Source: press releases by Daihatsu and Suzuki; compiled by Marklines

 

Technological advancements of the fuel-efficiency "e : S" technology used in the July 2014 Mira e : S

(1) powertrain Improved thermal efficiency based on high compression ratio (11.3→12.2)
Improved intake port to strengthen the vortex flow (tumbling) of the air fuel mixture
Use of high ignition spark plugs in order to increase the initial ignition spark
Relieved knocking caused by a high compression ratio and lowered pumping loss by the Atkinson cycle
By using a duel injector, relieved knocking caused by a high compression ratio and stabilized fuel burning by making the fuel spray particles finer
(2) chassis By placing a tire deflector also in front of the rear tire, further reduced the vehicle's air resistance when moving
(3) energy management By revamping energy generation control, increased the amount of energy generated while the vehicle is traveling at slow speed and controlling generation while the vehicle is accelerating or traveling at normal speed

Source: July 2014 Daihatsu press release

 

Duel injector
Duel injector mounted on the Mira e:S
Source: July 2014 Daihatsu press release

 Daihatsu is in charge of developing and producing fuel-efficient technologies such as those used in the 3-cylinder 1.0L engine shared by the Toyota Vitz and Daihatsu Boon, which have a lot of common features. In addition, these vehicles also share a lot of fuel-efficient technology used in Toyota's 1.3L engine, which is one class higher. Although, the mini-vehicle engines are the result of Daihatsu's development activities, Daihatsu develop advanced elemental technologies with Toyota such as Atkinson cycle, tumbling intake ports, etc. That is an advantage for Daihatsu.


Toyota: Implements strategy to launch fourteen new engines in two years


 



Strengthening R&D for engine powertrains

 In order to compete in the fiercely competitive, fuel-efficiency field, Daihatsu established Kurume Development Center next to the Kurume Plant of Daihatsu Kyushu, as its R&D center designated to developing mini-vehicle engines. As a result, Daihatsu created a consolidated R&D infrastructure that includes both production and development activities, enabling it to respond to shorter development periods at the same time and create an operating structure ready to deal with the fierce competition in R&D.

Established Kurume Development Center

Strengthened coordination between production and development functions, which are in close proximity to each other arrow Established Kurume Development Center in March 2014 Performance evaluation function Established facility to evaluate and test performance of engines and transmissions (March 2014)
Established facility to evaluate and test the performance of car bodies; and a testing ground (December 2014)
Shortened engine development time by 6 months arrow No. of employees 100 (as of December 2014)
Amount invested JPY 14.0 billion for buildings, infrastructure, machinery, equipment

Source: Daihatsu press releases

 

 



"Ultra space": maximizing space in mini-vehicle cabin

 On September 29, Daihatsu announced the details of the technology it used on a new mini vehicle scheduled to be launched in November 2014. The vehicle's name will be the "Wake," which is the production model of the Deca Deca concept car that it exhibited at the 2013 Tokyo Motor Show. Daihatsu highlighted the appeal points of the new vehicle: the largest cabin interior in a mini vehicle; excellent vision; and stable driving performance thanks to the lowered center of gravity, in spite of the tall vehicle height. By enhancing the vehicles appeal in terms of fuel efficiency and the efficient use of cabin-interior space, a fundamental feature in mini vehicles, the company is aiming to recover its top position in the mini-vehicle market.

Outline of technology in the Wake

Mini No.1: cabin interior height Interior height 1455mm Ultra space
Opening height 1700mm
Useful luggage space 90L big volume luggage under trunk
Possible to load a baby stroller without folding down rear seat
Miracle luggage
High field of vision: easy viewing Eye point ground height 1387mm Fine vision
Achieves secure and safety dynamic performance without tall height feeling Improvement of handling and stability
Reduction of gravity center height
Fine & relax driving concept

Source: September 2014 Daihatsu press release

 

 



Revolutionary "monocoque frame +plastic exterior panel architecture" in all-new Copen

New Copen
New Copen: frame and plastic exterior panel architecture
Source: June 2014 Daihatsu press release

 The "monocoque frame and plastic exterior panel architecture" that was incorporated into the fully remodeled Daihatsu Copen in June 2014 is revolutionary, proprietary automotive design not only for mini vehicles but also for non-mini vehicles. Since it is possible to simply change the exterior panels without changing the monocoque frame, it is possible for a customer to change the design of the body by selecting panels suited to their own tastes. Even though the cost per vehicle increases due to plastic panels and additional parts, the idea of removable plastic exterior panels is a new undertaking. Daihatsu was able to make them at low cost based on its proprietary production method and eliminate the disadvantages inherent in sports cars. Once sports cars are made, their panels cannot be easily changed until the costs for expensive exterior panels are depreciated,  a situation which is exacerbated by their low sales volumes. The "monocoque frame + plastic panel" concept could become a new business model, with third parties' being able to carry a supply of exterior panels. Also the company can reduce investment costs for variants and model redesigns.


Features of the "frame +plastic exterior panel architecture" in new version Copen

Body structure Ensured body strength and body rigidity based on only the monocoque frame, without conventional exterior body panel strength
Body exterior is built of 13 plastic parts
Plastic body panels are fastened by bolts based on the monocoque frame
Plastic body panels are removable
Advantages to company Panels can be changed easily without the need to change the monocoque frame
Derivatives with different body contours can be developed in a short time and at lower cost
Because the exterior panel parts are made of plastic, third parties can manufacture them
Advantages to consumers Panels manufactured in a variety of designs and colors can be suited to the tastes of each consumer
After purchasing, customers can change the design and color to their tastes

 

Plastic exterior panels Fasted by bolts
Plastic exterior panels (colored panel areas ) Fastened by bolts (indicated by arrows)

Source: June 2014 Daihatsu press release

 

Areas with improved body rigidity; and the results thereof

Reinforced areas
(indicated in red)
Seamless junction throughout the entire body: front, sides, rear, to the floor
Reinforcement of tunnel portion under the floorboard and cross-members
Results of improved rigidity Improved rigidity by three times in terms of vertical bending
Improved rigidity by 1.5 times in terms of torsion

 

Reinforced areas Reinforced areas
Reinforced areas (indicated in red)

Source: June 2014 Daihatsu press release

 

Batch-type paint line
Batch-type paint line
Source: June 2014 Daihatsu press release

 The coating of this body structure is also a proprietary process. The conventional electro-deposition coating equipment that is widely used to coat mass-production vehicles on continuously moving coating lines was replaced. Instead, a batch-type coating line is used to paint these panels. Setting the ultimate electrode placement, pressure, and time based on the electrode coating conditions achieves a high degree of anticorrosive performance and enables the new coating lines to be installed in less than half of the space required by conventional ones.


 



Fierce competition in 2014 mini-vehicle market

 

Mini vehicle sales volume Mini vehicle sales volume

Source: MarkLines Data Center


 Daihatsu was able to outpace Suzuki from 2007 through 2013 in terms of mini-vehicle sales in Japan, becoming the leading OEM. Suzuki, however, released its Hustler in 2013, which became a huge hit, and has since surpassed Daihatsu in terms of monthly sales in Japan since April 2014, becoming the leading OEM. Honda, which released its very popular N Series in 2011, has seen a huge increase in sales, more than double. The power struggle among the OEMs is constantly changing, since Nissan was also able to increase its unit sales by launching additional models. In response to this, Daihatsu is trying to make a comeback by launching new models that have undergone either minor or full model redesigns:The company launched the Mira Cocoa in August (minor) the HiJet in September (full) 2014; It is further going to launch the new mini vehicle Wake (new), and the Move (full) by the end of 2014.

 

Mini vehicle sales volume/share Mini vehicle sales volume/share

Source: Marlines Data Center


 Looking at the details of new-vehicle sales in Japan, we see that both the number of and the market share of mini vehicles had increased since 2010. The peak in terms of sales was during March 2014 when 300,000 units were sold due to last-minute demand that rose just before the consumption tax hike. The share of new-car sales in April was 45%, which was the peak. Due to the huge, last-minute demand, sales afterward have clearly decreased for the first time in three years, with sales of mini vehicles in August 2014 lower by 15.1% year-over-year (y/y). It appears that it will be difficult for y/y sales to be higher after September too. However, there could be another last-minute buying spree for mini vehicles at the end of the fiscal year, just before the tax on mini vehicles increases in April 2015.

 

 



Astra Daihatsu Motor in Indonesia leads in production volume

 Daihatsu's operations outside Japan are mainly located in Southeast Asia, with Indonesia positioned as the center of its operations overseas. Among the Toyota Group, Daihatsu has been placed in charge of developing and building mini and low-price small cars. Its JV in Indonesia, Astra Daihatsu, is building not only Daihatsu brand vehicles but also Toyota vehicles on an OEM basis. Out of all the vehicles sold in Indonesia between January and August 2014, Astra Daihatsu had built 36.1% of the vehicles, including both Daihatsu and Toyota OEM-basis vehicles.

Daihatsu (Astra Daihatsu) built 550,000 units in 2013

Astra Daihatsu Motor production volume Indnesia sales volume
Source: Daihatsu 2013 annual report Source: Marklines Data Center

 

Daihatsu (Astra Daihatsu Motor) building over half of Toyota's vehicles on an OEM basis, achieves highest production volume in Indonesia

Indnesia sales volume share Indnesia production volume
Source: Marklines Data Center

 

Outline of current situation in Indonesia

Forecast for total demand in Indonesia  Vehicle sales in Indonesia in 2013 increased 10.2% y/y, to 1.23 million units, showing rapid growth through 2013. However, during January - August 2014, 830, 398 units were sold, which was a y/y increase of only 4.8%. Sales between January and August of LCGCs (low cost green cars), which were gradually launched, totaled 113,752 units, accounting for around 13-14% of the market. The Association of Indonesia Automotive Industries (GAIKINDO) predicted in March that unit sales in 2014 would be on par with those in 2013, or 1.23 million units. However, it adjusted the forecast upward, considering the volume of orders placed at its motor show held in September. New car sales in Indonesia surpassed those in Thailand, which has been plagued by political unrest. It is predicted that Indonesia will become the largest ASEAN market for new cars in 2014. In addition to rising competition in the major MMPV sector, sales of LGGCs will further increase and boost demand in the domestic Indonesian market.
Current situation at Toyota and Daihatsu  In 2013, Toyota sold 441,635 units and Daihatsu sold 186,358 units. The combined units sales of the Group accounted for 52.5% of all units sold. The combined number of units sold by both companies between January - August 2014 accounted for 48.9.0% of all vehicles sold, with Toyota's sales increasing 1.2% (282,593 units), achieving 34.0% market share; and Daihatsu's sales increasing 9.1% (126,165 units). Astra Daihatsu Motor builds Daihatsu vehicles and over half of the Toyota vehicles sold in Indonesia. In FY2013, it built 550,000 units and for the January - August period in 2014, it built 359,769 units, including 46,399 units of the Toyota Agya and 29,898 units of the Daihatsu Ayla, which are strong selling LCGC. Daihatsu, in order to strengthen its product development activities in Indonesia, set up a new testing ground in 2013 at its Karawang Plant, the plant where it builds the Ayla and already has an R&D function.
Daihatsu offices and plants in Indonesia
Current situation at Suzuki, Honda, Nissan, and Mitsubishi  During the January - August period of 2014, Honda's sales increased 78.1% (110,459 units), Suzuki's sales increased 1.4% (105,705 units), Mitsubishi's sales decreased 5.1% (96,683 units) and Nissan's sales (including Datsun) decreased 21.3% (32,902 units). Looking at these numbers, Honda's tremendous increase stands out. Each of the OEMs is strengthening its own production facilities so as to achieve an annual production capacity in the range of 200,000-250,000 units. At the beginning of 2014, Honda started commercial production at its second plant in Karawang, increasing its total production capacity to 200,000 units (120,000 at the second plant and 80,000 units at the first plant). Suzuki is scheduled to launch operations in the beginning of 2015 at its Bekasi Plant (initially 50,000 units; in the future, 100,000 units), increasing its total production capacity to 250,000 when combined with the 150,000 units being built at its Tanbum Plant. In May 2014, Nissan launched operations at its second plant in Purwakarta, West Java, which will build Datsun vehicles exclusively. Combined with the 100,000 units at its first plant, this will increase the production capacity of the two plants to 250,000 units. In September, Mitsubishi established a new production plant at the GIIC, and industrial park in Bekasi, West Java. The plant will launch operations in the first half of 2017. It will initially have an annual production capacity of 160,000 units, which will be expanded to 240,000 sometime in the future.
Indonesia - Flash report, Sales volume, 2014
Auto makers offices and Plants in Indonesia

 

 



Launched LCGC (Low Cost Green Car) ahead of competitors

 The major vehicles in Daihatsu's product range include the 7-seater, small-size MPV Xenia (4,000 units/month); the fuel-efficient, low-cost Ayla (3,800 units/month), which was launched last year and is Daihatsu's first LCGC; the Gran Max (4,400 units/month), which is sold in Japan as the Toyota Townace/Liteace; and the small-size SUV Terios/Be-go (1,650/month).

Xenia

Vehicle type 7-seater, small-size MPV Xenia
Xenia and Avanza are best sellers in Indonesia
Unit sales 5,400 units/month (2013)
Vehicles in same family of car Toyota Avanza (built on OEM basis; 210,000 units in 2013; 275,000 when including the Xenia)
Platform Daihatsu Be-go/Toyota Rush
Length 4150mm
Width 1660mm
Height 1695mm
Wheelbase 2655mm
Engine Main engine :1.5L-L4「3SZ」(101ps/133Nm)
Price IDR 186.1 million

Source: Daihatsu press release

 

AYLA

Vehicle type 5 door hatchback AYLA
Ayla was certified as the first LCGC, ahead of competitors' vehicles
Unit sales 5000units/month (Jan-Jun/2014)
Vehicles in same family of car Toyota Agya (built on an OEM basis)
Length 3600mm
Width 1600mm
Height 1520mm
Engine 1.0L-L3[1KR-DE]
Price IDR 76.1 million - 97.5 million RupiahAT : MT+IDR 9 million

Source: Daihatsu press release

 

 



Competition with Honda and Nissan heating up in Malaysia, another important market

 In Malaysia, Perodua was formed by Daihatsu and local capital in 1993. The company builds and sells Daihatsu-brand vehicles under the Perodua brand. In 2006, it surpassed Proton, becoming the largest OEM in the Malaysian market. In 2013, Perodua sold 196,000 units (4% y/y increase), maintaining its leading position. It is predicted that sales in 2014 will increase 2% y/y, to 207,000 units. Its annual production capacity in 2013 was 207,000 units, but this increased by 100,000 units in 2014, after a new plant came on line.

 

Current situation in Malaysia

Total demand in Malaysia In 2013, automotive sales increased 4.5% y/y, to 656,000 units. As a result, unit sales in 2013 exceeded 600,000 for the fourth consecutive year, setting a new record. Thanks to the 4.5-5.0% economic growth grate and stable employment in the country, the market expanded, with OEMs actively conducting sales promotions. Sales of commercial vehicles increased 4.7% y/y, to 79,000, while sales of passenger cars increased 4.4% to 577,000 units. Of particular note is the 50.9% increase in SUV sales. The Malaysian Automotive Association (MAA) predicts that sales in 2014 will increase 2.2% y/y to 670,000 units.
Perodua
(Daihatsu's local JV)
Perodua sold 196,000 units in 2013 (4% y/y increase), maintaining its No. 1 position. It predicts that 2014 sales will increase 2%, to 207,000 units. With the launch of operations at a new plant, its annual production volume will be 100,000 more than the 207,000 in 2013. The new plant is located within the compound of the Perodua Group's Rawang Plant, which is positioned as the plant in Axia to build a new, small-sized vehicle certified in September as an EEV. The new plant's rate of automation will be increased from the current 30%, to 70%. Annual production capacity will increase from the current 250,000 units to 350,000.The number of employees will increase by 1,200, from the current 7,700. In addition, Daihatsu established a new plant to build engines in Malaysia, which will launch operations in mid 2016 with an annual capacity of 140,000 units and which will initially employ around 150 people.
Rawang Plant, Perodua Global Manufacturing Sdn Bhd.
Production by competitors (Proton, Toyota, Honda, Nissan) In 2013, Proton built 140,000 units. Honda built 48,000 units (63.0% y/y increase) and plans to increase production to 100,000 in 2014. Nissan significantly increased its production by 50%, to 43,000 units and plans to increase the number to 68,000 in 2014. Based on the NAP2014 (National Automotive Policy 2014) that the Malaysian government announced in January 2014, all of the OEMs are reviewing their production operations with a view toward increasing sales in Malaysia and expanding exports.
Plant of Tan Chong, producing Nissan models
Producing Toyota, Daihatsu, Hino models
EEV: Energy Efficient Vehicle

 

Malaysia sales volume Malaysia sales volume

Source: Marklines Data Center

 

 



Perodua's product lineup

 Perodua's product range consists of the following four models: the low-cost Viva, based on the Mira; the Myvi based on the Boon; the Alza, an MPV based on the Boon Luminas; and the Axia that was certified as an EVV in 2014 in Malaysia and which is based on the same platform as the Ayla sold in Indonesia.

 

Viva

Vehicle type 5 door hatchback Viva
Unit sales 4300 units/month (Jan-Jun/2014)
Platform The 6th generation Mira, with front/rear design changes
Length 3,575mm
Width 1,475mm
Height 1,530mm
Wheelbase 2,390mm
Engine L3cyl : 3 unit
659cc EF-VE
847cc ED-VE
989cc EJ-VE
Price MYR 22,000 - 36,800

Source: Daihatsu press release

 

Myvi

Vehicle type 5 door hatchback Myvi
Unit sales 8300 units/month ( Jan-Jun/2014 )
Platform Daihatsu Boon (Toyota Passo), with interior/exterior changes
Length 3,690mm
Width 1,665mm
Height 1,545mm
Wheelbase 2,440mm
Engine L-4cyl : 2 unit
1.3L K3-VE
1.5L 3SZ-VE
Price MYR 43,900 - 57,800

Source: Daihatsu press release

 

Alza

Vehicle type 7-seater MPV Alza
Unit sales 4700 unit/month ( Jan-Jun/2014 )
Platform Daihatsu Boon Luminas/Toyota Passo, with front/back design and interior/exterior changes
Length 4205mm
Width 1695mm
Height 1620mm
Wheelbase 2750mm
Engine L-4 cyl : 1.5L 3SZ-VE
Price MYR 56,000 - 64,000

Source: Daihatsu press release

 

Axia

Vehicle type 5 door hatchback Certified as an EEV in Malaysia
6,000 units were sold within the first 10 days of the Axia's launch on August 15. As of September 24, 20,000 units have been sold.
Axia
Unit sales 8,000 units/month (planned)
Platform Ayla, a LCGC sold in Indonesia; with an exclusive upper body design
Length 3640mm
Width 1620mm
Height 1510mm
Engine 1L engine, shared with the Ayla
Price MYR 24,600 - 42,500

Source: Daihatsu press release

 

 



FY2014 revenue lower due to severe competition

Produced unit volume After the global financial crisis, remarkable growth was seen through 2013. However, in 2014 total demand in Japan is dropping and the competitive environment not only in Japan but also in Indonesia has become even more severe. While the number of units being sold outside has continued to be strong, the decrease in unit sales of mini vehicles and OEM-basis vehicles is reducing overall revenue. Plus, when taking this competitive environment into consideration, profits are forecast to decrease because of increased investments needed for facilities and equipment to enhance products, and because of increased depreciation costs.

 By launching six new vehicle models in Japan in the second half of 2014, Daihatsu is planning to recapture the No. 1 position that it previously held. In addition, by boosting local production in its export operations in Indonesia, the company foresees that its 2014 revue will be 96% of that in 2013; its operating income will be 95%, its ordinary profit will be 94%, and its current net income will be 98%.


Daihatsu Sales Business results

Source: Daihatsu's annual report FY 2013 and first quarter FY 2014

 

Daihatsu's consolidated business results

(in millions of JPY)
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 2013
Apr.-Jun.
2014
Apr.-Jun.
FY 2014
(outlook)
Sales of Daihatsu vehicles 1,085,200 1,113,700 1,137,800 1,222,000 1,318,500 303,100 299,300 1,290,000
Sales in Japan 788,500 786,600 814,200 862,600 933,900 208,500 205,200 900,000
Sales outside Japan 296,700 327,000 323,500 359,400 384,600 94,500 94,000 390,000
Outsourcing, OEM 489,400 445,700 493,400 542,900 594,700 148,600 130,200 540,000
Total sales 1,574,727 1,559,412 1,631,320 1,764,976 1,913,254 451,788 429,551 1,830,000
Operating income 40,747 103,443 115,462 133,040 146,743 43,250 25,167 140,000
Ordinary income 43,842 112,215 128,223 148,173 163,494 48,053 29,484 153,000
Current net profit 21,162 52,555 65,138 81,406 83,698 23,277 13,845 82,000
R&D expenses 43,734 38,227 33,830 35,700 46,482 10,200 11,100 46,000
Capital investment 36,745 40,614 69,336 73,100 97,300 18,300 32,200 115,000
Depreciation costs 72,900 63,700 61,000 56,200 59,600 13,700 15,200 67,000

Source: Daihatsu's annual report FY 2013 and first quarter FY 2014

Daihatsu unit sales worldwide

(in 1,000 units)
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 2013
Apr.-Jun.
2014
Apr.-Jun.
FY 2014
(outlook)
Mini vehicles 596 568 603 652 690 164 180 660
Small vehicles 7 5 3 10 10 3 2 10
Sales in Japan 603 573 606 661 699 167 182 670
Sales outside Japan 325 367 368 372 414 97 99 438
Total units sold 928 940 973 1,034 1,113 264 282 1,108

Source: Daihatsu's annual report FY 2013 and first quarter FY 2014

Units produced (on consignment/OEM basis)

(in 1,000 units)
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 2013
Apr.-Jun.
2014
Apr.-Jun.
FY 2014
(outlook)
Japan 240 176 222 219 233 57 43 220
Non-Japan 161 192 236 281 344 78 83 332
Total 400 368 458 500 577 135 126 552

Source: Daihatsu's annual report FY 2013 and first quarter FY2014

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