European and US suppliers in China (Part 1): Shanghai, Jiangsu, eastern China

Increased demand leads to enhanced local production and R&D capabilities

2015/01/08

Summary

 The total sales of all types of vehicles in China, the world's largest car market, increased by 6.1% year-over-year (y/y) to 20.17 million units (on factory shipment basis) for the period between January and November 2014. Passenger car sales alone in China  rose by 9.2% y/y to 17.64 million units for the same period. The strong sales of passenger cars supported the Chinese car market, since there was a decrease in sales of commercial vehicles. The China Association of Automobile Manufacturers predicts that total sales for all vehicle types will be around 23 million units for the full-year 2014.

 The Volkswagen (VW) Group has the top share in the Chinese car market. The group sold 3.25 million units between January and November 2014 in China, a 16.0% increase y/y, expanding its share by more than 1% to 15.4%. General Motors Company (GM), second only to VW, sold 1.67 million units for the same period. GM recorded a 11.3% growth y/y, moderately expanding its share to 7.9%. PSA Peugeot Citroen and Ford Motor Company also largely increased their sales volume in China.

 Under these circumstances, European and U.S. automakers are actively investing in China, expecting the market to further grow. VW and GM in particular plan to invest in China, in order to increase their production capacity to over 4 million vehicles each. In response to these automakers' investments, European and U.S. automotive parts suppliers are also strengthening their production and research and development (R&D) capabilities in China.

 This report summarizes activities of key European and U.S. parts suppliers in and around Shanghai, in eastern China, between the end of 2013 and mid-December 2014. Activities in other regions will be reported separately.

Eastern China
Eastern China

Summary of activities in Eastern China:

New companies, plants launch operations BorgWarner (turbochargers), Bosch/Mahle (turbochargers), Continental (instrument panel/driving assistance/MHI),Cummins (turbochargers), Federal-Mogul (relocation and integration of bearing plants, exhaust insulating sleeves), GKN (powder metallurgy parts), Johnson Control (establishing interior parts JV), Novelis (aluminum sheets), Roechling (intake manifolds, etc.), SKF (bearings), Sogefi (suspension and engine system components), ThyssenKrupp (steering and damper systems, cylinder head covers), Visteon (interior and plastic parts), ZANINI (wheel covers)
Boost production capacity Bosch (high-pressure oil pumps),  GKN (drive shafts), TRW (steering wheels), Schaeffler (transmission parts)
Add production items Dana (multi-layer steel gaskets), Delphi (fuel pumps and injectors for direct injection engines), ZF (9-speed AT)
R&D center Establish Delphi, Eaton, Harman, Plastic Omnium, SKF, Tenneco, TRW
Expand Mahle, MANN+HUMMEL, ZF
Headquarters for China/Asia-Pacific region IAC (newly established), Lear (newly established), ZF(Expansion)
Reorganize business Halla Visteon Climate Control (acquiring 100% ownership of an affiliated company),
Johnson Matthey (acquiring a plant),
KSPG (transferring majority share in German subsidiary to Chinese company),
Visteon (selling local subsidiary (JV))

Related Reports:
Japanese Suppliers in China (3):Northern/ Northeastern/ Southwestern Regions (Aug. 2013)
Japanese suppliers in China (2): Southern and Central Regions (Aug. 2013)
Japanese suppliers in China (1): Eastern China Region (Jul. 2013)




Establishment of new plants: Borg Warner, Bosch and Mahle's turbocharger plants

Companies Activities
BorgWarner
Opens new turbocharger plant
In September 2014, BorgWarner Inc. announced that it has opened a new plant in Taicang, Jiangsu Province, China. The new plant is the company's second turbocharger plant in China. The new plant will employ more than 150 people by the end of 2014, and the number of employees is expected to rise to 500 by 2018. BorgWarner expects the Chinese light-vehicle turbocharger market to more than double from 4.2 million units in 2014 to 8.6 million units by 2019, as local emission standards become increasingly stricter.
Bosch/Mahle
Joint venture's turbocharger plant begins operations
In November 2014, Bosch Mahle Turbo Systems (BMTS), a joint venture (JV) between Robert Bosch GmbH and Mahle GmbH, began operations at Bosch Mahle Turbo Systems (Shanghai) Co., Ltd., the JV's first plant in China. The new plant is built within Mahle's Shanghai facility. A research and development center is also built next to the new plant. The plant is capable of producing 2 million turbochargers per year. These turbochargers will be used on gasoline engines with a displacement of 1.0 to 1.5 liters in vehicles that are mainly marketed in China.
Continental
Opens second plant in Wuhu to concentrate on instruments, driver assistance systems, and HMI businesses
In November 2014, Continental AG announced that the second plant of its subsidiary Continental Automotive Interior (Wuhu), located in Wuhu, Anhui Province, has opened. With an initial investment of EUR 33 million for land and building, the new plant will be fully operational in the first quarter of 2015. The new plant includes production facilities, an R&D center, a laboratory and warehouse. The company will focus on the business of instruments, driver assistance systems and Human Machine Interface (HMI). The new plant will employ about 1,500 people, including around 215 R&D engineers by the end of 2015. The company plans to install 42 production lines in the new plant by that time.
Cummins
Opens second plant for producing turbochargers
In November 2014, Wuxi Cummins Turbo Technologies Co., Ltd. announced that it has completed the first phase of construction of its second plant in Wuxi, opening the new facility. This new facility has expanded Wuxi Cummins's annual turbocharger production capacity to 2 million units. The second phase of the construction project is scheduled to begin around 2020. When the second phase of construction is completed, the company's annual turbocharger capacity will further increase, to 3 million units.
Federal-Mogul
Integrates two bearing plants
In November 2014, Federal-Mogul Powertrain division announced that it has relocated two JV plants into one new plant in the Zhoupu Zhihui Industrial Park in Shanghai. The two plants are Federal-Mogul Shanghai Bearing Co., Ltd. and Federal-Mogul Shanghai Compound Material Co., Ltd. They are Federal-Mogul majority-owned JVs established with Huayu Automotive Systems Co., Ltd., a subsidiary of SAIC Motor Corporation, Ltd. The new plant will produce engine bearings, bushings and thrust washers. The completion of the new plant means that the number of production lines for bearings, will increase from current 7 to 11. The annual production capacity for bearings will also increase from 100 million units to 500 million units.
Opens new plant for producing exhaust insulating sleeves
In October 2014, Federal-Mogul Powertrain announced that it has opened a new plant in Changshu, Jiangsu Province, China. The new plant will provide additional production capacity for Federal-Mogul's systems protection business, including its Thermflex exhaust insulating sleeves. Thermflex sleeves, made of a special natural fiber, can effectively retain heat in exhaust pipes so that harmful emissions are sufficiently decomposed. These exhaust insulating sleeves are used for automobiles, rapid-transit railways and aircraft in China.
Breaks ground for new JV plant to supply valve seat inserts
In June 2014, Huangxin Federal-Mogul Powder Metallurgy Co., Ltd., a JV between Federal-Mogul and Anqing Huanxin Group Co., Ltd., held a groundbreaking ceremony for a new plant in Anqing. Investment in this construction project is expected to reach USD 50 million. The plant will produce valve seat inserts and valve guides, starting in 2015. The company plans to achieve sales of USD 80 million by 2018.
GKN
Expands powder metallurgy business
In October 2014, GKN Powder Metallurgy announced that it is expanding its operations at its existing facilities in Danyang and Yizheng in Jiangsu Province, China. GKN will invest GBP 8.7 million to build a new plant at its Danyang site. The new plant will cover an area of 20,000 square meters when construction is completed in September 2015. The existing plant at the Danyang site produces highly engineered powder metallurgy parts primarily for automotive engines and transmissions. The company's new plant that will be expanded in Yizheng, had its ground breaking in 2012. It produces small precision parts mainly for use in car engines, bodies and chassis. By the end of 2014, about 80 people will be employed at the Yizheng site.
Johnson Controls
Forms JV for producing interior parts
In May 2014, Johnson Controls Inc. and Yanfeng Automotive Trim Systems Co., Ltd., a SAIC Motor group supplier, announced that they had signed a definitive agreement to form a JV for producing interior parts. The new JV's revenue is expected to be USD 7.5 billion. Yanfeng will hold the majority share (70%) in the JV, and Johnson Controls will have a 30% share.The new JV will be headquartered in Shanghai, with global engineering, development and customer centers in the U.S., Europe, China, Japan and India. The product portfolio will include instrument panels, cockpit systems, door panels and floor consoles. The JV is scheduled to be established in the first half of 2015.
Establishes fabrics JV

In July 2014, Johnson Controls Inc. announced that it has signed an agreement with Shanghai Yanfeng Industry and Commerce Co., Ltd. and Anhui Yansheng Automotive Trim Co., Ltd. to form a new fabrics JV in Huainan, Anhui Province, China. The new JV, named Anhui New Nangang Johnson Controls Automotive Trim Co., Ltd., will provide Chinese automakers with a variety of services, from fabric design, engineering and manufacturing up to supplying trim products. The new JV will commence operations in October 2014.

Magna International
Forms JV to produce front-end modules
In February 2014, Magna International Inc., through its affiliated Magna Exteriors, and Chongqing Guangneng Rongneng Trim Co., Ltd., announced the formation of a 50-50 JV in China. The new JV, named Magna Guangneng Automotive Trim System (Hangzhou) Co., Ltd., will assemble front-end modules at its plant in Hangzhou, Zhejiang Province, and will supply them to the Chinese automotive market.
Novelis
Opens its first aluminum automotive sheeting plant in China
In October 2014, Novelis, Inc. announced that it has opened its first plant dedicated to the production of heat-treated aluminum automotive sheeting in China. The wholly owned facility, located in the Changzhou National Hi-Tech District, represents a USD 100 million investment by Novelis. With an annual capacity of 120,000 tons, the new plant will produce aluminum automotive sheeting for use in lightweight vehicle frames and body panels such as hoods, doors, fenders and lift gates. Since 2011, Novelis has invested more than USD 550 million globally to triple its automotive sheeting production capacity to 900,000 tons by 2015.
Roechling
Opens new automotive parts plant in Kunshan

In September 2014, the Roechling Group announced that it has begun production at its new plant in Kunshan, Jiangsu Province, China. Until the construction of the new, wholly owned plant was completed, Roechling Automotive had rented production facilities in neighboring Suzhou. Roechling has invested EUR 10 million in this project.

Products:
Intake manifolds, air-ducts with air-vent control, grille shutters, cylinder head covers, air tubes for intercoolers, ABS pistons, door carries, fuel tanks, air-filter housing and other parts for air flow management, acoustics, and thermal management

Customers:
Automakers- Shanghai Volkswagen, FAW VW, Ford, GM, Daimler, Fiat, Iveco, Guangzhou Automobile, SAIC, Mazda, Dongfeng Motor, Audi, and others
Suppliers-Continental, Bosch, Brose, Valeo Japan, and others

SKF
Opens new bearing plant and technical center
In June 2014, AB SKF announced that it has inaugurated the SKF Campus in Jiading District, Shanghai. The SKF Campus covers an area of 45,207 square meters with a total investment of SEK 700 million. On the campus are a new automotive bearing plant, the Global Technical Centre, SKF Solution Factory, and SKF College China.
Sogefi
Opens two new plants for producing suspension components and engine system components

In January 2014, Sogefi S.p.A. announced that it has opened two new plants in Shanghai, China, with one producing suspension components and the other producing engine system components. The total investment amounts to USD 40 million. The two plants, when they run at full capacity, will employ more than 500 people in total. Sogefi aims to achieve sales of over USD 100 million in China in 2017, which is approximately three times the 2013 result.

The first plant is mainly dedicated to the development and production of suspension components. Initially, tubular and solid stabilizer bars will be produced and supplied to BMW, Daimler, FCA, Ford, PSA and other customers. The second plant is designed for producing engine system components. At the beginning, the plant will produce air intake manifolds and water outlets, and supply them to customers such as Daimler, Shanghai GM, SAIC Motor, Ford and Jiangling Motors.

ThyssenKrupp
Opens new plant for producing steering and damper systems
In July 2014, ThyssenKrupp AG opened a new auto components plant in Pudong New Area, Shanghai. The new plant will produce steering and damper systems for the Chinese market. ThyssenKrupp has invested EUR 100 million in the new plant. The new plant has an annual production capacity of 750,000 electric steering systems and 1.8 million damper systems.
Opens cylinder head cover plant in Changzhou
In November 2014, ThyssenKrupp AG announced that it has opened a new plant in Changzhou, Jiangsu Province, China. The investment amounted to EUR 40 million. The new plant will employ up to 200 people and produce one million cylinder-head covers per year.
Visteon
Dongfeng Visteon establishes interior and plastic parts subsidiary in Yancheng
In December 2014, Visteon Corporation announced that Dongfeng Visteon Automotive Trim Systems Co, Ltd., Visteon's JV in China, will establish a wholly owned subsidiary to supply its products to Dongfeng Motor's local plants. The new company will be named Dongfeng Visteon Yancheng Automotive Trim Systems Co., Ltd. Total investment in the new subsidiary will amount to CNY 50 million. The subsidiary will design and sell automotive plastic parts, and will design, produce and sell automotive interiors. Key customers of Dongfeng Visteon Yancheng Automotive Trim Systems include Dongfeng Nissan, Dongfeng-Puegeot-Citroen, Dongfeng Passenger Vehicle, and Dongfeng Honda.
ZANINI AUTO GRUP
Zanini's first plant in Asia starts operations
In the summer of 2014, Zanini Auto Grup, S.A. started operations at Zanini (Changzhou) Autoparts, the company's first plant in Asia. The new plant, built in Changzhou, Jiangsu Province, produces wheel covers for vehicles. Zanini Auto has won orders from customers including FAW-Volkswagen, Shanghai GM, GM Korea, Ford, and BAIC Group.

 



Enhancement of production capacity: Bosch, Cummins, TRW, and others

Companies Activities
Bosch
Bolsters production line for high-pressure oil pumps at Wuxi Plant
In March 2014, United Automotive Electronic Systems Co., Ltd. in the Bosch Group announced that it has completed installing equipment onto its production line for high-pressure oil pumps at its Wuxi Plant. The company's annual production capacity for the products will increase by 80% to 1.8 million units.
Dana
Starts producing multi-layer steel gaskets in China
In May 2014, Dana Holding Corporation announced that it has started producing multi-layer steel (MLS) cylinder head gaskets, exhaust gaskets, and transmission valve body separator plates at its plant in Wuxi, Jiangsu Province, China. Dana's 12,000 square-meter technical center is a comprehensive development and manufacturing facility that enables the company to develop and produce Victor Reinz's sealing products within its Wuxi site. The comprehensive system serves to supply Dana's products to key customers' facilities in China and the Asia-Pacific region.
Delphi
Production of high-pressure fuel pumps for GDI engines begins
In September 2014, Delphi Automotive PLC announced that its powertrain plant in Shanghai began producing high-pressure fuel pumps for gasoline direct-injection (GDI) engines. The company plans to produce 1.5 million fuel pumps per year at the plant. According to media reports, production of injectors for GDI engines will also begin in July 2015. The annual production capacity for injectors will be 5 million units.
GKN
Adds coating equipment to drive shaft production line
In November 2014, Shanghai GKN Drive Shaft Co., Ltd., a JV between GKN Plc, announced that it will add coating equipment to its drive shaft production line at its plant in Pudong, Shanghai. Shanghai GKN will invest CNY 5.8 million to install spray coating equipment, cleaning equipment and drying equipment at the plant. After the installation is completed, the plant will be able to process over 800,000 sets of drive shafts per year.
Schaeffler
Expands transmission parts plant in China
In April 2014, Schaeffler AG held an opening ceremony for its new fifth plant at the Taicang manufacturing site in Jiangsu Province, China. Built as an extension of its third plant, this new plant will primarily manufacture wet-type double clutches and hydraulic torque converters. It is the first time for the company to produce both products in China.
TRW Automotive
Shanghai TRW Automotive boosts steering wheel production capacity
In October 2014, Shanghai TRW Automotive Safety Systems Co., Ltd., a subsidiary of TRW Automotive Holdings Corporation, announced that it will rent a plant located in Anting, Jiading District, Shanghai to boost its production capacity for steering wheels. Shanghai TRW Automotive Safety Systems plans to produce 200,000 steering wheels at the plant a year.

 



Enhancement of local development capacity: Delphi, Eation, TRW, and others

Companies Activities
Delphi
Delphi Electronics (Suzhou) Technical Center opens
On May 20, 2014, Delphi Automotive PLC announced that it has opened Delphi Electronics (Suzhou) Technical Center at the Suzhou Industrial Park. The center currently employs nearly 150 engineers and plans to add about 50 engineers by the end of 2014. Delphi produces car audio systems and electronic braking systems at its plant in Suzhou.
Eaton
Establishes technical center in Shanghai
In April 2014, Eaton Corporation established its Vehicle Group Asia Pacific Technical Center in Shanghai. The new technical center will develop and provide technologies for passenger cars and commercial vehicles. These technologies include engine valves, valve drive units, superchargers, transmission systems, clutches and hybrid systems for vehicles sold in China.
Harman International
Establishes Global Development Center in Suzhou
In April 2014, Harman International Industries, Inc. announced that it will establish a Global Development Center in Suzhou by the middle of 2015 to develop audio and infotainment systems. The company plans to invest USD 16 million in the first phase of this project. The new facility will have a site area of 10,000 square meters. The development center, which will initially hire 200 employees, plans to increase the workforce to around 350 in the future.
Mahle
Completes expansion of technical center in Shanghai
In November 2014, Mahle GmbH announced that it has completed the expansion of its research and development center located in the suburbs of Shanghai. Approximately 15,000 square meters of production space and 3,200 square meters of office space have been added to the facility. The renovated facility will produce jigs for manufacturing filters and engine auxiliary components. The expansion of the research and development center was carried out together with the construction of Bosch Mahle Turbo Systems (Shanghai) Co., Ltd.'s plant described above.
MANN+HUMMEL
Increases R&D capacity in China
In May 2014, MANN+HUMMEL GmbH announced that it will increase its R&D capacity in China. The company's R&D center in China will have a series of equipment to test air- conditioning filters (for reducing the PM 2.5 level inside vehicles), liquid filters, and intake manifolds. In addition, the company will establish a semi-anechoic room and install equipment for measuring noise, vibrations, and harshness (NVH) in the R&D center.
Plastic Omnium
Inaugurates development center
In December 2013, Plastic Omnium S.A. inaugurated a development center for its exterior parts business in Anting, Jiading District, Shanghai. The company plans to increase the number of engineers and technicians from 300 at present to 450 by 2016. In 2013, Plastic Omnium launched 35 new exterior parts programs in China. The company will increase the number of annual program launches to 50 by 2015. The company's key customers include VW, GM, SAIC Motor, FAW Group, BMW, PSA and Jaguar Land Rover.
SKF
Opens new technical center

In June 2014, AB SKF announced that it has inaugurated the SKF Campus in Jiading District, Shanghai. On the campus are the Global Technical Centre, SKF Solution Factory, SKF College China and a new automotive bearing plant (as described above). The SKF Campus covers an area of 45,207 square meters with a total investment of SEK 700 million.

Tenneco
Opens new R&D facility in Kunshan
In September 2014, Tenneco Inc. announced the opening of a new clean-air research, development and manufacturing facility in China. The new, wholly owned facility, based in Kunshan, Jiangsu Province, will design, develop and manufacture emission gas control products and systems as well as Tenneco's XNOx Selective Catalytic Reduction (SCR) system for the company's commercial truck business in China and the Asia Pacific region.
TRW Automotive
TRW Automotive Holdings opens largest technical center
TRW Automotive Holdings has announced the opening of its largest ever technical center in Anting, Shanghai, the Anting Technical Center, which covers an area of 66,000 square meters and houses more than 20 testing rooms. The new technical center will support all of TRW's main business areas including braking, steering and suspension, occupant safety, and safety electronics, and will employ more than 1,200 engineers and trainees.

 



Local headquarters and business reorganizaiton: IAC, Lear, and others

▽Local headquarters

Companies Activities
IAC Group
Opens Asia headquarters
In June 2014, IAC (International Automotive Components) Group opened its new Asia headquarters in Shanghai. In addition to housing a technical center, the new headquarters will be responsible for IAC's Asian operations that include the region's marketing and administrative activities along with global and domestic design/engineering, procurement, and manufacturing leadership. The new headquarters currently employs 115 people. The company plans to increase the workforce to 150 in the future.
Lear Corporation
Opens new Asia headquarters and Product and Technology Center
In March 2014, Lear Corporation opened its new Asia headquarters and its regional Product and Technology Center in Yangpu District, Shanghai, China. The new headquarters with the new Product and Technology Center employs 600 workers, handling the company's mainstay products, which are automotive seating and electrical components such as high-power products for electrical and hybrid vehicles.
ZF
Expands headquarters for China and Asia-Pacific region; locally produces new 9-speed AT
In July 2014, ZF Friedrichshafen AG announced that it will substantially expand its headquarters in Shanghai that oversees operations in China and Asia-Pacific. The space for offices, laboratories, and test benches will be quadrupled from current 11,000 to 54,000 square meters. The building will be completed at the end of 2015. In the next five years, ZF will invest EUR 50 million in this project. At the new building, the company will be able to test products in which car-driveline and chassis technology have been incorporated; ZF can also test transmissions for commercial vehicles and construction machineries at the facility. The new building will also be equipped with a test facility for ZF's new 9-speed automatic transmission. ZF plans to start producing this new AT in China as well, in 2017.

 

▽Business reorganization

Companies Activities
Halla Visteon Climate Control
Acquires majority stake in Chinese subsidiary of Japan Climate Systems
In June 2014, Halla Visteon Climate Control Corp. (HVCC) announced that it has reached an agreement to acquire a 51% share in Jie Xi Si (Nanjing) Automotive Climate Control Co., Ltd., a Chinese subsidiary of Japan Climate Systems Corporation. HVCC will spend USD 6.4 million to complete the transaction. Jie Xi Si (Nanjing) manufactures heat exchangers for automotive applications. Japan Climate Systems is a JV which is evenly owned by three companies: HVCC, Mazda and Panasonic.
Johnson Matthey
Acquires cathode materials plant from A123 Systems

In October 2014, Johnson Matthey Plc. announced that it has completed its acquisition of A123 Systems' cathode materials manufacturing plant. The plant, located in Changzhou, Jiangsu Province, China produces lithium iron phosphate (LFP) cathode materials. With the acquisition of the plant, the companies have entered into a long-term supply agreement under which Johnson Matthey will supply all of A123's LFP requirements. A123 retained ownership of its intellectual property in battery materials. Johnson Matthey will produce A123's "Nanophosphate" LFP exclusively supplied for A123.

KSPG
Transfers 50% share in KS Aluminium-Technologie to Huayu Automotive Systems
In July 2014, KSPG AG and Huayu Automotive Systems, a subsidiary of SAIC Motor, announced that both companies have reached an agreement under which KSPG will transfer a 50% share in KS Aluminium-Technologie GmbH to Huayu Automotive Systems. Currently, KS Aluminium-Technologie is a wholly owned subsidiary of KSPG. KSPG plans to integrate its entire automotive aluminum alloy casting business in Germany into KS Aluminium-Technologie GmbH. KS Aluminium-Technologie has three plants in Germany and supplies its products to automakers such as VW, Porsche, Volvo, Daimler, BMW and Peugeot.
Visteon
Sells shares of its JV's automotive interior business
Visteon Corporation is bolstering its electronics business while positioning its interior parts business as a non-core business. The company is reorganizing its operations in China. In December 2013, Visteon sold all of its shares in Yanfeng Visteon Automotive Trim Systems Co., Ltd., a 50-50 JV engaged in automotive interiors, to Huayu Automotive Systems. In November 2013, Visteon gained a 51% holding in Yanfeng Visteon Automotive Electronics Co., Ltd., that engages in automotive electric parts. Yangfeng Visteon Automotive Electronics was a subsidiary of Yangfeng Visteon Automotive Trim Systems. Visteon has a pre-emption right to the remaining shares of Yanfeng Visteon Automotive Electronics.

 

<Automotive Industry Portal MarkLines>