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4. Tokai Rika Co., Ltd.
5. Tokai Rika Co., Ltd. Business Report FY ended 2015

 
Factors
1) <Japan>
-Sales decreased by 4.4% year-on-year as a result of customers' lower unit-production volumes, which fell due to lower demand that resulted after the last-minute buying spree that happened before the Japanese consumption tax increased in April.
-Operating profit decreased by 14.3% year-on-year due to lower sales volumes, despite the weaker yen and rationalization initiatives.

2) <North America>
-Sales increased by 23.2% year-on-year due to an increase in production units of the customers.
-Operating profit increased by 135.1% year-on-year due to increased sales.

3) <Asia>
-Sales increased by 3.7% year-on-year as a result of positive currency translation that resulted from the weakened yen. This positive result was achieved despite an decrease in production units of the customers in China and Thailand,
-Operating profit remained at the same level year-on-year because of a decrease in the operating levels in China and Thailand.

4) <Other>
-Sales in other global regions, which included sales at its subsidiaries in Europe and South America, increased by 6.9% year-on-year.
-Operating profit increased by 48.7% year-on-year.

TRMAC Engineering Co., Ltd. converted into wholly owned subsidiary

-In May 2014, the Company announced that it has acquired all of the shares of its consolidated subsidiary, TRMAC Engineering Co., Ltd., and converted it into a wholly owned subsidiary of Tokai Rika. TRMAC designs and evaluates in-vehicle electronic equipment. In November 2014, TRMAC Engineering Co., Ltd. has changed its name to TOKAI RIKA ADVANCED.

Contracts

-The Company has developed Japan's first touchpad remote control system to be mounted on a vehicle center console. The Lexus "NX", which Toyota Motors Corporation released on July 29, 2014, is the first model to adopt this new touchpad system. The Company has started production of the touchpad systems at its plant in Oguchi, Aichi, and has been shipping them to Toyota Motor Kyushu, Inc.'s Miyata plant (in Miyawaka, Fukuoka). The Company has received a second contract for the new touchpad system from Toyota for use in the Lexus "RC sports coupe" that will be launched by the end of 2014. (From an article in the Nikkan Jidosha Shimbun on August 6, 2014)

-New decorating technology (technique) on steering wheel is being applied on Toyota's Alphard and Vellfire. (FY ended March 2015).

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Achievements

-R&D activities in Japan were focused on advanced development and elemental technology. R&D activities in North America, Europe, and China centered on first understanding the local market needs and the developing products and making product proposals to customers.

Switches
-Developed switches that enable displays and related multi-functional operations to be possible, in addition to developing input systems incorporating improvements in terms of design and operability.
-Launched commercial production of touch pad type remote control device which realized an intuitive operation, such as a smartphone.

Security Systems
-Developed and commercialized a new, low-cost, smart-key system designed for sales worldwide.
-Further enhanced and improved variations of shift-by-wire shifters, which are representative of the types used in HVs and EVs.

Safety Systems
-Developed and commercialized a seatbelt incorporating the next standard for retractors that are able to respond to the need for weight reduction, and expanded their use on more models.
-Developed low-cost door mirrors and expanded their use on more models.
-Commercialized decorative panels offering a keen sense of design unity and continuity for various interior products, by applying its proprietary, high-precision decorating technology "3D Dry Transfer Technology."

R&D Structure

-The Company has begun establishing a new research and development system, following the recent moves of automakers to focus on common modules. Its main customer, Toyota Motor Corporation, is now pursuing a strategy named "Toyota New Global Architecture (TNGA)" to promote common parts development. In 2013, Toyota informed its part suppliers that the automaker will start using common cockpit modules consisting of common parts for displays and operational systems including switches. Therefore, the Company has decided to transform its R&D system to meet the requirements. In summer 2013, the Company established a project team consisting of engineers mainly from development and design divisions. The team will soon welcome new members from procurement, manufacturing and production engineering divisions to make a competitive proposal. The Company will also strengthen technology research on parts for advanced operational systems including organic light emitting display and touch panels. (From an article in the Nikkan Jidosha Shimbun on January 17, 2014)

R&D Activities

-The Company will step up planning and development of its next-generation operational systems. A new project team for the "Switch Business Reconstruction Project" was established in June 2014. The team is intensively examining the operational technologies. Load on a driver is growing with an increase of switches around the driver's seat. Head-up displays (HUDs) and voice recognition systems are expected to reduce the load for the driver. However, the concrete design image of the entire cockpit that achieves the balance among functions while ensuring usability has not been formed. In order to decide the future direction of the product development, the Company is introducing a new measuring technology to visualize the driver's load. Addition of new functions to the vehicle also leads to an increase of switches around the cockpit. The number of switches exceeds 100 for some luxury vehicles. Operation of many switches during driving increases the risk of fatigue and carelessness of the driver. The Company aims at eliminating the risk and achieving a comfortable and convenient driving environment. (From an article in the Nikkan Jidosha Shimbun on September 12, 2014)

Product Development

The third-generation automatic transmission shift lever based on the Toyota New Global Architecture (TNGA)
-The Company has developed the third-generation automatic transmission shift lever based on the Toyota New Global Architecture (TNGA) design scheme of Toyota Motor Corporation. The Company standardized design of its shift levers in accordance with the TNGA, which aims at the use of common components with its focus on introducing a common platform and a driving position. In addition, the Company has introduced simultaneous and synchronized planning for parts development, process concept and production. As a result, the Company has achieved the Ryohin-Renka Cost Innovation (RR-CI: low-cost non-defective products cost innovation) target that aimed for a 30% cost reduction (RR-CI was announced by Toyota in 2009). Leaving enough room for designing the peripherals of shift levers, the Company has cut costs and also improved product appeal at the same time. The Company will start supplying the new shift lever globally in 2015 or later. (From an article in the Nikkan Jidosha Shimbun on March 16, 2015)

Touchpad remote control system
-The Company has developed Japan's first touchpad remote control system to be mounted on a vehicle center console. The touchpad system allows a driver to intuitively control car navigation, audio, and air conditioning systems while maintaining proper driving position. The Lexus "NX", which Toyota Motors Corporation released on July 29, 2014, is the first model to adopt this new touchpad system. The Company has started production of the touchpad systems at its plant in Oguchi, Aichi, and has been shipping them to Toyota Motor Kyushu, Inc.'s Miyata plant (in Miyawaka, Fukuoka). The Company has received a second contract for the new touchpad system from Toyota for use in the Lexus "RC sports coupe" that will be launched by the end of 2014. (From an article in the Nikkan Jidosha Shimbun on August 6, 2014)

-For FY ended March 2015, in addition to investing in equipment to respond to the production of new products, the Company also invested to expand production in China, India and Philippines to reinforce production capacity in developing countries.

Investments Outside Japan

<Mexico>
-The Company will build a new plant for manufacturing switches and security systems in Mexico. This is the Company's first entry into the country. In May 2015, the Company will set up a new subsidiary, which will start operations in the autumn of 2016. The Company will invest USD 34 million (JPY 4 billion) in the subsidiary by the end of the fiscal year ending in March 2019 (FY 2018). In FY 2018, the plant is expected to generate sales of USD 52 million (JPY 6.2 billion) , which will be raised to USD 126 million (JPY 15.1 billion) in FY 2020. (From an article in the Nikkan Jidosha Shimbun on April 28, 2015)

<Philippines>
-The Company established a new switch plant in the Philippines. The new plant started operations in December 2014 as the second plant of the Company's Filipino manufacturing subsidiary. The investment amount in the plant is estimated to reach JPY 3 billion up to 2017, and the plant's production capacity will be expanded by about 50% from the current level. The new plant will focus on producing shift lever control and other automotive switches, which will be supplied to North America, Europe and Southeast Asia. It will serve as the Company's sole export base outside Japan to supply switches worldwide. The Company will make use of abundant labor resources in the Philippines to enhance its cost competitiveness, while utilizing the plant to complement supply shortages around the globe. (From an article in the Nikkan Jidosha Shimbun on January 19, 2015)