Aisin Seiki Business Report FY2006

Business Highlights

Financial overview
(in billion JPY) FY2006 FY2005 Rate of Change
Sales 2,378.6 2,120.5 12.2% - Increase in vehicle production of major customers
- Active sales promotional activities  for automatic and manual transmissions 
Operating Profit 131.0 118.0 11.0% - A sharp rise in materials prices and higher depreciation costs were offset by sales growth and rationalization of overall management
Ordinary Income 134.2 125.0 7.3%
Net Profit 66.8 61.0 9.5%

Business performance by region
(in billion JPY) FY2006 FY2005 Rate of Change
Sales 1,982.5 1,815.4 9.2 - Increase in vehicle production  by major customers; and sales growth of body parts and automatic transmissions 
Operating Profit 99.0 99.2 (0.2) - Despite increased sales and rationalization efforts, materials price hikes such as for aluminum had a significant negative effect 
North America
Sales 382.6 357.4 7.0 - Increase in the sales and supply of body and brake parts 
Operating Profit 8.0 4.6 72.8 - Start up costs to launch drivetrain products were positively offset by sales growth 
Sales 181.3 148.0 22.5 - Increased sales, mainly of automatic transmissions and car navigation systems 
Operating Profit 3.9 0.6 550.0 - Sales growth coupled with a decline in the cost to launch production in the Czech Republic and Turkey 
Sales 170.3 121.3 40.4 - Effective marketing efforts to promote manual transmissions in Thailand and body products in China 
- As subsidiary in Indonesia that was accounted for under the equity method became one of the company's consolidated subsidiaries 
Operating Profit 20.8 14.6 42.7


The Company, Toyota Boshoku Corporation and Denso Corporation, three companies in the Toyota group, announced that they held a joint opening ceremony at Aisin Seiki Foshan Body Parts Co., Ltd. (ASFB) and Toyota Boshoku Foshan Co., Ltd. (TBFC) on January 22nd. ASFB is a subsidiary of the Company and TBFC is a joint venture between Toyota Boshoku and Denso. ASFB has been producing electric sunroofs and motor housings for power seats from May 2006. TBFC started its production of oil filters for China and other Asian markets in July 2006 and it plans to expand its production for the European market in 2007. ASFB expects annual sales of approximately 377 million yuan (about 5.67 billion yen) while TBFC is planning to achieve about 100 million yuan (about 1.5 billion yen) in annual sales in 2007. (From an article in the Nikkan Jidosha Shimbun on Jan. 24, 2007)

Business Plan
The Company is planning to raise its market share of aftermarket clutches for use in Japanese vehicles in Europe to 25% over the next five years. While the Company has retained its No.6 position in the OEM market worldwide, its share in the aftermarket in Europe remains only at 20%, even for Japanese cars, due to the Company's weak sales infrastructure. The Company will continue to spend about 20 million yen a year to promote sales by constructing a strong sales network throughout Europe. (From an article in the Nikkan Jidosha Shimbun on Sep. 15, 2006)


R&D Structure
The company's R&D structure is based on information sharing among R&D sections at each group company having special technologies and unique know-how on existing products; and at research companies in and outside Japan specializing in R&D on wide range of leading technologies. Sharing information enables new technologies and products for the next generation to be developed.   

The company's auto parts business develops new products and systems to meet the increasing need for more sophisticated technologies in line with energy, environmental protection, and consumer safety requirements. 

The Company announced that it will establish a Production Technology Center adjacent to its Headquarters located in Kariya, Aichi Prefecture. The purpose is to raise the Company's production technology capabilities. A total of approximately 10 billion yen will be invested in the new facility scheduled to begin operating in August 2007. Construction of a building with four above-ground floors totaling 38,000 sq.m. began on December 4, 2006. The building is scheduled to be finished in July 2007. The new center will consolidate production engineering functions, including the development of manufacturing processes and the design and production of dies and equipment, which are presently being spread across various regions. The company aims to raise the in-house manufacturing ratio of its dies and equipment to 50%, from the current 25%. (From an article in the Nikkan Jidosha Shimbun on Dec.14, 2006)

The Company, Aisin AW Co., Ltd. (Anjo City, Aichi Prefecture), and Aisin Engineering Co, Ltd. (Kariya City, Aichi Prefecture) announced that they will jointly establish a software development company on February 1, 2007. Operations at the new company are scheduled to begin on April 1. In line with electronic devices being used to a greater extent in the auto industry, requirements for developing software to operate them are also growing. Establishing the development company will allow the Group to slash development lead time and improve product quality. Embedded directly in each electric control unit and device, the software program serves as a crucial tool for controlling and networking the in-vehicle systems. The new company will integrate all the Group's software development activities, preparing for the projected increase in demand. The Company plans to locate its offices in Nagoya and Kariya City in the Chubu region; Yokohama in the Kanto region, and one in Tohoku (the hubs of the automotive industry in Japan). (From an article in the Nikkan Jidosha Shimbun on Feb.01, 2007)

R&D expenses
(in billion JPY) FY2006 FY2005
Total 103.7 95.1
Auto parts business 98.4 90.6
% 94.9% 95.3%

Recent achievements in R&D
E8-speed automatic transmission for high capacity FR vehicles
EPre-crash intelligent head restraint
ENew intelligent parking assist system
The company develops systems and products that significantly improve running performance,  and the safety and convenience of vehicles. In addition, the company promotes  marketing, targeting customers in and outside Japan. 

Investment Activities

R&D Expenditure
Investment for the period ended March 2007 totaled 197,800 million yen. 
Group-wide investment in the auto parts business reached 188,600 million yen.
Of the total, 45,100 million yen was spent on Aisin Seiki and 21,900 million yen on Aisin AW.  

Main Reasons for Capital Investments
Investment was focused on preparing lines for producing new and improved products for new-vehicle models, increasing production capacity at home and abroad, streamlining production systems, and developing new products and evaluation facilities.

Details of Major Capital Investments
- Manufacturing facilities for body products at Kinuura plant
- Manufacturing facilities drivetrain products and other products at Nishio plant
Information facilities for Aisin AW's Okazaki plant
- Casting facilities for Aisin Hokkaido

<Domestic Investments>
The Company announced that commercial production started at its Kinuura Plant, the new production facility in Hekinan, Aichi Prefecture, which produces auto body parts. The plant was established so that a part of the the functions being performed at the Nishio Plant (Nishio, Aichi Prefecture) could be transferred there. This will enable the company to revise processes and distribute products more efficiently. The transfer project requires a total investment of 10 billion yen, which includes the construction and transfer expenses. The Company is targeting 60 billion yen in sales for FY 2006. The transfer of the facilities from the Nishio Plant started in April this year and mass production started along with the relocation of door handle and sunroof production facilities at the end of May. The company has strived for efficiency at the new plant, as it completely renewed the door handle coating facility, making more efficient use of space in creating a small, multi-color, automated coating line. A spoiler production facility will also be transferred to complete the relocation at the end of December. (From a story in the Nikkan Jidosha Shimbun on Jun 3, 2006)

<Overseas Investments>
The Company announced that it will set up two new production facilities in order to meet growing demand for door frames in North America. In the U.S., Aisin Mfg., California, LLC will be established in California; and Aisin Canada, Inc. will build its second plant in Canada. The new plants will expand the Company's door frame production capacity in North America to 8.1 million units by 2010, a 50% increase from the current level of 5.4 million units. Up until now, the Company has been producing door frames solely at Aisin U.S.A. Mfg., Inc.. (From an article in the Nikkan Jidosha Shimbun on Nov.2, 2006)

New equipment installations
Plant (City) Equipment to be installed Estimated amount of  investment
(in million JPY)
Period of the project Increase in production
From To
Aisin Seiki Co., Ltd.
-Kariya Plant
(Aichi Pref., Japan
Manufacturing equipment for brake and Chassis related products 3,800 Apr. 2007 Mar. 2008 (1)
-Shintoyo Plant
(Aichi Pref., Japan)
Manufacturing equipment for body related products 3,100 Apr. 2007 Mar. 2008 (1)
-Nishio Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 10,300 Apr. 2007 Mar. 2008 (1)
-Handa Plant
(Aichi Pref., Japan)
Manufacturing equipment for brake and Chassis related products 11,100 Apr. 2007 Mar. 2008 (1)
Aisin Takaoka Co., Ltd.
-Headquarters plant
(Aichi Pref., Japan)

Casting facilities etc.

4,600 Apr. 2007 Mar. 2008 (1)
Aisin AW Co., Ltd.
-Headquarters Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 6,800 Apr. 2007 Mar. 2008 (1)
-Okazaki Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train/information related products 7,200 Apr. 2007 Mar. 2008 (1)
-Okazaki-higashi Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 5,100 Apr. 2007 Mar. 2008 New facility
Aisin Keikinzoku Co., Ltd.
Headquarters Plant
(Toyama Pref., Japan)
Casting facilities etc 6,500 Apr. 2007 Mar. 2008 (1)
Aisin Kiko Co., Ltd.
-Kira Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 3,100 Apr. 2007 Mar. 2008 (1)
Aisin AI Co., Ltd. -Headquarters Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 6,000 Apr. 2007 Mar. 2008 (1)
-Kira Plant
(Aichi Pref., Japan)
Manufacturing equipment for drive-train 7,000 Apr. 2007 Mar. 2008 New facility
Aisin Aw Industries Co Ltd
-Headquarters Plant
(Fukui Pref., Japan)
Manufacturing equipment for drive-train 5,000 Apr. 2007 Mar. 2008 (1)

Aisin Hokkaido Co., Ltd.
-Headquarters Plant
(Hokkaido, Japanj

Casting facilities etc. 5,000 Apr. 2007 Mar. 2008 New facility
Aisin Automotive Casting Tennessee, Inc.
-Headquarters plant
(Tennessee, USA)
Manufacturing equipment for drive-train 5,600 Jan. 2007 Dec. 2007 (1)
-Headquarters plant
(North Carolina, USA)
Manufacturing equipment for drive-train 3,300 Apr. 2007 Mar. 2008 (1)
The Nawaloha Industry Co., Ltd.
-Headquarters plant
(Saraburi, Thailand)
Casting facilities etc. 3,500 Jan. 2007 Dec. 2007 (1)
Thai Engineering Products Co., Ltd.
-Headquarters plant
(Pathum Thani, Thailand)
Casting facilities etc. 3,000 Jan. 2007 Dec. 2007 (1)
Advics Manufacturing Ohio, Inc.
-Headquarters plant
(Ohio, USA)
Manufacturing equipment for brake and Chassis related products 4,500 Jan. 2007 Dec. 2007 (1)
Aisin Europe Manufacturing Czech s.r.o
-Headquarters plant
(Pisek, Czech Republic)
Engine-related facilities 4,400 Jan. 2007 Dec. 2007 (1)
(*1)Minor increase