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5. JATCO Ltd. Business Report FY ended 2013-2015

Recent Years

Recent Development Outside Japan

-Leading two automatic transmission (AT) suppliers, Jatco Ltd. and Aisin AW Co., Ltd., are increasing their sales all over the world. In the fiscal year ended in March 2014 (FY 2013), both suppliers achieved record highs in sales volume (production volume for Jatco), revenue, and profit. The two companies have been increasing the number of their plants in emerging countries; Jatco is concentrating its management resources on CVTs while Aisin AW is focusing on ATs. In order to support their major customers' production expansion outside Japan, the suppliers have been stepping up local production, which has led to the increase in sales. Aisin AW and Jatco rank in the first and second in the global AT market (excluding those made in-house by automakers). According to Aisin AW, its global market share is 15%, followed by Jatco's 11% (FY 2012 data). Aisin AW aims to maintain its 15% global share through FY 2020. To achieve this goal, the company plans to increase its sales of transmissions for hybrid vehicles. Aisin AW also aims to satisfy needs for ATs to be mated with turbocharged downsized engines, whose demand is expected to increase in emerging countries. Meanwhile, Jatco intends to expand its customer base to win the top market share in the world by FY 2020. With its main focus on the North American and Chinese markets, Jatco is also promoting development of low-cost ATs designed for emerging markets.

Recent Development Outside Japan

<Mexico>
-In Sep., 2014, the Company has celebrated an opening of the second manufacturing plant of Jatco Mexico, S.A. de C.V. in Aguascalientes. The total investment in the new plant construction is USD 220 million or JPY 20.5 billion. With the addition of the new plant with an annual production capacity of 400,000 units, Jatco Mexico's two plants produce 1.7 million units of transmissions a year in Mexico. The new plant will produce two types of continuously variable transmissions (CVTs): the CVT8 and the CVT8 HYBRID. The former is designed for mid-to large-sized vehicles and currently installed on the Nissan "Altima" and the Nissan "Rogue". The latter is designed for hybrid vehicles and now used for the Nissan "Pathfinder Hybrid". (From an article in the Nikkan Jidosha Shimbun on September 11, 2014)

<China>
-In April 2013, the Company announced that it achieved the cumulative production milestone of one million continuously variable transmissions (CVTs) in China. The Company's Chinese production subsidiary, JATCO (Guangzhou) Automatic Transmission Ltd., started production of CVTs for medium-sized vehicles in 2009. In 2011, it launched production of Jatco CVT7, which is a CVT with an auxiliary gearbox for compact vehicles. In March 2013, it also began to produce Jatco CVT8 installed in Dongfeng-Nissan's Teana. The subsidiary currently has the capacity to produce approximately 900,000 CVTs a year, while also possessing local development functions for the products. (From an article in the Nikkan Jidosha Shimbun on Apr. 24, 2013)

<Thailand>
-In Sep. 2013, the Company held an opening ceremony at its manufacturing subsidiary JATCO (Thailand) Co., Ltd. (JATCO Thailand). JATCO Thailand is the Company's third overseas plant after Mexico and China. The plant will produce 500,000 units annually of CVT7, a continuously variable transmission (CVT) with an auxiliary gearbox. The CVT7 will be installed on the "Micra" (known as March in Japan) and the "Sylphy" which are produced by Nissan Motor (Thailand) Co. Ltd. JATCO Thailand started operations in July 2013 with 740 employees. The number of employees is scheduled to increase to 1,300 by April 2014. (From an article in the Nikkan Jidosha Shimbun on September 10, 2013)

-Jatco (Thailand) Co., Ltd. produces CVTs also for Suzuki's "Swift".

-The subsidiary supplies 75% of its products to Nissan, 15% to Mitsubishi Motors, and 10% to Suzuki. (Interview findings by MarkLines, February 2014)

<Russia>
-The Company began supplying its products to AvtoVAZ of Russia, and aims to further increase its business in the country. In June 2012, it established an office in Togliatti, Samara Region, where AvtoVAZ's headquarters is located. In addition, it opened an office in Moscow in June 2013.

Recent Development in Japan

Streamline domestic production
-The Company announced organizational changes effective April 1, 2013. The Company will disband Mizushima Production Section with the end of production at the Mizushima Plant in Kurashiki City, Okayama Prefecture. The Production Section No.1 and No. 2 at the Kambara Plant in Shimizu Ward, Shizuoka City, will be integrated into a single unit, as the Company aims to streamline domestic production. (From an article in the Nikkan Jidosha Shimbun on Mar. 23, 2013)

Increase CVT production capacity from 500,000 to 600,000 a year
-In 2012 the Company is boosting production of continuously variable transmissions (CVTs) at its Kakegawa Plant for supply to Suzuki Motor Corporation. Jatco will increase CVT production capacity by 20% from 500,000 to 600,000 CVTs a year in 2013 by adding the workforce, accelerating the line speed and also making further capital investment. The Kakegawa Plant will raise the production volume of a compact, high fuel efficiency new-generation "CVT7" with an auxiliary gear box. Suzuki uses the new CVT for its mini and compact vehicles, including the new "Wagon R" minivehicle launched in September. The Company is set to enhance production capacity at the plant to meet growing demand for CVTs from Suzuki for its extended model lineup, as well as the mainstay model. (From an article in the Nikkan Jidosha Shimbun on Oct. 26, 2012)

Major Contracts

Award-giving

R&D Facilities

R&D Facilities

-In May 2014, the Company opened a branch office in Barcelona, Spain. The office is located on the premises of Nissan Technical Center Europe, and will be responsible for the testing and quality management of new continuously variable transmission (CVT) technologies for Nissan vehicles. Staffed by four employees, the new operation will allow the Company to work more closely with Nissan to develop and offer products that better meet the needs of the European market. (From an article in the Nikkan Jidosha Shimbun on May 14, 2014)

R&D Activities

Improving the efficiency of CVT
-In 2013, the Company announced that it will significantly improve the efficiency of its continuously variable transmissions (CVTs), eyeing installation on vehicles in 2020. The size, weight and energy loss will be reduced by 40% from CVTs currently installed on medium and large-sized vehicles. To keep up with increasing demand for electric vehicle (EV) transmissions, the Company will develop a CVT unit that can be mounted on both gasoline and electric vehicles. (From an article in the Nikkan Jidosha Shimbun on November 22, 2013)

Establishment of quality technology center
-In 2012, the Company announced that Jatco (Guangzhou) Automatic Transmission Ltd. established new quality technology center within its premises. The technical center will have functions including quality assurance, statistical quality control, development and procurement, allowing the subsidiary to more efficiently address market quality issues, conduct vehicle application studies, and work on localizing production. Jatco Guangzhou started producing continuously variable transmissions in 2009. It is going to increase their production capacity from the current 730,000 units to 900,000 units a year by the spring of 2013. (From an article in the Nikkan Jidosha Shimbun on April 18, 2012) 

Investments Outside Japan

<Mexico>
-In September 2014, the Company has celebrated an opening of the second manufacturing plant of Jatco Mexico, S.A. de C.V. in Aguascalientes, Mexico. The total investment in the new plant construction is USD 220 million or JPY 20.5 billion. With the addition of the new plant with an annual production capacity of 400,000 units, Jatco Mexico's two plants produce 1.7 million units of transmissions a year in Mexico. The new plant will produce two types of continuously variable transmissions (CVTs): the CVT8 and the CVT8 HYBRID. The former is designed for mid-to large-sized vehicles and currently installed on the Nissan "Altima" and the Nissan "Rogue". The latter is designed for hybrid vehicles and now used for the Nissan "Pathfinder Hybrid". (From an article in the Nikkan Jidosha Shimbun on September 11, 2014)

<Thailand>
-In September 2013, the Company held an opening ceremony at its manufacturing subsidiary JATCO (Thailand) Co., Ltd. (JATCO Thailand). JATCO Thailand is the Company's third overseas plant after Mexico and China. The plant will produce 500,000 units annually of CVT7, a continuously variable transmission (CVT) with an auxiliary gearbox. The CVT7 will be installed on the "Micra" (known as March in Japan) and the "Sylphy" which are produced by Nissan Motor (Thailand) Co. Ltd. JATCO Thailand started operations in July 2013 with 740 employees. The number of employees is scheduled to increase to 1,300 by April 2014.

Investments in Japan

-In 2012, the Company is boosting production of continuously variable transmissions (CVTs) at its Kakegawa Plant for supply to Suzuki Motor Corporation. The Company will increase CVT production capacity by 20% from 500,000 to 600,000 CVTs a year in 2013 by adding the workforce, accelerating the line speed and also making further capital investment.