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5. Hitachi Automotive Systems, Ltd. Business Report FY ended Mar. 2017

Hitachi Automotive Systems, Ltd. Business Report FY ended Mar. 2017

-IFRS

-In the fiscal year that ended in March 2017, the Company forecast that sales would reach JPY 1 trillion and the adjusted operating profit margin would be 6%. However, both sales and the adjusted operating profit margin both ended up lower than initially forecast due to the effect of negative currency translation, although the operation ratio improved.

-IFRS
Reconsidered business plan FY2020 (ending March 2021)

Strategies by product
-The Company is working to increase the percentage of high-value-added electronic products in relation to conventional products, which still are the foundation of its business.

-The Company plans to increase the percentage of products used in vehicle electrification and for self-driving vehicles, from 20% to 30%. It will position them to further enhance its sales and revenue structure.

-The Company’s president and CEO Hideaki Seki announced the company’s new goal to boost its share in the automotive safety and information systems market to 10% by 2020. With the introduction of autonomous driving technologies, the automotive safety and information industry is expected to grow to a JPY 3 trillion market by 2020. The company aims to become a one-stop supplier of autonomous driving solutions by enhancing cooperation with other Hitachi group companies to develop sophisticated products that leverage the Group’s technical advantages and are differentiated from those of its competitors. (From an article in the Nikkan Jidosha Shimbun on June 27, 2016)

Strategies by Region
-Focus on increasing sales to OEMs that currently have a high production share of electric and self-driving vehicles, by concentrating on two markets, China and North America

Recent Business Developments
-On February 7, 2017, Hitachi Automotive Systems and Honda Motor Company announced the signing of a Memorandum of Understanding to establish a joint venture company for the development, manufacture and sales of motors for electric vehicles. The new company will be established in Hitachinaka City, Ibaraki Prefecture in July 2017. Initial capital investment will be JPY 5 billion, with Hitachi Automotive Systems contributing 51% and Honda contributing 49%. The signing of the definitive agreement for the joint venture is planned for the end of March 2017. Subsidiary operations of the new Japan-based joint venture are planned for the U.S. and China, each with manufacturing and sales functions.
Honda will continue to use the motors it currently manufactures in Japan, as well as motors from the new company. Hitachi Automotive Systems will continue to maintain the business relationships it has with vehicle manufacturers that receive electric motors from the company. (Honda press release on February 7, 2017)

-On January 2017, the Company announced that it equipped a vehicle with an autonomous driving electronic control unit (ECU) that features 11 advanced driving functions including low-speed adaptive cruise control (traffic jam pilot), and tested it on the company's Tokachi Test Course. The test demonstrated that all functions worked correctly. The feedback obtained from this demonstration will be used to make further improvements aimed at starting sales of the ECU in July 2017. (From an article in the Nikkan Jidosha Shimbun on January 23, 2017)

-On December 2016, Hitachi Automotive Systems announced that it had equipped a vehicle with an autonomous driving ECU (Electronic Control Unit) that has 11 advanced driving functions including low-speed adaptive cruise control (traffic jam pilot). To assist with driving in congested traffic on highways, the Company has developed low-speed traffic jam assist (TJA) that keeps track of the low-speed vehicle ahead, low speed car passing (LSP) assist, and auto lane changing (ALC) applications that function under the control of the ECU. A vehicle equipped with an autonomous driving ECU provided with all these functions was then tested on the company's Tokachi Test Course, which demonstrated that all functions worked correctly. Starting sales of the product is scheduled in July 2017. (From a press release on December 26, 2016)

Prioritize Technology to Respond to Megatrends
-Place a higher priority on developing technology that responds to megatrends, to be achieved through collaborations and alliances among the Hitachi Group.

Recent Customer Orders Received

hot wire slot-in type airflow sensors
-On March 2017, the Company announced that hot wire slot-in type airflow sensors from Hitachi Automotive Systems have been used in the new, fully redesigned Prius PHV. The Hitachi Automotive Systems hot wire slot-in type airflow sensors used in the new Prius PHV are notable for their high levels of precision and high reliability. They have been used in the latest model Prius, launched in December 2015, and are now also being used in the new Prius plug-in hybrid model. (From a press release on March 30, 2017)

Lithium-ion battery module
-On December 2016, The Company announced that its lithium-ion battery module is being used in the new Suzuki Solio and Solio Bandit hybrid specification cars. The module comprises a high voltage lithium-ion battery power pack and inverter. The lithium-ion battery module is manufactured by the Hitachi Group company, Hitachi Vehicle Energy, Ltd., and comprises a battery cell and a voltage detection board for the battery cell, housed in a single case. By using a resin case, the weight of the module has been reduced by 35% compared to the company's previous battery modules. The module is also compact, with height 37% lower than the company's previous modules. (From an article in the Nikkan Jidosha Shimbun on December 26, 2016)

ADAS ECU
-On December 2016, The Company announced that its ADAS (Advanced Driver Assistance System) ECU (Electronic Control Unit) is being used on the new Serena that Nissan Motor Corporation launched in August, 2016. The Nissan Serena had already been equipped with a number of advanced safety technologies, and the new Serena adds to that with ProPILOT, Nissan's driver support technology that can automatically control the accelerator, brakes and steering when driving in both heavy traffic and during long periods of cruising. (From a press release on December 12, 2016)

Mono tube shock absorber
-On December 2016, the Company announced that it provides mono tube shock absorber for Lexus IS which were released in October, 2016 as minor change models. It is being used on all models of IS series. The mono tube shock absorber is a principal component of a suspension system that provides outstanding responsiveness. (From a press release on December 7, 2016)

Motors for electricity generation and propulsion
-On November 2016, the Company announced that its motors for electricity generation and propulsion have been adopted by U.S.-based General Motors Company for use in the new Chevrolet Volt. The two kinds of motors use bar coils through which high current flows that are proportional to the cross-section as the coils inserted in the stator. The company has introduced a coil forming technology that enables high-speed and high-precision coil bending, resulting in an approximately 40% increase in the efficiency of the production process. (From an article in the Nikkan Jidosha Shimbun on November 25, 2016)

-IFRS

-In the fiscal year that ended in March 2017, the Company spent JPY 70.5 billion on capital investments, a 1% increase year-over-year.

R&D Structure

-On January 2017, The Company and Clarion Co., Ltd. (Clarion) announced that they have developed an automatic parking system that is remotely controlled with smartphones from outside of vehicles. The two companies will introduce the new system to automakers, and are aiming for its early practical application. The automatic parking system is a combination of Clarion's "SurroundEye" camera surrounding monitoring system and Hitachi Automotive Systems' vehicle control units, and steering and brake actuator control technologies. (From an article in the Nikkan Jidosha Shimbun on January 18, 2017)

-On December 2016, the Company and Clarion Co., Ltd. announced the joint development of a remote parking system that automatically performs parallel and perpendicular parking as well as garage parking and exit from outside the vehicle through remote control using smartphones. The newly-developed remote parking system is an automatic parking system that combines Clarion's SurroundEye camera monitoring system with Hitachi Automotive Systems' vehicle control units and steering and brake actuator control technology to park a vehicle by remote control using a smartphone. (From a press release on December 22, 2016)

-On October 2016, the Company and Hitachi Solutions, Ltd. announced they have jointly developed a platform for autonomous driving electric control units (ECUs). The platform improves the development efficiency of applications for autonomous driving vehicles. It integrates Hitachi AMS's autonomous driving system development technology and Hitachi Solution's embedded database technology, and has a real-time database optimized for autonomous driving system application development. Application development and operation verification on an ECU can be performed using general-purpose computers via a special Software Development Kit (SDK). Hitachi AMS will begin assessment of the platform from late 2016 in order to supply autonomous driving ECUs based on the new platform and SDKs from July 2017. (From an article in the Nikkan Jidosha Shimbun on October 27, 2016)

-On October 2016, the Company announced that it has developed vehicle localization estimation technology by integrating camera image information and the industry's first lane marking fusion function, which addresses situations where visual contact with the traffic lane is lost, with GPS position information. A vehicle that is being driven autonomously needs to constantly detect its position accurately down to to the lane it is traveling in, and this system meets such requirements. The newly developed lane marking fusion function collects forward and peripheral images obtained from cameras. Each time visual contact with the traffic lane is lost in the course of the image information processing, the function uses the immediately information detected immediately beforehand to perform a stable estimation of the vehicle's position. The Company is aiming to improve within the autonomous driving Electronic Control Unit by matching GPS-based position information with image information obtained from forward and peripheral cameras. (From an article in the Nikkan Jidosha Shimbun on October 12, 2016)

-On September 2016, The Company and Hitachi, Ltd. announced the joint development of technology that automatically verifies safety requirements for automotive control systems. This technique makes it possible to reduce the time required for verification of safety requirements to one-tenth compared to conventional visual verification methods. Automakers and parts suppliers verify safety requirements that are specified in the process of design and development of control systems. The technology developed by the two companies enables automated computer-based verification of these safety requirements to check for oversights. Conventionally, safety requirements are written by designers. This technique encodes safety requirements to eliminate ambiguity. The two companies will contribute to the development of autonomous vehicles by extending the scope of application and dissemination of this technology, which ensures the maintenance of safety and reliability in automotive control systems. (From an article in the Nikkan Jidosha Shimbun on September 30, 2016)

-On July 2016, Hitachi Automotive Systems, Ltd. announced that Mazda Motor Corporation has developed a new technology based on Hitachi's G-Vectoring vehicle motion control technologies. The automaker will introduce it as an advanced safety feature initially in the updated Mazda Axela that goes on sale in Japan. Mazda's new vehicle control technology called G-Vectoring Control (GVC) enables dynamic coordination in both the car's lateral and longitudinal acceleration forces, and ensures smooth and efficient vehicle motion by optimizing the vertical load on the four wheels. GVC is the first step in Mazda's new-generation vehicle motion control technologies initiatives called Skyactiv-Vehicle Dynamics series and as such is expected to stimulate future market growth. (From a press release on July 14, 2016)

-On April 2016, Hitachi, Ltd., Hitachi Automotive Systems, Ltd., and Clarion Co., Ltd. announced that they have developed the OTA (Over The Air) Software Update Solution for wirelessly updating ECU (Electronic Control Unit) software. The solution is expected to form a core technology for supporting next-generation vehicles such as autonomous driving vehicles and connected cars. It is a one-stop solution that uses the Hitachi Group's technology to provide high-reliability transmission of software updates from data centers (OTA Center) to vehicles, and reduces the time of such updates to one-tenth of that previously required. The new solution is scheduled to be available in 2018. (From a press release on April 28, 2016)

-On April 2016, the Company announced that it has developed a high-output 48-volt lithium-ion battery pack for mild hybrid electric vehicles. The company plans to start delivering samples of the new product to automakers this summer. Mass production is expected to begin by March 2019. The new battery pack is a highly integrated package that includes not only a battery management system board and battery cells but also a relay and a fuse. Prismatic lithium-ion cells that offer approximately 1.5 times output density of the company's existing battery cells are also integrated in this highly reliable battery pack. When assisting acceleration of a motor with a 48-volt system, it delivers a fully sufficient torque performance with a maximum output of 10 kW or more and a maximum input of 13 KW or more (for 10 seconds in each case). The new battery pack was designed and is sold by Hitachi Automotive Systems, while being manufactured by Hitachi Vehicle Energy, Ltd. a lithium-ion battery manufacturer headquartered in Ibaraki Prefecture. (From an article in the Nikkan Jidosha Shimbun on April 22, 2016)