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5. TACHI-S Co., Ltd. Business Report FY ended Mar. 2020

TACHI-S Co., Ltd. Business Report FY ended Mar. 2020

Factors by Region
<Japan>
-Sales: JPY 127.6 billion (5.1% decrease year-on-year) (Y/Y)
-Operating loss of JPY 515 million due to lower sales, changes to product lineup, delay in improving profit structure, etc. (Operating income in the previous FY was JPY 968 million.)

<North America>
-Sales: JPY 43.6 billion (13.4% decrease y/y)
-Operating loss was JPY 1.0 billion due to changes to product lineup, higher R&D expenses, etc. (Operating loss in the previous FY was JPY 370 million.)

<Central/South America>
-Sales JPY 57.6 billion (3.4% increase y/y)
-Operating loss was JPY 2.2 billion due to changes to product lineup, expenses to launch production for redesigned vehicle models, etc. (Operating loss in the previous FY was 1.4 billion.)

<Europe>
-Sales: JPY 1.7 billion (46.4% decrease y/y)
-Operating profit: JPY 65 million (104.4% increase y/y) 

<China>
-Sales: JPY 48.3 billion (8.1% decrease y/y)
 The added sales at new subsidiaries was not enough to offset the decrease in sales at existing subsidiaries in China.
-In addition to lower sales, changes to product lineup impacted operating profit, which was 3.9 billion. (36.0% decrease y/y).

<Southeast Asia>
-Sales: JPY 3.5 billion (19.0% decrease y/y)
-Operating loss: JPY 456 million (JPY 169 million operating profit in previous FY).

Business Operations Overseas (China)

-Tachi-S Co., Ltd. (Tachi-S) announced that it will establish a new Chinese subsidiary for the production and sale of automotive seat parts, and relocate its two existing automotive parts production subsidiaries to the new company. The establishment of the new subsidiary will be completed in December. Tachi-S aims to improve competitiveness through synergy effects and strengthen production capacity, in order to win new orders and produce next-generation automotive seat parts. (From an article in the Nikkan Jidosha Shimbun on July 30, 2019)

-Tachi-S Co., Ltd. (Tachi-S) announced that its Chinese subsidiary, Tachi-S China Co., Ltd., has acquired a 51% stake in Hunan Changfeng Namba Automotive Components Co., Ltd., an automotive seat maker and a fully-owned subsidiary of Hunan Changfeng Automobile Sofa Co., Ltd, to make the company its subsidiary. The new subsidiary has at the same time changed its name to Hunan Tachi-S Automotive Seating Co., Ltd. Tachi-S has not disclosed the acquisition value. Through the acquisition of the new subsidiary, whose main customer is GAC Mitsubishi Motors Co., Ltd., a joint venture between Mitsubishi Motors Corporation, Mitsubishi Corporation, and Guangzhou Automotive Group, Tachi-S aims to strengthen its Mitsubishi business in the Chinese market. The new subsidiary, which was originally established in July 2012, has an annual production capacity of 300,000 automotive seats. It has sales of about CNY 500 million (JPY 8 billion) in the fiscal year that ended in March 2019. Hunan Changfeng Automobile SOFA will continue to hold a 49% share in the new company. (From an article in the Nikkan Jidosha Shimbun on April 22, 2019)

R&D Activities

Development of seats and proprietary functional parts:
-Development of seat systems that include automotive seats, reclining apparatus, slide rails, lifters, power-seat devices, seat-adjustors, long slide-rails and other extra functions. The Company is proposing and delivering them to customers. 

Development of technology to improve automotive safety:
-Development of seat systems such as seats with airbags, seats with smart-airbags that include occupant-detection function, seats that mitigate neck injuries. The Company is delivering them to customers, and in addition is conducting R&D on safety seats that respond to fore, aft, and lateral collisions.

Development of environmentally friendly products
-The Company is conducting R&D activities to develop products that eliminate all environmental impacts and substances, such as materials that improve fuel efficiency, as well as lightweight seats with new architectural designs. The Company is proposing and delivering them to customers.

Development of body parts for barrier-free vehicles
-The Company is developing seats that offer passengers assistance when they enter/alight from vehicles, making product proposals and delivering them to customers.

Developing low-cost products
-Through standardization and commoditization of parts, the Company is working on developing, proposing, and delivering next-generation, low cost seats to customers.

Developing Production Technology
-Developing technology that improves adhesive-molded seats; technology that improves foam-molded headrests and armrests; technology that simplifies and automates assembling of seats, and production based on CAD/CAM. In addition, developing production lines that can handle small-lot production of a large variety of products in order to respond to the increase in new-vehicle models and growing product lineup.

Seat R&D
-Under the aim of developing more comfortable seats, the Company is evaluating “seating comfort” and researching the optimum seat structure and ways to improve comfort. In addition, reducing development time and costs by creating virtual-based testing technology.

Seat Designing
-The Company is conducting R&D activities on all sorts of aspects of seat design such as future seat concepts, new-product designs, corporate designs, etc., proposing and delivering new designs to customers.

Standardized Seat Frames
-The Company is conducting in-house development of low-cost, lightweight, standardized seat frames that can be widely used in the industry, proposing and delivering them to customers.

R&D Facilities

Product Development

Seats for mobility-as-a-service (MaaS) vehicles
-Tachi-S Co., Ltd. (Tachi-S) will develop seats for MaaS (Mobility as a Service) vehicles. The company has won an order for the development of seats for electric vehicles (EVs) that will be used for next-generation transportation services from a new customer in the U.S. Tachi-S has a track record of supplying seats and frames for EVs to Japanese and Chinese automakers, such as seats for Nissan Motor Co., Ltd.’s Leaf EV. This will be the first time for the company to develop seats for mobility service vehicles. Mass production will start from around 2021 to 2022. When the thickness of battery cases mounted on lower vehicle bodies increases, it becomes difficult to get on and off the vehicle. Tachi-S has established a technology that reduces frame thickness in order to lower seat hip points. (From an article in the Nikkan Jidosha Shimbun on July 26, 2019)

-Contents of the investment by region for FY ended Mar. 2020 are as follows: