Japanese automotive suppliers are being forced to depend on their ingenuity to survive, reported the Nikkei business newspaper.
This includes thinking outside the box, like U-Shin which has acquired the much bigger car lock operations of Valeo.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
U-shin chairman and president Kohji Tanabe predicted the standardisation of vehicle parts would prompt suppliers to do more business with clients beyond their affiliates, which would lead to an industrial shake-up.
He believes that only three suppliers will survive for each component worldwide. The acquisition by U-shin, which will be finalised at the end of this month, will make the company the world’s top maker of car lock systems.
Japanese carmakers have been pushing for localisation while increasingly standardising parts. Toyota is relocating Corolla production overseas, and Honda will soon produce a new Fit/Jazz subcompact exclusively for the US in Mexico.
Suppliers told the Nikkei that it would become all the more important for parts makers to supply goods to production facilities spread around the globe quickly and cheaply. This will make things tougher for for smaller firms.
In 2011, Kayaba Industry (KYB), set up a joint venture with South Korean rival Mando in Brazil to produce automotive shock absorbers. Executive Kazuaki Shoji said, however: “There are limits to what we can do alone to expand our operations in emerging markets.”
The partnership enables the Japanese firm to maintain production volumes and halve its new investment requirement.
Denso is working to strengthen its R&D capabilities in the US, Europe, China, Thailand, India and Brazil to catch up with global giant Bosch. The Japanese company plans to double the number of engineers it employs to 5,000 by 2015 to help develop products that meet the consumer needs unique to those markets.
