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Japanese auto parts industry undergoing consolidation

29 Dec 2019
A model shows off a skeleton model of a vehicle by Japan’s auto parts maker Toyota Gosei on display at the Tokyo Motor Show in Tokyo on October 28, 2015. (File photo/AFP)
A model shows off a skeleton model of a vehicle by Japan’s auto parts maker Toyota Gosei on display at the Tokyo Motor Show in Tokyo on October 28, 2015. (File photo/AFP)
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Updated 29 Dec 2019
29 Dec 2019

Tokyo

The Japanese auto parts industry is undergoing a wave of consolidation as makers are pursuing economies of scale to survive competition.

Auto parts suppliers are being forced to spend heavily on new technologies such as electrification and autonomous driving, according to industry executives.

Global giants such as Robert Bosch GmbH of Germany pour a massive amount of money into research and development. Smaller rivals cannot follow suit.

The combined operating profit of 60 publicly traded Japanese auto parts suppliers that use domestic accounting standards is expected to drop 21.7 percent to 562.2 billion yen in the year ending March 2020 from the previous year, according to a tally by the Japan Auto Parts Industries Association.

For 13 makers using international standards, combined profit is likely to fall 15.5 percent to 629.0 billion yen, according to the tally.

“Investment in growth fields including new technologies is weighing on profitability,” an association official said.

The situation will be worse if electric vehicles, which require fewer parts compared with vehicles with engines, become popular, industry executives said.

In March, Clarion Co. was acquired by a major French auto parts maker. Marelli Corp., formerly known as Calsonic Kansei Corp., completed the acquisition of a major Italian parts supplier in May.

In October, Aishin Seiki Co. announced a merger with a unit that makes transmissions, while motor maker Nidec Corp. acquired an auto parts unit of Omron Corp.

A merger plan involving a Hitachi Ltd. unit and three affiliates of Honda Motor Co., announced in October, drew particular attention.

Bringing together the four companies, which have prowess in fields that are different from one another, will increase the ability to develop highly competitive products.

“It’s like a small Bosch was created,” Tetsuo Agata, president of Jtekt Corp., a Toyota Motor Corp. group supplier, said of the four-way merger.

Seiji Kuraishi, Honda’s chief operating officer, left open the possibility of additional mergers involving affiliates. “I would say yes if asked about the possibility.”

“There would be more mergers and acquisitions” in the industry, said Yasushi Matsui, senior executive officer at leading auto parts maker Denso Corp.

Jiji Press

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