ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Japan-Update

Denso expanding auto component capacity in India by 50%

Parts maker trying to meet demand from market leader Maruti Suzuki

Denso's auto component plant in the Indian state of Haryana

NAGOYA -- Denso, a Japanese auto component maker, is set to expand production in India, where it plans to spend about 15 billion yen ($132 million) between now and 2025.

The money will go toward adding to an existing facility in the state of Haryana, west of New Delhi, to increase capacity for making engines and other parts by about 50%.

The Toyota Motor affiliate intends to meet growing demand from Maruti Suzuki India, which has been experiencing significant sales growth.

Maruti Suzuki, India's largest automaker, is a unit of Japan's Suzuki Motor.

Other Toyota-affiliated component makers, including Jtekt and Toyoda Gosei, are also increasing production in India to meet demand in the rapidly expanding market.

The Haryana plant produces injectors, which are used alongside engines, and electronic control systems for automakers, primarily Maruti Suzuki.

Denso also plans to build a new facility next to the existing one at the plant. Construction is to start this coming spring and be completed in the spring of 2019. The plant's total floor space will increase from 20,000 sq. meters to 32,000 sq. meters. The additional unit will be fitted with new equipment in stages before starting full production in 2025.

India's passenger vehicle sales have been growing at 7% to 8% annually for the past five years. The figure exceeded 3 million in 2016. In the year through this past March, Suzuki sold 1,445,000 units in India, up by 140,000, or 11%, from a year before. Takahiko Hashimoto, a Maruti Suzuki executive in charge of sales, thinks "similar growth will continue for some time."

Suzuki Motor has also set up a wholly owned subsidiary in India, Suzuki Motor Gujarat, and a new plant in the western state of Gujarat. The plant, which opened in February, is capable of producing 250,000 vehicles a year. Suzuki plans to gradually triple the plant's capacity.

In addition to finding ways to accommodate Suzuki's increased production in India, component makers also need to respond to tightening regulations in the country. The Indian government in 2020 plans to introduce environmental regulations comparable to those in Europe. In 2022, it will introduce Asia's most stringent fuel efficiency regulations. Denso's planned expansion in India is aimed at supplying products that meet the strict emissions standards, said Keiichi Yamauchi, chairman of Denso International India.

Toyoda Gosei is also building a plant in Gujarat, where it expects to spend about 1.2 billion yen. The plant, Toyoda Gosei's first in the state, is to start producing air bags and other products in the latter half of fiscal 2018, which begins in April.

India tightened its safety regulations in October, effectively obliging automakers to fit their vehicles with air bags. Demand for air bags has been on the rise.

In February, Jtekt acquired shares in Sona Koyo Steering Systems, a joint venture with a local company, making it a subsidiary. Jtekt is now considering whether to build a plant in Gujarat.

The Indian government plans to mandate that all vehicles sold in the country in 2030 and beyond run on electric motors. Toyota and Suzuki Motor have signed a memorandum to cooperate in introducing electric vehicles to the Indian market. For the time being, however, the priority will be adapting to the tighter environmental regulations on gasoline-engine vehicles.

Suzuki's production expansion "is hard just to keep pace with," said an executive of a Toyota-affiliated parts maker.

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media