There's a new kid in town in the hotly contested market for automotive brake systems, and the stakes are high as this new player from Japan potentially could leapfrog to the world's No.2 position within a few years.
Advics Co. Ltd. combines the brake operations of three of Japan's largest automotive suppliers: Denso Corp.,Seiki Co. Ltd. and Sumitomo Electric Industries Co. Ltd. The company was formed in Japan last July, but Advics North America, based in Plymouth, MI, was formed in January and will commence operations in April. The company used last month's Society of Automotive Engineers World Congress in Detroit as a coming-out of sorts.
This new player is formidable because Denso and Aisin Seiki are the top brake suppliers toMotor Corp., and Sumitomo has a diverse customer base for brakes including Motor Co., Motor Co. Ltd., Isuzu Motors Ltd. and Mazda Motor Corp. Together, they report global sales of about $1.6 billion, including $240 million in North America.
Advics plans to boost sales to more than $2 billion by 2005, which company officials say would position it to potentially overtake TRW Automotive and Continental Teves Inc. as the No. 2 producer, behind only RobertGmbH.
In Japan,Seiki is the largest brake producer. The combined company will dominate even more of that region. Worldwide, Advics employs 800 people, including 60 currently in North America — a number soon to grow. Advics headquarters is in Kariya, Aichi, Japan.
Denso, Aisin Seiki and Sumitomo overlap in some brake segments. All three, for instance, have some antilock brake system development. Denso has the most ABS expertise; Aisin Seiki has the most experience with foundation brakes. Aisin Seiki also supplies rear-wheel steering in Japan, making it a competitor of Delphi Automotive Systems' Quadrasteer.
Each of the three companies holds an equity stake. Aisin Seiki has 40%, Denso and Sumitomo each have 20% andholds the remaining 20%. Both Denso and Aisin Seiki are part of the Toyota Group, which owns 22% of each company. Aisin Seiki is Toyota's main supplier of stability control systems.
Beyond ABS, Advics will produce and market brake systems equipped with traction control and anti-skid stability management systems.
In North America, the new company has four plants, including two from Sumitomo and one from Aisin Seiki. The fourth plant, now under construction by Aisin Seiki in Terre Haute, IN, for some $19 million, will produce hydraulic brake boosters and other components. Construction will be completed by June, with launch scheduled for January. The plant should employ 200 workers by 2005. Advics' other brake manufacturing plants are in Asia/Pacific.
Combining the three companies creates greater potential to integrate stopping and steering into a “total chassis control” approach, which the other brake producers have discussed as well.
Gordon Daig, vice president of sales and marketing for Advics North America, says he is not discouraged by recent reports thatCorp. is considering removing ABS as standard equipment on a number of vehicles (see Auto Talk, p.17). “GM is most interested in the latest technology in new brakes,” Daig says. “There are two technology leaders in brakes — and us.”
Even if GM eliminates ABS as standard equipment on some vehicle lines, Daig says his company forecasts take rates increasing in the U.S. for ABS.
Meanwhile, Aisin Group announced it would expand its North Carolina plant to assemble 200,000 automatic transmissions a year, beginning in July 2004. The first customer is Toyota.
In Marion City, IL, the company formed Aisin Mfg. Illinois LLC last October. The new $5 million plant will make sunroofs and power sliding doors beginning in July for an undisclosed customer. The plant is expected to have 250 employees by 2005.
Advics brake customers — North America
GM — Isuzu Rodeo
— Lincoln LS, Jaguar, Taurus
— PT Cruiser
Toyota — Camry, Corolla
Advics brake customers — Japan