Aisin Ambitions on Display Along With Products at NAIAS

DETROIT – Trying to get a handle on the Aisin Group is not easy.

Ranked as the world’s fifth-largest global supplier, the group comprises 180 consolidated companies and makes more than 10,000 products – everything from brakes and transmissions to navigation systems and power-door assemblies.

In fiscal 2016, the group, headed by Aisin Seiki, a core member of the Toyota keiretsu, is projecting sales and earnings of ¥3.2 trillion ($27.3 billion) and ¥175.0 billion ($1.5 billion), both new highs, and is on track to reach its fiscal 2020 sales target of ¥3.3 trillion ($28.2 billion) next year, three years ahead of schedule.

Even so, Aisin Group earnings are lagging. When it closes its books in March, operating margins are projected at good-but-not-great 5.5% and have some ways to go to reach the supplier’s rumored target of 10%.

Excluding Aisin AW, the world’s largest manufacturer of automatic transmissions and the group’s most profitable company with margins exceeding 7.0%, Aisin operates overall with a margin below 4.5%.

“The basic idea is to produce components near our car-maker customers,” former President Fumio Fujimori said when unveiling the supplier’s Vision 2020 business plan in April 2012. He predicted most growth would occur outside of Japan, setting an overseas sales target of 50%, up from 30%. Much of that gain was expected to come from China, India, Indonesia and Brazil.

Aisin AW’s 2-motor hybrid transmission for new Prius.

The company appears on track to achieving that goal. Midway through the plan, overseas sales account for 44% of Aisin’s total revenue.

Now, Fujimori’s successor, Yasuhori Ihara, is trying to move the group beyond the financial targets into preventive safety and environmental technologies.

“We want to boost fuel efficiency of our drivetrain and related products by 30% over the next 10 years,” he says at the North American International Auto Show here in January, where Aisin’s wares were showcased alongside all the new models on the exhibition’s main floor.

Ihara, who joined Aisin Seiki last April from Toyota and was named president in June, brings a unique skillset to the supplier, having served as executive vice president and head of the automaker’s purchasing group. Clearly, he’s a big-picture guy.

Among the technologies on display at the auto show were four transmissions, including two automatics installed in U.S.-built vehicles, specifically the 6-speed units adopted by the Dodge Ram 3500 and Nissan Titan XD trucks.

Both transmissions are produced at Aisin Drivetrain in Crothersville, IN, one of two Aisin transmission plants in the U.S. The other: AW North Carolina in Durham, NC, produces 6-speed automatics for the Toyota Tacoma pickup.

Aisin AW’s latest transmission, a 10-speed automatic, was on display at the Lexus exhibit in the new Lexus LC 500, a luxury coupe due to hit the market next year.

From Automated Parking to Driver Monitoring

John Clark, executive vice president-marketing and sales at Aisin World of America, outlines five key product-development areas for the company moving forward: heat management, powertrain motorization, transmission efficiency, aerodynamics and weight/mass reduction.

“By mastering these five technologies in hybrid and traditional gas-fuel engines, as well as in (electric vehicles) and fuel cells, we will improve fuel efficiency and develop technologies for enhanced vehicle energy management,” Clark says.

In the safety field, Aisin displayed an intelligent parking-assist system and driver monitor. Intelligent parking and emergency-braking assist, developed in conjunction with Toyota and Denso, another Toyota group supplier, automatically backs a vehicle into a parking space. It also can parallel park the vehicle and automatically apply the brakes to avoid collisions.

The driver-monitoring system detects the driver’s face orientation, eyelid position and blinking patterns. First displayed in Detroit at the ITS World Congress in September 2014 and introduced in Japan last year, the system aims to help avoid dangerous situations by alerting the driver via audio warnings when it detects signs of drowsiness.

Meanwhile, Ihara confirms reports Aisin AW expects to produce 10 million automatic transmissions by fiscal 2020 and 12 million units by fiscal 2025, up from 7.4 million projected this fiscal year ending March 31.

The supplier opened two additional Chinese plants in 2014 in Suzhou and Tianjin, boosting its capacity in the market to 760,000 units from a total of three facilities.

In 2017, Aisin is scheduled to open a 120,000-unit plant in Chonburi, Thailand, while in Japan it invested ¥10 billion ($85 million) to expand its Okazaki-East plant last year.

Aisin AW President Mutsumi Kawamoto tells WardsAuto here no decision has been made on where the new capacity for another 3 million transmissions will come from to meet the 2020 targets, but he says it likely will be split roughly half in Japan and half overseas.

Kawamoto is aware of the exchange rate risk of adding capacity in Japan. But with the yen trading at ¥118:$1 and ¥128:€1, compared with ¥79.8:$1 and €1=¥102.6:€1 in 2012, overseas customers such as Volkswagen and Toyota’s transplant operations want to purchase transmissions in yen, meaning from Japan.

Kawamoto dismisses the idea of adding capacity in Europe. There simply is not enough volume for the transmissions currently exported from Japan, a large number of which are 8-speed gearboxes that go to BMW and Volvo Car for such models as the BMW 2-Series Active Tourer and X1 and Volvo S60, S80 and V60. IHS Automotive estimates the supplier will produce 850,000 8-speed transmissions in the current fiscal year.

Seeking Leadership in Safety Tech

Its manual transmission operation is growing as well. Aisin AI will pick up new business from Toyota this year, which will shift production from its Kinuura, Japan, plant to the supplier. Overall, Aisin AI is forecasting fiscal 2015 output of 1.6 million units.

Another growth sector is hybrid drive systems, which Kawamoto anticipates increasing from 700,000-800,000 units annually to 900,000 in 2020. Aisin AW currently supplies hybrid transmissions to upscale Toyota cars like the Crown and GS450h as well as the new Prius.

By 2020, Kawamoto expects hybrids, both conventional 1- and 2-motor types, as well as plug-ins, to account for 20% of vehicle sales in major markets such as the U.S.

In North America, Clark is particularly bullish about the future.

“We see North America being a strong foundational point from a market standpoint. We want to insert a more global-centric, as opposed to Japan-only, approach to developing components for Aisin,” he says.

With a major technical center and proving ground respectively in Northville and Fowlerville, MI, Aisin World in fact is becoming a global development center for its OEM customers, though Clark acknowledges “Aisin’s operations in Japan are still the benchmark for the group.”

Aisin World manages the supply of some 3,500 original equipment parts. In fiscal 2014, it generated revenues of $2.4 billion. By fiscal 2020, it is projecting 25% growth in sales to $3.0 billion.

Clark, addressing what appears to be a group-wide restructuring taking place despite record-level earnings, says Aisin “needs to move proactively into true globalization, and not just country markets but different sectors like autonomous driving. So much is changing right now with respect to systemization and integration.

“Having a chassis division along with brakes, engines, drivetrains and body electronics sets us up in a way that we can take a leadership role in safety technology, while paying close attention to fuel economy requirements – and do so on behalf of all of our customers.”

Unstated, but clearly a corporate goal is to reduce its dependence on Toyota from 64% of its sales at present to 50% in the future.