Behind the Scenes / Big changes coming for Japan auto industry

The Yomiuri Shimbun

SoftBank Group Chairman and CEO Masayoshi Son, left, and Toyota Motor President Akio Toyoda announce a new business alliance, in Chiyoda Ward, Tokyo, on Oct. 4.

By Koichi Kuranuki / Yomiuri Shimbun Senior WriterThe automobile industry is entering a once-in-a-century phase of monumental change. In addition to alliances between manufacturers, the Economy, Trade and Industry Ministry is partnering with Germany in an effort to establish an international standard for future automobiles. How is Japan’s world-leading automobile industry adapting to the shift?

The acronym CASE is being used to describe the next generation of automobiles — which will be Connected (to the internet), Autonomous, Shared and Electric.

Vehicles will exchange data on road conditions among other things via the internet. Instead of a human driver, vehicles will operate autonomously with the aid of cameras and sensors. A move toward sharing vehicles, rather than individuals owning them, will also force automobile manufacturers to change their business models.

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According to SC-ABeam Automotive Consulting, the percentage of electric cars in use around the world is expected to be about 4 percent in 2020, rise to about 13 percent by 2030 and exceed 50 percent in 2050.

There are several problems with the existing crop of electric vehicles, which are considered to be one of the next-generation automobiles, including shorter traveling ranges compared to those of gasoline-powered cars due to constraints on battery performances, and long charging times.

“We will begin to see some major changes around 2030,” predicts SC-ABeam Automotive Consulting President Shinya Omori.

To address issues with electric vehicles, companies such as Toyota Motor Corp. are rushing to develop high-performance batteries. It is believed that higher battery performances will present an opportunity for the market share of electric vehicles to rise.

The Japanese automobile industry will need to respond to such market shifts.

In October, Toyota and SoftBank Group Corp. announced a joint venture for next-generation mobility services. Honda Motor Co. has also partnered with General Motors Co. to develop self-driving vehicles. Across industry and national boundaries, a succession of alliances is being formed.

Standing up to China

In concert with efforts in the private sector, the Economy, Trade and Industry Ministry has been exploring measures to ensure the survival of the domestic automotive industry as a key pillar of the Japanese economy.

A public-private research group established by the ministry and the domestic automobile industry has continued partnership negotiations with German international standards organization “ProSTEP,” and they are expected to reach a basic agreement within the year.

The goal of the partnership is to create a standardized model for the design and development of self-driving cars and other next-generation automobiles.

If the goal is realized, Japanese and German automobile and parts manufacturers would share data on the performance and specification of parts for self-driving vehicles, as well as basic design and development methods.

With cooperation between Japan and Germany in the foreground, China’s expanding automobile manufacturing industry is emerging in the rear. China aims to become a major player in the manufacturing of automobiles, including electric vehicles.

By unifying and locking down design and development methods, “Japan and Germany, which have led the field of conventional engine-powered vehicles, hope to become leaders in the development of next-generation automobiles,” said a senior ministry official.

Intensifying competition

The unification of design and development methods is expected to lead to intensified international competition among parts manufacturers.

Conventional gasoline-powered automobiles can have about 30,000 parts, while electric vehicles have far fewer, at around 10,000, making survival in the parts industry a difficult prospect.

Intra-group business deals among affiliated parts manufacturers in the Japanese automobile industry have been crucial for major domestic automobile manufacturers.

So-called “corporate castle towns” have supported local economies, but they will need to change.

Parts manufacturers in Hiroshima Prefecture, home to Mazda Motor Corp., are attempting to make significant changes to their traditional product development methods in anticipation of the advent of next-gen automobiles.

The Automotive Technology Innovation Center of the Hiroshima Industrial Promotion Organization, a public-interest incorporated foundation playing a central role in the endeavor, is conducting analyses on parts related to vibration and noise dampening with devices more often seen in such fields as medicine.

The goal is to shore up the technical development capability of local automobile-related companies.

“Next-generation automobiles will require further reductions in weight, vibration and noise,” said Tsuyoshi Sugihara, a senior official of the center. “We hope to pool our technologies and propose new products in cooperation with local companies.”

Similar efforts are underway in Hamamatsu, Shizuoka Prefecture, home to Suzuki Motor Corp.

Eiji Mochizuki, director of the next-generation automobile center at the Hamamatsu Agency for Innovation, a public-interest incorporated foundation, is a former Suzuki employee.

The foundation conducts surveys involving about 260 local companies regarding how to respond to the electrification of automobiles, supporting the development of new technologies. It also disassembles electric vehicles from Nissan Motor Co. to study the performance of key parts and shares the information.

Mochizuki, who participated in a study tour in China in May, said that he feels new manufacturers, some of which have large-scale testing facilities, present a threat.

“Japan would not be able to compete” with parts manufacturers emerging in the gigantic Chinese market, he said, reflecting the sense of urgency.

Japan’s automobile industry employs 5 million people domestically — 10 percent of the Japanese workforce — and exports products worth about ¥50 trillion. To survive this dramatic shift, further efforts between the public and private sectors are needed.

(From The Yomiuri Shimbun, Oct. 27, 2018)Speech

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