Merging four automotive parts manufacturers to start up Hitachi Astemo, Ltd.: Toward becoming a strong global supplier

"We have three big ambitions. Hitachi Astemo, Ltd. will contribute to the planet, expand global leadership, and create value."

At a web conference on business strategy held on January 18, 2021, Brice Koch (president and CEO of Hitachi Astemo) started his talk with these emphatic terms.

On January 1, 2021, the four automotive parts manufacturers of Hitachi Automotive Systems, Keihin Corporation, Showa Corporation, and Nissin Kogyo Co., Ltd. merged to form Hitachi Astemo, Ltd. This new company will serve as a global supplier of mobility solutions for automobile and motorcycle industries worldwide. Comprising 123 consolidated companies in 27 countries throughout the world, it has a working force reaching approximately 90,000 employees.

Recent years have seen an increasing demand in the automobile and motorcycle industries for reduced environmental load, reductions in traffic accidents, and improvements to safety and comfort. Hitachi Astemo CEO Koch emphasized that, by merging the four companies and supplementing and enhancing the strengths of each, "we will be able to make societal, environmental, and economic contributions." Regarding the impact of COVID-19, he considers it an opportunity to promote reform. He explained:

"Governments and stakeholders are focusing on reducing CO2 emissions. We must aim for zero emissions. Also, CASE technologies (Connected, Autonomous, Service/shared, Electrification) are in demand in countries all over the world. The world is impacted by COVID-19. This, however, is also an opportunity to enhance efficiencies and create various innovations."

Hitachi Astemo has set the goals of achieving carbon neutrality at its factories by 2030 and of a 50% reduction in CO2 emissions generated by the actual use of products.

Koch also pointed out that both automobile-related technological development and synergies with Hitachi Ltd.'s Lumada will be essential to the company's readiness for the CASE era. Lumada is Hitachi’s solution that leverages customer data through digital technology to develop new business. Koch explained the utilization of Lumada as follows:

"The high-precision map-positioning unit adopted last year for Nissan's new Skyline is a concrete example of a case in which Lumada was used. You get online, just-in-time how the traffic situation is, so that your vehicle can find the best routes and avoid traffic jams. The map positioning is automatically updated over the air. Lumada is responsible for the creation of extremely smart products and services."

The four companies for which management was integrated are base companies with proven performance in the industry. As Koch says, "Based on the very strong founding members, we can bring together their various know-how so as to create scales and reinforce market leadership. We can become the best partner for automobile and motorcycle manufacturers throughout the world."

Hitachi Automotive Systems has long been a global provider of powertrain systems (engines, drive shafts, and other drive system parts), chassis systems, and advanced driving assistance systems. Hitachi Astemo combines Keihin drivetrains, Showa suspension systems and steering, and Nissin Kogyo brake systems with the aim of growing into a more efficient and stronger global supplier. Koch explains as follows:

"We have 141 sites worldwide, and with that we can be very close to our customers. We can serve them locally and really develop our partnerships. We see in Asia a very strong potential in motorcycles as a market that will grow significantly once again. In China, we plan to expand electric vehicles and OEMs."

Regarding the xEV (electrified vehicle) sector, including the motors and inverters installed in electric vehicles, Koch says, "We have already invested 100 billion yen, and we are planning to invest a total of 300 billion yen over the next five years. Autonomous driving and advanced driving assistance systems will enable safe driving. We would like to prioritize investment in fields with this kind of potential for growth."

As it sets about achieving the three ambitions stated above by Koch, Hitachi Astemo has established sales goals of 1.6 trillion yen (approximately 15.3 Billion USD) in 2021 and approximately 2 trillion yen in 2025 with goals for EBITDA, an index that measures company profitability, of more than 10% for 2021 and 15% for 2025.