Suppliers of auto parts in Japan are ramping up their investment spending in research and development to be able to secure a feasible future for their companies in the rapidly changing automotive industry. The combined research and development spending of the top 16 Japanese makers of car parts is forecasted to reach 1 trillion yen (about $93 billion) by 2022.
Makers of auto parts are competing in the creation of new technologies and services that will ensure their survival in the new era that is emerging in the auto industry. A perfect example is CASE that encompasses 4 transformative trends of connectivity, autonomy, sharing and electrification. According to industry experts and analysts, CASE is the biggest revolution in car manufacturing ever since the Ford Model T.
With CASE many car parts will become obsolete particularly engine components. This will result to a life and death challenge for many parts suppliers. According to Boston Consulting Group, electric cars will constitute at least 30% of global passenger car sales by 2035. In 2017, electric vehicles account for only 1%. The group also expects that by 2035, CASE-related products and services will account for at least 40% of the overall global auto industry profits.
According to Kiyotaka Ise, president of Aisin Seiki, one of the major Japanese car parts manufacturers, the CASE era poses a very serious problem to companies. If a big supplier like Aisin is seriously concerned about its future, it follows that every business must be worried about their future prospects.
According to Mizuho Securities, companies like Denso, Aisin and Toyota Industries are working hard in the development of CASE-related products for autonomous driving and electric drivetrain for electric vehicles. However, massive investments in R&D will not guarantee that these companies will remain in business 10 years from now because Japanese spending is far less than the investments being made elsewhere in the world.
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