Photo/Illutration Brice Koch, president and CEO of Hitachi Astemo Ltd., speaks in an online news conference streamed live on Jan. 18. (Captured from YouTube)

Newly minted automotive parts supply behemoth Hitachi Astemo Ltd., expecting a windfall from the development of electric and self-driving vehicles and other technologies, is expanding in scale to capitalize on the opportunity.

Hitachi Astemo President and CEO Brice Koch said he intends to make the company a global leader in CASE (connected, autonomous, shared and electric) technologies at a Jan. 18 online news conference to unveil the company's business strategy.

Hitachi Astemo became Japan's third-largest auto parts maker this year through a merger of four auto parts suppliers affiliated with Hitachi Ltd. and Honda Motor Co. Its capacity is topped only by Denso Corp. and Aisin Seiki Co., which are affiliated with Toyota Motor Corp.

The company anticipates a 30 percent rise in sales from the business year ending in March 2020 to roughly 2 trillion yen ($19 billion) in the business year ending in March 2026 due to growth in the market for next-generation technologies such as electric and self-driving vehicles.

Hitachi and Honda struck a basic deal to merge the four companies in October 2019.

In January this year, Hitachi Automotive Systems Ltd., which was a wholly owned Hitachi subsidiary, absorbed and merged with Keihin Corp., Showa Corp. and Nissin Kogyo Co., which had been turned into wholly owned subsidiaries by Honda.

Hitachi has a 66.6 percent stake in Hitachi Astemo. Honda owns the remaining 33.4 percent.

Numerous large suppliers outside Japan have become giant companies after a series of mergers and acquisitions.

The domestic auto parts manufacturers decided to merge because it has been pointed out that they would be less competitive when it comes to development and sales channels as long as they remained small in scale.

Hitachi and Honda decided to go for their auto parts maker merger after it was pointed out that they could better compete with rivals in development and sales channels by expanding to a larger scale.

Hitachi Astemo will mainly concentrate its resources into developing driving mechanisms for electric vehicles, suspensions and other tire-related parts and sensors for driving assistance functions to incorporate demand in China, the United States and elsewhere around the globe.

Following the merger, the company now boasts the top global market share in shock-absorbing parts. While retaining the lead, it also intends to claim the top position as a manufacturer of motors and inverters for electric vehicles in the business year ending in 2026.

The three Honda subsidiaries had depended on Honda for their sales, accounting for 70 to 90 percent each. But Hitachi Astemo's sales to Honda account for less than 40 percent, while the new company now deals with Nissan Motor Co., Subaru Corp. and U.S. automaker Ford Motor Co.

The global auto parts market hit rock bottom in 2020 when its value was estimated at 27 trillion yen, according to Fuji Chimera Research Institute Inc.

The research firm predicts that the market size will rebound to 37 trillion yen in 2025 and reach 40 trillion yen in 2030.

Hitachi, now the parent company of Hitachi Astemo, is known for selling railway vehicles, power plants and other products, but has also been focusing on supplying IT services.

It intends to apply the expertise of the three Honda subsidiaries it absorbed to its automobile industry business.

(This article was written by Taiki Koide and Chihaya Inagaki.)

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