IHI and China First Automobile Group Corporation establish turbocharger joint venture
Ishikawajima-Harima Heavy Industries Co., Ltd. (IHI) and Fawer Automotive Parts Company, Ltd.(Fawer) will establish Changchun FAWER-IHI Turbo Co., Ltd., a joint venture to manufacture turbochargers for vehicles, in Changchun, China, in January 2004. The new company will also conduct design, sales, and after-delivery services. Fawer, which is an affiliate company of China First Automobile Group Corporation (FAW Group), the China’s largest vehicle manufacturer, totally manages the supply of car parts.
Ishikawajima Mass-Produced Machinery Co., Ltd. (IHK) and ITOUCHU Corp. will also have capital stakes in the new turbocharger manufacturing company. The former, an IHI affiliate, is in charge of production of IHI turbochargers and the latter has a good business relationship with FAW Group and rich experience with Chinese businesses.
The new company will start operation in the autumn of 2004. The products will be mounted on every type of vehicle ranging from small passenger cars to large trucks produced by FAW Group. The turbochargers will also be marked for vehicles built by other Chinese companies.
Production of the Chinese automobile industry shows steady growth annually, which is supported by both domestic and foreign automobile manufacturers, and the latter intend to secure production bases in the country to market automobiles worldwide. Thus, China is expected to become a leading car manufacturing country soon.
IHI will make efforts to increase its market share of turbochargers in China with the strong partnership and support of FAW Group, the largest integrated automobile manufacturer in China.
FAW Group has focused on the IHI turbocharger to cope with increasing demand for turbochargers due to the sharp increase in automobile production and regulation enforcement for exhaust gases, and their high evaluation led to the contract to establish the new joint venture. IHI is expanding the turbocharger business worldwide, and the new company is the fifth production base overseas.
IHI’s worldwide turbocharger production capacity has reached about 1.6 million units per year at present, twice the production five years ago. The production capacity is now ranked third in the world.
The new company will target sales of about 20,000 units for the first year (2004 to 2005). This will increase to about 300,000 units in 2006 and 600,000 units in 2008.
|Outline of the New Company
||Changchun FAWER-IHI Turbo Co., Ltd.
|Head Office and
||Changchun Economic & Technical Development Zone, China
||123 million yuan (1,670 million Japanese yen)
||45% by Fawer; 35% by IHI; 10% by IHK; and 10% by ITOUCHU
|Start of operation:
||40,000m2, building area: 8,000m2
||67 (five Japanese included), 195 employees in 2006
||Design, manufacture, sales, and after-delivery services of turbo chargers used for various vehicles