Take long-time Toyota Motor Corp. loyalist Aisin Seiki Co. This week, the Japanese maker of transmissions and clutches announced joint ventures with China’s Geely Automobile Holdings Ltd. and Guangzhou Automobile Group Co. The deals will allow Aisin to begin manufacturing components in China by 2020, furthering domestic players’ ambitions to strengthen their technology, and credibility.
A choice of aggressive partner like Geely, in stark contrast to the more conservative Toyota, means there’s growth but also heightened risk for Aisin. Geely’s car sales increased by more than 50 percent last year, and Guangzhou Automobile has the backing of the state.
Aisin’s move to branch out is necessary. Last year, 60 percent of its revenue came from Toyota group companies, and that’s been the case for many years. Chinese automakers account for about 11 percent, with European firms like Volkswagen AG and Audi AG making up the rest.
In good times, that captive relationship has been lucrative. But with large swathes of the auto market stagnating — the launch of Toyota’s new Camry in the U.S. wasn’t the hit expected — a rethink was crucial.
Timely, incisive articles delivered directly to your inbox.