Denso is not just Toyota's supplier anymore
SENSOR-CENTRIC

Toyota-affiliated Denso readies technology for other automakers

A video screen, using data from sensors that scan the road ahead, warns of a potential collision during a Denso demonstration.
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KARIYA, Japan -- Denso Corp., the world's No. 2 parts supplier, is banking on brisk demand for safety sensors with plans to offer a suite of new products for mass-market cars by 2016.

The new technologies will include autonomous emergency braking, lane-keep assist and full-speed adaptive cruise control systems.

And in a bid to diversify its customer base, the Toyota-affiliated parts maker will offer the new products to any automaker, not just its tried-and-true Toyota Group stalwarts.

The shotgun strategy to widen midmarket sales breaks with Denso's traditional approach in other segments. Its expensive, high-end sensor systems, for example, typically are reserved for Toyota's Lexus brand, while economical lower-end versions go into minicars made by Toyota subsidiary Daihatsu.

The upcoming rollout, which will deploy the technologies by March 31, 2016, is part of Denso's drive to boost sales of sensors, the crucial eyes and ears of tomorrow's safety systems.

Yoshifumi Kato, Denso's executive director of r&d: "Within Denso, this segment has the greatest potential, in terms of growth rate. We believe these safety systems should be deployed in all vehicle segments."

The company, about 22 percent owned by Toyota, reaps relatively modest sales of about ¥10 billion ($97.3 million) from those technologies today, for a market share between 5 and 10 percent.

But by 2020, Denso expects those sales to explode to $1.95 billion, bringing its global market share to 20 percent, said Yoshifumi Kato, Denso's executive director of r&d.

"Within Denso, this segment has the greatest potential, in terms of growth rate," Kato said in a July 16 interview at the company's global headquarters outside Nagoya, Japan. "We believe these safety systems should be deployed in all vehicle segments."

Catching the Germans


The components include systems using camera-based optical sensors, millimeter wave radar and laser radar.

These sensors warn drivers about such hazards as oncoming cars or pedestrians. Dubbed active safety systems, they aim to prevent a crash before it happens.

Denso ranks No. 2 on the Automotive News list of the top 100 global suppliers with estimated sales of $35.85 billion in its 2013 fiscal year.

But it trails European rivals such as Robert Bosch GmBH and Continental AG in advanced safety sensors. Denso's bread-and-butter products are drivetrain components and air conditioners.

The Germans took the lead in the last decade by feeding demand from German luxury brands that could afford to load their cars with pricey safety technology that long was seen as an elective creature comfort.

But deployment is rapidly moving downmarket because of stricter European Union safety rules taking effect in 2015. The Euro New Car Assessment Program, or Euro NCAP, rates vehicle safety and increasingly will test for crash avoidance technologies.

Cars without these features will be hard-pressed to achieve the top five-star rating. And European adoption of more stringent rules is expected to force other markets, such as the United States and Japan, to raise the bar as well.

Safety for the masses


"This is creating a new standard that will impact movements in Japan and the United States," Kato said. "For the volume market, more advanced safety functions will have to be applied."

Denso predicts that the global market for such sensors, about $1.95 billion today, will surge fivefold to $9.73 billion in 2020, as carmakers comply.

Denso's mass-market products include a lane-keep assist system that is already on sale. It uses a camera to track the road's white lines and keep the car on track with the aid of small automatic steering adjustments.

Two other systems will be deployed by March 31, 2016. They include a full-speed range adaptive cruise control system, which can bring the car to a full stop and then resume driving from a standstill. It pairs a camera with millimeter wave radar.

The other is an autonomous emergency braking system that has the added ability of detecting pedestrians. It also combines a camera with millimeter wave radar.

Denso’s millimeter wave radar is used in the Mazda3 sedan.

Toyota Group companies account for about 75 to 80 percent of Denso's sales in the field.

But its millimeter wave radar is used in safety systems on the Mazda3 and Mazda6 sedans, as well as the Hyundai Sonata sedan. The Kia Soul subcompact also uses a camera sensor from Denso.

New regulations, such as those being in introduced in Europe, should make it easier for Denso to find new customers.

That is because the regulations set a baseline for sensor performance that must be met by all carmakers. And the clear specifications make it easier to develop standardized sensors. Standardization, in turn, allows for higher volume and lower costs, meaning a wider array of customers can use the same part.

At least that is Kato's expectation.

"If we can achieve those NCAP targets, then we can apply our product to many customers, beyond Toyota," he said.

"Sensors need standardization, otherwise they won't be widely used by many different customers."

Yet when it comes to sensors, there is no one-size-fits-all solution. The industry generally deploys several kinds of sensors, each with their strengths and weaknesses.

Denso, like the industry at large, is still groping for the best mix and a breakthrough to reduce the number of sensors.

For now, Denso is turning to systems that mix different kinds of sensors to cover one another's weaknesses.

For example, millimeter wave radar is good at long-range detection and not easily disrupted by bad conditions such as rain or fog. It also is very precise in measuring distance.

That makes it good for adaptive cruise control. But it is weak at discerning shapes such as pedestrian silhouettes.

Laser radar is more cost-effective but has a shorter range and is weak in inclement weather. It is used in low-cost systems.

Optical or camera-based sensors are best at discerning the shapes of pedestrians from trees or decoding roadside signs.

But they too have range and weather limitations. Any active safety system that wants to tackle vehicle-on-pedestrian collisions typically deploys a camera-based sensor.

"They all have strengths and weaknesses," Kato said. "But sensing has to be very, very reliable. So the current trend is using a combination, or fusion, of different kinds of sensors."

And that redundancy is yet another cost hurdle to overcome.

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter


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