KARIYA, Japan -- Denso Corp., the world's No. 2 parts supplier, expects its safety technology business to surge starting in 2015, when tougher European auto safety standards take effect.
The regulations will trigger global shockwaves that spur demand from Detroit to Tokyo for better pre-crash sensors, cameras, head-up displays and other active safety systems, predicts Hiroyuki Wakabayashi, a Denso senior executive director.
For Denso, a Toyota Group company long focused on drivetrains and air conditioners, the shift means safety products will suddenly be one of its fastest growing businesses.
"Active safety products will grow very sharply in that period and into the future," Wakabayashi said in a July 16 interview at Denso's global headquarters outside Nagoya. "The field is very competitive. We will be devoting more resources into it."
The company expects its global sales of safety technology to rocket 40 percent over the next 10 years. And it plans a 30 percent increase in the number of engineers working on safety over that time to meet the demand, said Wakabayashi, the board member in charge of Denso's information and safety systems group.
Safety and information systems are Denso's third-biggest business segment, after powertrain systems and thermal products.
The unit accounts for 16 percent of Denso's overall revenue and booked sales of ¥576.9 billion ($6.13 billion) in the fiscal year that ended March 31, 2013. Sales grew 8 percent year-on-year.
Driving the market will be stricter European Union safety requirements that take effect in 2015. The European New Car Assessment Programme rates vehicle safety and will increasingly test for crash-avoidance technologies such as autonomous braking, speed-control systems and lane-departure warnings.
Cars without those features will be hard-pressed to achieve the top five-star rating. "It is a requirement," Wakabayashi said.
The EU move is expected to trigger similar tightening of safety certification in the United States and Japan. That will force manufacturers to deploy the technologies globally because consumers look to a car's ratings when deciding what to buy.