KIYOSU, Japan — Toyota Group supplier Toyoda Gosei Co. is best known for churning out plastic moldings, sealing strips, brake hoses and resin interior parts.
But President Naoki Miyazaki says it is time to reposition the parts maker for a high-tech era in which customers are clamoring for autonomous driving systems and electrification.
Miyazaki, 60, sees potential in evolving Toyoda Gosei's product lineup and tapping sales beyond its traditional go-to customer and top shareholder, Toyota Motor Corp.
The supplier, which operates as a network of 67 group companies in 18 countries and regions, is pursuing a business plan it calls TG 2020 Vision. The three main goals are to create products that help popularize hybrids, plug-in hybrids, electric vehicles and low-cost compact cars; to "take the lead in the global lighting market" by perfecting its line of LED technologies; and to develop technologies to help reduce dependence on oil.
Miyazaki, a former Toyota executive, spoke with Asia Editor Hans Greimel about Toyoda Gosei's product expansion plans, r&d undertakings and sales outlook.
Q: How will Toyoda Gosei respond to the era of autonomous driving?
A:We think that autonomous driving is an opportunity for us. We are a manufacturer of resin parts, but we own patents for components required for autonomous driving.
For example, steering wheels with sensors around them, or interior cockpit components, or radiator grilles with sensor functionality. There is an array of sensors, lasers, cameras that will be required for autonomous driving in the future. And they will be installed in the area around the front or cockpit area, so we can integrate those functions into the parts.
Toyota Gosei, you could say, owns that real estate in the car. So we can expand into that business based on the real estate that we own. If we can integrate sensors into these areas, such as the grille, we can make customers happy, and we can increase the value of these parts.
For example, the millimeter-wave radar compatible emblems. They are made out of resin, but radar can actually penetrate it to the outside. We have technologies that make it possible.
What other opportunities are there in autonomous driving?
At the Tokyo Motor Show, one of the things we displayed was our LED technology. We have special technologies for LEDs. For autonomous driving, we need to communicate with pedestrians or other vehicles, so we can display messages on the outside of the vehicles using LED lighting, to display warnings or the current state of the vehicles.
What about in the cockpit, such as haptic controls and retractable steering wheels?
It depends on the level of automation. If it's complete automation, the steering wheel will disappear. But if it's Level 3, then automated and manual driving must be interchangeable. When drivers release their grip of the steering wheel, warning signals can be sent to drivers. That sort of function is already installed, and we are in the process of manufacturing them.
We are also an airbag manufacturer. The purpose of airbags is to protect drivers and passengers. The assumption is drivers are behind a steering wheel and passengers fasten their seat belts. But if we achieve complete autonomous driving, then drivers may not be behind the wheel and may not even be facing forward.
So we may have to rethink the conventional style and design of airbags. Maybe the location of the airbag will change, and maybe the speed of deployment will change.
Does Toyoda Gosei expect airbags to be a rapidly grow-ing business area?
In developed markets such as Europe or America, safety regulations are becoming stricter.
And in developing markets, regulations have traditionally been not so strict. But there will be more safety regulations established in developing nations as well. Thus, we can expect our market to become larger in both developed and developing countries.
Does Toyoda Gosei plan to deepen its relationship with Japanese airbag inflator maker Daicel?
Daicel is one of the main inflator makers, so we would like to strengthen our relationship with them to expand our airbag business. We can expect some good effects. We can have an alliance in technology development. Also, we can speed up development. Our relationship with Daicel is getting closer.
Will Toyoda Gosei and Daicel continue to deepen cross-shareholdings?
We are not intending to increase our capital stakes any more.
Your LED business is losing money, which is ironic because Toyoda Gosei researchers won a Nobel Prize for developing the technology. What's your turnaround strategy?
Our business in generic LED lighting and backlights for digital devices and personal computers is losing its competitiveness in terms of pricing. Our market share is decreasing, and that business unit is in the red.
Currently, we are changing the percent of our LED business from those segments into automotive use — for example, the light elements for headlamps or interior lights. If autonomous driving is realized, LED lighting can be utilized both in the interior and on the exterior more than now.
We are actually downsizing the LED business, but we are maintaining the number of human resources and doing r&d for this new area. Because Toyoda Gosei is a resin and an LED manufacturer, this can be a strong point for us in the future.
What is Toyoda Gosei's timeline for realizing autonomous driving?
It's very difficult to say. But we are currently developing technology that can deal with high levels of autonomous driving. By around 2025, we can probably complete systems for autonomous driving. But 2020 is a little too early.
Toyoda Gosei has tried to expand sales to customers outside Toyota Group so non-Toyota customers will account for half of global sales by 2020. Can you give an update?
Our basic thought is we want to preserve our business with Toyota while expanding business with new customers on top of that. Getting to 50 percent by 2020 is a little too early. I would say around 2025.
And what percent of sales comes from Toyota currently?
If we're counting only Toyota Motor, then it's about 60.8 percent. If we include the entire Toyota Group, it's about 66.5 percent.
Toyoda Gosei also has been trying to expand its business with non-Japanese automakers, which used to account for 10 percent of global sales. The goal was to increase it to 30 percent. How much progress has the company made?
Concerning American makers, business is increasing with Ford and GM. We also have business in Europe with German companies, but I can't say it's increasing. We'd also like to expand in China by focusing on Chinese makers.
In China, we'd like to expand business with European, American and, of course, Japanese automakers operating there. But because the market share of domestic Chinese automakers will increase, we would like to determine what strategic components we can leverage as our strength to sell to them. I have a bit of a sense of crisis. Unless we can do that, we might not be able to expand our business long term in China.
What kind of products is Toyoda Gosei developing to respond to electrification?
We think electrification is also an opportunity for us. One reason is weatherstripping. Without engines, vehicles will be quieter. So, we have to develop better soundproofing. If we can develop components with these kind of functions, we may be able to expand our business.
What else are you developing for electric vehicles?
Cooling systems will be required for electrification, for use around the motors. So probably rubber hoses are required.
Another area is in lightweighting. We are makers of resin products, which are always considered in lightweighting. But we would like to further develop lightweight technologies.
Some people say Toyoda Gosei has nothing to do with electrification or autonomous driving because we are a resin and rubber supplier. But we have patents for parts required for automation and technology in lighting.
So we think that electrification and autonomous driving present an opportunity for us. We'd like to expand our business in modules or systems, not just individual bits and pieces.
Most carmakers are very busy with r&d in electrification and autonomous driving. But they don't have enough resources. So they are thinking of delegating certain areas to suppliers for development.