Hitachi Astemo spearheads an unusual approach in Japan because its CEO, 56-year-old Koch, is not a Japanese lifer who grew up in the company. He's a Swiss engineer who parachuted into Hitachi in 2017. He is hardly a central casting choice for "Japanese supplier executive." He does not speak Japanese and was poached from Swiss fibers and surfaces company OC Oerlikon Group, where he was CEO. He also had a long career at Swiss engineering giant ABB.
But Hitachi Astemo cuts a uniquely international profile in homogeneous Japan. Nearly half of its top 19 executives are non-Japanese, a telling sign of its global ambitions.
The new company could be a model for how suppliers around the world will manage the delicate transition from old-school businesses steeped in internal combustion to newfangled technologies in the fields of electrification, automated driving and on-the-go connectivity.
Its creation highlights Honda's own changing approach to partnerships in the pressure cooker of new technologies. By combining three of its top suppliers into a stronger, bigger entity, Honda can focus more on investing in areas such as artificial intelligence, sensors and software.
Honda's new CEO, Toshihiro Mibe, who took the reins April 1, says his middling-sized company can't do it all by itself and increasingly needs help in next-generation technologies. A classic example of the new approach was Honda's 2018 agreement with General Motors and Cruise to develop and commercialize autonomous new mobility services. That move was followed last year by an agreement with GM to jointly develop vehicles for North America.
The Astemo name is derived from the catchphrase "Advanced Sustainable Technologies for Mobility." Instead of trying to supply all things to all customers, the newly launched Hitachi Astemo is paring uncompetitive segments and will focus on systems it considers its strengths for tomorrow.
In: inverters, motors, chassis control and software.
Out: climate control, trucks, audio systems. It even divested from a lithium ion battery venture, conceding it didn't have the scale to succeed.
Hitachi Astemo wants to solidify itself as a global leader in three key product areas where it already has a lead: electrification technologies, hydraulic suspensions and foundation brakes. Hitachi Astemo is a global leader in the electrified drivetrain and suspension segment.
The merged company derives about half of its global revenue from these three segments now. Koch wants those areas to contribute more than 60 percent of the company's sales in 2025. Saturating core segments is more important than spreading yourself thin and wide, he said.
"What we look at is our positioning by product," Koch told Automotive News. "That, to me, is much more relevant than the overall size of the company. If you don't have more than 50 percent in a global leadership position, then your business has some risk of not being sustainable."
The blockbuster deal for the new megasupplier was announced in late 2019. Before that, Honda's three affiliated companies — Keihin, Showa and Nissin Kogyo — were longstanding pillars of the automaker's group of vertically integrated suppliers, or keiretsu. Honda retains a 33 percent ownership in the resulting company, mostly as a silent partner. Hitachi Automotive's parent, the electronics giant Hitachi Ltd., owns 67 percent and wields management control.