Recent Tier 1 design center openings in Asia suggest the market has moved eastwards to where car sales and production are growing. Evidence of this trend, over the past year, can be seen in the latest Strategy Analytics "Tier 1 Vendor Regional Design Center Database": http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5943. Examples of new openings include: China Bosch is to open a technical center and manufacturing facility in Changsha, Hunan, by 2012.Hangsheng-Intel joint venture will develop and supply of remote keyless entry systems from Shenzhen, Guangdong.Harman is to open two technical centers in Dandong, Liaoning and Suzhou, Jiangsu.
- Furthermore, new players in the global automotive industry have arrived, in the form of Delphi divestments: BWI (Beijing West Industries) - the former braking and suspension business; Nexteer - the former steering business was recently acquired by Pacific Century Motors.
India Denso is to open a technical center in December 2011 at its facility in Gurgaon, Haryana. Japan Autoliv has recently expressed its intention for a possible acquisition in Japan. Gentex opened its Kitakyushu technical center to offer electro-chromic mirrors and high beam assist systems to its Asian customers.
- Furthermore, Bosch has opened two software development centers in India (Bangalore and Coimbatore) and another in Vietnam by 2015.
Strategy Analytics has linked the increased R&D activity with growing car production in Asian markets:
- According to JD Power, both sales and production volumes in China will increase dramatically - destined to become the world's largest market by volume.
- India, a fellow emerging market, is also experiencing increased activity. This includes: the launch of the market-specific Ford Figo and Toyota Etios models; the OEM expansions that have taken place with General Motors (engine plant in Talegaon) and Toyota (assembly plant in Bidadi) and those that have been planned by Ford, Kia and Maruti-Suzuki; as well as the Tier 1 vendors who will supply this expansion, such as new assembly plants from Autoliv and Brose.
Some renewed activity has also been observed in Japan and Korea. Foreign Tier 1 vendors are making further in-roads at supplying Japanese OEMs, while Korean OEMs are keen to expand their market shares in Europe and North America. As with Chinese OEMs, albeit on a larger scale, Korean OEMs like Hyundai-Kia are adding more electronic features. The Strategy Analytics report "Chinese OEMs: Rapid Advance In Quality Bodes Well For Automotive Electronics", covers the rise in automotive electronic demand among Chinese OEMs: http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5501, while worldwide electronics demand is covered by the "Automotive Electronics System Demand Forecast 2008 to 2017: Q3 Update": http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5815. While there is a rush to bring R&D capability in order to serve their customers' needs, Tier 1 vendors need to be aware that such growth will be more uncertain for 2011 - Incentives in certain markets will be curtailed and thus affect car production growth. For example, the sales tax reduction for engine capacities below 1.6-liters will not continue in China beyond December 31, while the incentive for fuel efficient vehicles in Japan has already ended. Strategy Analytics advises caution before vendors commit to further expansion.