Chapter 2: A Lesson in Market Dynamics

During the 1950s and 1960s, the Japanese economy was in the midst of a rapid period of growth. Under the leadership of Prime Minister Ikeda, the country was pursuing a policy of trade liberalization, with many Japanese firms such as DENSO setting their sights on overseas expansion. 1966 saw the creation of DENSO’s new open market system outline, which provided the blueprint for its overseas expansion activities. It recognized that to become a global player within the automotive industry, it would need to gain a foothold in Europe. This became a reality four years later with the creation of the company’s representative office in Stuttgart, Germany, chosen for its proximity to key customer Bosch.

The expansion into Europe coincided with the introduction of an important piece of legislation in the United States – the Muskie Clean Air Act – which stipulated that carmakers intending to sell their vehicles in the US market needed to comply with the Muskie Act air pump requirement. This proved to be a major opportunity for DENSO to establish a presence in the US, given its capability in the area of air pumps, which led to lucrative contracts with a number of major European car manufacturers, beginning with Porsche in 1973 and then Mercedes-Benz in 1980.

The establishment of the entity known as DENSO International Europe took place in 1973 in the Netherlands, where it is headquartered to this day. One particular encounter with Ford of Europe stands out from that era, becoming part of DENSO folklore throughout its business in Europe. DENSO had only recently acquired Ford as a customer, having been tasked to provide the firm with an electric washer solution. After implementation, it became apparent that the solution in question was not fully transferable to the European market, despite its suitability for models produced for sale in the US and Japan. Due to a design flaw, the washer fluid did not reach the windshield, and while the team was able to make adjustments to overcome this issue, further technical problems soon emerged. This experience taught DENSO a valuable lesson that remains relevant to this day: in order to be truly global, it is imperative to understand the local conditions for every product and work to make continuous improvements to support optimal performance. This temporary setback proved to be a stepping stone to greater things, enabling DENSO to build credibility in the eyes of the customer and leading to more work with Ford once the issue was fully resolved. That the team was able to creatively solve the problem while working in close collaboration with Ford engineers is testament to the power of the DENSO Spirit in action.