2. Expansion of the automobile products field and sales growth

(1) Growth and development of DENSO PS

DENSO PS built a new plant in Hongseong, South Chungcheong Province in 2004, and in Hwaseong, Gyeonggi Province in 2008 to start a mass production system for new products.

The Hongseong Plant, completed in 2004, focused on the production of motors such as wiper systems, power window motors, and DC electric motors, while the Changwon Plant was in charge of the production of new engine components in advanced technology fields such as stick oil, CVVT (Continuously Variable Valve Timing), and alternators.

The construction of the Hwaseong Plant started in April 2007 and was completed in September 2008 with a scale of 33,100 m2 in Complex-type Foreign Investment Zone No. 2 in Jangan-myeon, Hwaseong City, Gyeonggi Province. Products from the Seoul Plant of the POONGSUNG Electric era were relocated, and production began of ignition coils, door locks, and washer motors. Then, in 2014, 10 lines were added to the Hwaseong Plant to produce air conditioners for cars.

Based on the transfer of management rights in 2000, DENSO PS made efforts to improve problems in its existing business structure. In particular, the company developed new products to attract customers and expanded its product line in the powertrain business.

In 2003, Fusaji Okuda became the second President & CEO of DENSO PS, and the company began mass production of highly functional and profitable products such as Variable Camshaft Timing (VCT) (2003), CVVT (2003), and Oil Flow Control Valves (OCVs) (2009).

At that time, the Quality Division of the Japanese headquarters was reluctant to produce high-function products at its group company in South Korea. However, despite these concerns, DENSO PS had a vision of the future and belief in its success, so it unyieldingly conducted countless quality tests and repeated improvements. Finally, it attained a level of quality equal to that of Japanese products and was highly evaluated by customers. DENSO PS’s vision and efforts led to a significant rise in sales.

The company had brilliant results, with sales more than doubling from 132.4 billion won in 2000 to 227.3 billion won in 2001, 301.5 billion won in 2003, and 652.1 billion won in 2015.

In July 2013, DENSO PS signed an investment agreement worth US $45 million with Gyeonggi Province to build 10 lines near the Hwaseong Plant, spurring production preparation for car A/Cs, thanks to a new order for car air conditioners (HVAC), a heating and cooling product of the Hyundai Motor Group.

In October 2013, “DENSO PS Corporation” changed its name to “DENSO Korea Automotive Corporation.” The 10 lines under construction were completed in 2014, and mass production of car A/Cs (HVAC) began on June 1, 2015. At the time, the Hwaseong Plant mainly produced products such as Electronic Toll Collection Systems, Single Integrated Fuel Control, and ignition coils, so it was expected that expanding the business from existing commercial air conditioners to car A/Cs would contribute significantly to sales growth if the car A/C technology of DENSO, the world’s No. 1 company, contributed to the South Korean automotive industry. There were also high expectations that the Hwaseong Plant would be positioned as a major business in South Korea, not to mention improve corporate image by creating jobs in regional society.

However, in 2020, the actual production of car A/Cs was reduced to half of the planned level, and the business scale was gradually reduced due to the failure to achieve the expected level of business results.

This business was a huge challenge as DENSO’s group companies in South Korea at that time. Although it was not a successful business, this experience led to a change in the management mindset to focus on the facts rather than the scale of the business.