6. Expansion into São Paulo

[1] Constructing the new Santa Bárbara Plant

The Brazilian automobile market (sales) remained at around 1 to 1.5 million vehicles per year from 1995 to 2005, but was boosted by falling interest rates and the appreciation of the real from 2005 on.
Brazil’s economy later settled into positive territory around 2008 due to the end of high inflation, a rising economic growth rate, and increasing exports. Automobile production also grew to 3 million vehicles when including buses and trucks, making Brazil the world’s sixth largest automobile producing country.

Having positioned Brazil as an important market alongside China and India, Toyota Motor planned to build a new plant in São Paulo to produce a newly developed compact EFC. However, the Pinda Plant, which had produced HVAC systems for Toyota Motor and Honda Motor, was a rental plant with a small floor area, and was distributed among three buildings, making the flow of materials extremely complicated. In addition, DNBR also found it difficult to increase line capacity because the level differences between and within the plants were so large that they even made it difficult to transport goods within the premises.
Consequently, in April 2008 DENSO Headquarters held a board of directors meeting and began working toward the establishment of a new plant in São Paulo.
The manufacturing plants of automobile manufacturers like Toyota Motor, Honda Motor, Volkswagen, and GM tended to be concentrated in the region of São Paulo. The requirements for the new plant’s site selection therefore included being within 100 km of Toyota Motor and Honda Motor, being able to respond to customers quickly, including logistics, and being able to set up a regional core location and a business site complex from the viewpoint of contributing to customers in areas besides thermal products alone. After conducting a comparative review of Itatiba, Salto, Itu, and other areas, in October 2008 DENSO made the decision to acquire and improve roughly 300,000 m2 of land in Santa Bárbara d’Oeste, São Paulo.

Occurring at about the same time, the 2008 financial crisis triggered DNBR’s customers to review their production plans, which temporarily postponed construction of the new plant. Despite this, DENSO judged that the future outlook remained unchanged, and commenced operations at the Santa Bárbara Plant in January 2011. The Pinda plant was eventually closed and the HVAC lines relocated to the new plant.