4. Strengthening Global Operations
1986-
(4) Strengthening the Foundation in Europe
- 1989
- Seizing the momentum of European integration, we established our first European production base in Spain in 1989. Subsequently, while considering cooperation with local parts manufacturers, we expanded our production items and strengthened our intra-regional production system.
Europe, home to Robert Bosch GmbH, posed a challenging market for our expansion. However, by the late 1980s, new circumstances emerged with the movement towards European integration and the establishment of the European Union (EU). In response, Japanese automakers began initiating local production in Europe. Meanwhile, European automakers, considering tariff advantages, increasingly aimed to procure parts within Europe. This necessitated a new supply strategy for our company in Europe.
Reference：Overview of European Integration (Establishment of the EU)
- Deep DiveChallenges in European Operations
- For our company, Europe has always been a challenging market for expansion activities. Our entry into Europe began in 1972 with the establishment of a representative office in Amsterdam, Netherlands. At that time, the European automotive electrical equipment market was dominated by Robert Bosch GmbH and Lucas Industries, making new entries difficult. Additionally, due to our partnership agreement with Robert Bosch GmbH, selling products using their technology in Europe required their consent and had to be done through their distribution network.
Moreover, each European country had numerous small and medium-sized parts manufacturers with long histories and unique technologies. Entering this market required maintaining a friendly relationship with Robert Bosch GmbH and avoiding friction with local parts manufacturers.
To navigate these challenges, we focused on promoting products that addressed new technical demands not already covered by existing products from local manufacturers. Our expansion efforts were carefully managed to avoid oversupplying the market, ensuring that our offerings met specific, unmet needs.
We chose Spain as our first production site in Europe. In 1989, we established “Nippondenso Manufacturing Barcelona” (now DNBA) and began producing ignition coils. As we expanded the ignition coil business, we also launched the production of ECUs (Electronic Control Units) for EFI (Electronic Fuel Injection) systems. This opened up new possibilities for future developments in the electronics-related business.
One of the pillars of our European operations was the local production of car air conditioners, a field not covered by Robert Bosch GmbH. Aligning with Toyota's entry into local production, we decided to localize the production of heat-related products, starting with radiators.
We opted for a joint venture approach rather than a solo venture. We began discussions with IMI Radiators Ltd. in the UK, which resulted in acquiring the company to form the foundation of our business, leading to the establishment of “ND Marston” (now DNMN) in 1989. Furthermore, in the UK, we established “NDM Manufacturing” (now DMUK) in 1990 as a joint venture with Italy's Magneti Marelli to produce car air conditioner components.
In Italy, we took an equity stake in Magneti Marelli's air conditioning division.
In France, starting from 1993, we provided meter-related technology to the electronics company Sagem, making them an important partner in Europe.
Entering the 1990s, Europe saw a stronger push for stricter emissions regulations due to environmental concerns. Additionally, there was a growing demand from users for enhanced in-car comfort. These trends indicated a significant future increase in demand for EMS (Engine Management Systems) and car air conditioners.
To solidify our business relationships with European automakers, we aimed to expand our dealings to include engine-related parts. However, system products like engine-related parts require precise matching with vehicles, necessitating localized application design.
In response to these needs, we established an EMS Technical Center in the UK in 1993 and a car air conditioner development center in Germany in 1994. These successive enhancements in local technical development capabilities further strengthened the foundation of our European operations.