Asia Report

Japanese HVAC manufacturer eyes growth as the market demands more efficient climate control systems.

Following record earnings and sales last year, Denso Corp. has set its sights even higher in fiscal 2004 with pretax (ordinary) profits projected to grow to Y202 billion ($1.8 billion @ $1.00=Y110), up 9 percent, on marginally greater sales of Y2.6 trillion ($23.4 billion). Powering the bullish business outlook is the company’s thermal systems group which comprises compressors, heaters and HVAC assemblies. In fiscal 2003, the group registered sales of Y893.5 billion ($8.1 billion) and accounted for 35 percent of consolidated sales. With the start of production last November in the Czech Republic and plans to open plants in Osceola, Ark., and Changchun, China, the company expects further growth.

Hikaru Sugi, newly named managing officer, says three themes are driving future product development — demand for improved cabin comfort, need for more energy efficient controls and regulations requiring carmakers to convert to noncarbon refrigerants. Sugi says a decision on a new refrigerant must be made within the next two years. Leading candidates are CO2 and R152.

Denso unveiled a CO2 refrigerant system in the spring of 2002. Adopted for the air conditioner in Toyota’s fuel cell vehicle, the FCHV, the system has potential to cut CO2 emissions by 35 percent compared to conventional cooling units that employ R-134a refrigerants. The company hopes to introduce the system on an unspecified luxury car by 2007. During the first year, management projects monthly sales of 5,000 units.

Meanwhile, Denso developed an electric compressor for the air-conditioning system on the remodeled Prius which went on sale last September. According to Sugi, the main advantage of the unit is improved fuel economy.

“When the engine stops, the air conditioner runs off the compressor, which in turn runs off the battery,” he explains. “With conventional systems, the engine would have to continue running to drive the compressor.”

Denso developed the electric A/C compressor on the Toyota Prius.

New controls for the motor and inverter contribute to 40 percent and 50 percent reductions in size and weight compared to conventional electric compressors. Because of its small size, the compressor can be mounted on the engine — as is the case with the Prius. As more models adopt hybrid technology, analysts expect a proliferation of electronic controls not only for HVAC (heating, ventilating and air-conditioning) units but also for other auxiliary systems including power steering and high-speed defrosters. They eventually expect these to run off 42-volt architecture. On the cost front, Denso plans to reduce airconditioner size and weight by 15-20 percent over the four-year period from 2003 following similar 20 percent reductions between 1998 and 2002. Examples: The condenser and evaporator, redesigned two years ago, have been lightened from 5.5 lb. to 4.6 lb. and 3.7 lb. and 1.9 lb. According to Sugi, size and weight reduction translates into lower cost.

Meanwhile, Denso continues to make advances in the production area. At Nishio, largest of the 37 plants making thermal systems and components, injection molding and machining have been fully automated. The next step is to boost nonstop operation: In aluminum machining, the company has exceeded four hours.

In final assembly, thanks to standardized processes, Denso is able to make quick adjustments in automation levels as the demand situation changes. For big-volume cars like the Toyota Corolla, which is produced at monthly rate of more than 11,000 units, heater and combined heater/air-conditioner assembly is almost fully automated. For smaller-volume models including the Toyota Land Cruiser, assembly is more labor intensive. The plant has a mix of fully automated, partially automated and manual lines.

“Because of process standardization, it only takes a weekend to reconfigure a line,” says a Nishio plant official. “In the past we needed several months and a substantial capital investment.” Other savings have been achieved through simplified design. For instance, Denso has largely done away with conventional bolts in the heater assembly, replacing them with plastic fasteners that can be snapped together in a less labor-intensive process.

Denso’s most automated heater assembly line, one of two such lines in the plant, employs a dozen robots. These handle all processes from case assembly to motor and heater core installation. All together: 12 processes excluding inspection. Located 20 miles southeast of Nagoya, the Nishio plant produced 7.2 million heaters and HVAC units in 2003. These were for almost all models in Toyota’s lineup, as well as cars built by other Japanese carmakers including Honda Motor, Suzuki Motor and Mitsubishi Motors.

In total, Denso produces more than 20 main HVAC units for Toyota and an even greater number for competitor cars. The number is nearly half the level of five years ago, reflecting platform reduction activities of Japanese carmakers and parallel programs inside Denso to standardize key components within vehicle classes. For instance, the Vitz, Fun Cargo and Bb, all built on the same platform, share basic systems.

Denso would like to see another one-third reduction in variations by the end of the decade although this would ultimately depend on carmaker requirements.

This article was provided exclusively to Automotive Industries by J•REPORTS, a new information service offering in-depth coverage of automotive technology based in Tokyo. For additional information about this and other studies and prices, contact JRepts@aol.com.