Tsubakimoto Chain Co. is expecting auto parts sales in China to climb to more than JPY12 billion ($116 million) by March 2018 as carmakers like General Motors and Volkswagen increase their orders to diversify supply chains. Tsubakimoto’s managing executive officer Toru Fujiwara told Bloomberg in an interview that the supplier’s board has approved plans for a new site in China as early as this year. Tsubakimoto, which makes transmission chains and gears, is planning to expand in China, where its auto parts sales are seen to hit JPY6 billion this fiscal year, boosted by an ongoing race between GM and VW to become the largest carmaker in the country. Because of this, the carmakers are diversifying orders to cut the risk of having just one supplier for each part, Fujiwara remarked. “That would be a tailwind for us,” Fujiwara told Bloomberg.
VW has disclosed that it will add seven car sites in China and raise output capacity there to 4 million vehicles annually by 2018. GM, meanwhile, is planning an $11-billion investment in China by 2016 and add four new sites to hike annual capacity to around 5 million units. “As a global operating company we work together with global operating suppliers,” Larissa Braun, a spokeswoman for VW Group China in Beijing, said in e-mailed comments to Bloomberg.
She said that to secure globally stable and efficient supplier chains, VW cooperates with the “most competitive and cost efficient supplier markets to improve continuously” their costs.” Fujiwara remarked that orders from Japanese carmakers in China like Toyota are also expected to surge.