Japan Auto and Robot Makers Expand into the East European Block

Japanese automobile manufacturers, lead by Toyota, are facing severe challenges. Domestic Japan auto sales for 2007 were the lowest in the past 35 years. Overall annual vehicle sales plummeted by 7.6% during 2007, and even Toyota, the defacto market leader, suffered a 6.5% drop domestically.

The major contributing factors - increasing fuel prices, a shrinking and rapidly aging population, and decreasing wage base, aren't likely to improve in the foreseeable future. Quite the contrary, analysts expect the situation to become much more severe throughout the next few decades. At the same time, vehicle sales in the US, currently the world's largest market, declined by 2.5% setting a nine year low. Although Toyota's US sales performance enabled it to leapfrog Ford Motor and gain the #2 slot right behind General Motors, the US economic outlook isn't rosy, especially with the election year unknowns in play.

In order to counter balance their domestic and US challenges, and to continue growing, Japanese auto makers have been expanding investments in China, India, and most recently the East European Block countries. And, as the major auto makers move they pull along their Japanese supplier chain. A good example is Yaskawa Electric's industrial robotics operations.

Yaskawa already has a strong overseas sales and support base established with operations in the US, Germany, Sweden, China, and India. But, without an East European facility they would find it difficult to maintain the intimate relationship they have enjoyed with the major Japanese auto companies.

Toyota already started vehicle production last December at a new factory on the suburbs of St. Petersburg, and Mitsubishi Motors has announced plans to put a new passenger car assembly plant into production near Moscow during 2010. So it was no surprise that Yaskawa announced the establishment of an affiliated company in Russia chartered with sales, marketing, and support of their industrial robot product lines. The company has been supplying robots and support to the region via their existing base in Sweden, but feels that the increased demand and projected market growth justified establishing the new company in Russia.

In addition to supporting Toyota and Mitsubishi, the company projects strong business from other manufacturing companies with operations in the region. The new company will offer customized solutions, consulting, and on-site support catering to the manufacturer's unique requirements.

As a company, robot related sales account for 34% of Yaskawa Electric's total world-wide sales. Analysts estimate their world-wide market share at 20%, which is definitely respectable. Nevertheless, Yaskawa plans to aggressively strengthen their international operations with the goal of having them contribute 50% of the company's total world-wide revenues.


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