SPEECH
2013 AAPEX
Las Vegas, Nev.
November 6, 2013
Richard Shiozaki
Senior Vice President
DENSO Products and Services Americas
[2 – DENSO Products and Services Americas]
Good morning.
And welcome to our news conference.
[3 – New Products and Product-Line Expansions]
We have some new products to introduce today, all of which maintain our DENSO FIRST TIME
FIT philosophy for providing quality replacement parts and service tools. But before we tell you
about these products, I’d like to present our latest financial results, and explain how our Original
Equipment expertise helps to inform our aftermarket business.
[4 – Global and North American Net Sales]
For the first half of our fiscal year, which just ended on September 30 th, we experienced strong
growth, with a 14.7 percent increase in global sales. North American results for the first half
were even stronger – a 33.9 percent increase from the previous year.
These double-digit increases go well beyond simply tracking with increased new-vehicle sales.
DENSO is making more and more inroads with both existing and new customers.
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[5 – Made in North America]
DENSO has more than 25 manufacturing facilities here in North America that produces products
for our regional customers. We supply heat pumps for the Nissan Leaf...instrument clusters for
the Hyundai Santa Fe...the HVAC system in the Ram 1500...the Start/Stop system for the Ford
Fusion...alternators in the Jeep Grand Cherokee...air conditioning condensers in the Chevrolet
Camaro...and more. Even when it comes to windshield wipers, we have a 28% share of the
North American OE market.
[6 – A Leader in the Aftermarket]
Our aftermarket customers encompass a wide range of W/Ds, jobbers, installers and buying
groups, including the Pronto Buying Group...WorldPac...CarQuest...Federated Auto Parts....NAPA
Auto Parts...Advance Auto Parts...and more.
And we are earning “preferred status” with many of them – a sign of our close working
relationships.
[7 – OE Leadership Brings A/M Strength]
As I mentioned up front, we believe that being a Tier 1 OE supplier brings both vision and
strength to our aftermarket business.
[8 – Bringing the Future to the Aftermarket]
These are not mutually exclusive fields – one feeds and supports the other, from original
equipment research and development....to new-car sales....to aftermarket service and parts
replacement...and ultimately to remanufacturing and recycling.
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[9 – Four Decades of Gasoline Injection]
Being on the leading edge of automotive technology is in our heritage. For example, DENSO has
been producing gasoline injection products since 1972. Just this year we produced our 900
millionth injector and our 250 million fuel pump.
[10 – Advances in Gasoline Injection]
Through the years we’ve reduced the size and weight of these components while improving
their performance to meet stringent emissions standards and the demand for higher fuel
efficiency. DENSO was also on the leading edge of the movement to gasoline direct injection –
we started production of high-pressure injectors and pumps for GDI systems in 1996. Today, we
produce gasoline injection products in 10 countries and regions.
[11 – Future Aftermarket Technology]
Start/Stop technology, which is now being fitted to more and more new cars is here to stay.
Globally, DENSO supplies the Start/Stop system for a wide range of vehicles, from Audi, BMW
and Ferrari, to Toyota, Honda and Subaru. In North America, DENSO Idle Stop-Start systems are
on Ford Fusion and Lincoln MKZ, as well as a range of General Motors products.
Five or ten years from now, as these vehicles accumulate tens of thousands of miles,
remanufactured DENSO motor/generators will help keep them on the road for many more years
to come.
[12 – Significant OE and A/M investments]
In order to supply both the OE and aftermarket business in North America, we are in the middle
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of a significant investment and expansion strategy.
[13 – At the Heart of North America]
In addition to our facilities in the United States, we’re investing more than $50 million to expand
our operations in Silao, Mexico, where alternators, HVAC units and radiators are produced for
the North American market.
[14 – Goal: $1 billion + 1,200 jobs by 2015]
And next year we’ll be opening a new warehouse facility in Montgomery, Alabama, representing
an investment of $2.2 million, with 45 new jobs in a three-shift operation.
All of these expansions bring us closer to realizing our goal of investing nearly $1 billion and
adding more than 1,200 jobs in North America by 2015.
[15 – Goal: 20% of Sales from A/M by 2025]
The creation of DENSO Products and Services Americas last year – our central aftermarket
headquarters in North America where we employ more than 400 people – shows our
commitment to the aftermarket in the Americas. And globally, our goal is to have 20 percent of
total sales come from the aftermarket by 2025.
Now, to tell you more about our new aftermarket products, and our latest product-line
expansions, here’s Fran Labun, vice president, Sales Group. Fran Labun.
Fran Labun
Fran Labun
Vice President, Sales Group
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[16 – DENSO Products and Services Americas]
Hello, and thank you for joining us.
As a leading aftermarket provider, DENSO develops technically advanced maintenance and
service parts for a wide range of vehicles. And make no mistake, we’re always looking for new
product-line possibilities.
[17 – DENSO Fuel Pump Solution]
A perfect example is our DENSO replacement fuel pumps. They are precision engineered
products with high flow rates yet low amperage requirements. Our 508 part numbers cover
vehicles in operation from 1985 to 2011. We’ve recently launched a DENSO fuel pump solution
that uses our quality 38-mm turbine fuel pump module for a major domestic carmaker to solve
a specific aftermarket issue. It’s an improved aftermarket design based on DENSO OE standards.
At launch later this month, we’ll have 30 part numbers, and more part numbers in February.
[18 – New TPMS Replacement Sensors]
A new product offering for us is Tire Pressure Monitors. Whether it’s a quick-lube operator who
inadvertently snaps a valve stem or an age-related failure on a high-mileage car, TPMS sensors
are being replaced at an increasing rate. And if a poor-quality sensor is installed, it creates
problems for both the installer and the customer.
[19 – New TPMS Replacement Sensors]
DENSO TPMS sensors use OE technology to ensure a quick, direct fit, with no cloning or
programming. These are application-specific service kits, with an anticipated 10-year battery
life. It’s a new product line for us, but we already have part numbers covering 73% of Toyotas,
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36% of Hondas and about 19% of the rest of the Japanese brands.
[20 – New Maintenance Products]
DENSO also produces an extensive line of maintenance items – everything from Cabin Air Filters
and oil filters, to wiper blades. In fact, we’ve just added a new line of rear wiper blades. With
graphite-coated rubber for improved performance, and durable but lightweight blades, we
have part numbers covering everything from the Chevrolet HHR and Kia Soul, to the Lexus
LX570 and Infiniti QX56.
[21 – DENSO Product-Line Expansions]
In June of this year, DENSO added 65 new part numbers to cover more vehicles’ starters and
alternators.
This expansion covers more than 20 million vehicles in operation, including more Honda and
Acura models. In fact, we have almost complete coverage of Asian vehicles. Our advanced
segment conductor – or SC – alternator, with its unique stator coil winding technique, increases
winding density from 45 percent for traditional alternators to 70 percent. That’s why DENSO SC
alternators are among the smallest and most efficient alternators in the world. What’s more,
we’ve recently repositioned our line of starters and alternators, so they represent an even
greater value.
[22 – DENSO Product-Line Expansions]
What’s more, our recently released 2013 “First Time Fit” Oxygen and Air/Fuel Sensor Catalog
offers one of the most complete product lines in the industry, covering everything from Acura
to Volkswagen,
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We’ve added 67 new oxygen sensor part numbers to cover an additional 7.7 million vehicles in
operation. With this expansion, we now have 99.9 percent coverage for domestic and imported
automotive and light-duty truck applications through the 2013 model year.
[23 – New Diagnostic System: VitalScan]
We’re also developing ways to help technicians diagnose and identify issues more quickly and
accurately. DENSO VitalScan is a new diagnostic tool and supporting web-based data system
that lets technicians perform hundreds of specific OBD2 tests in minutes, delivering detailed
vehicle health reports.
[24 – New Diagnostic System: VitalScan]
It automatically links with thousands of online documents and even searches for similar cases
and suspect parts, saving evaluation and diagnostic labor time. This is a very robust and
comprehensive service system – not just another scan tool. We have an example of VitalScan in
our exhibit, so please come see us after the press conference so we can provide more details.
[25 – Beyond Cars: Heavy-Duty & Fleet]
In addition to cars and light-duty vehicles, we also offer diesel and electrical components for a
growing number of medium and heavy-duty vehicles. For example, we have a new line of
industrial spark plugs called “Iridium Saver,” designed specifically for the oil, gas and transit
markets.
[26 – Beyond Cars: Heavy-Duty & Fleet]
Our new Iridium Saver GK3-7 spark plug is the only aftermarket plug designed specifically for
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the Cummins ISL-G 8.9-liter CNG engine. This heavy-duty natural gas engine powers shuttles
and school buses, urban transit, and medium- and heavy-duty trucks. With its unique design
and three ground electrodes instead of one, the DENSO Iridium Saver spark plug is engineered
to channel rapid gas flow at the spark-plug tip, generating a more consistent spark for complete
combustion.
[27 – Beyond Cars: Commercial Vehicles]
Fleet vehicles, such as Ford and GM commercial vans and pickups, may experience a high
number of start-stop events per mile. Our new PA Type and Offset Gear Reduction starters are
re-engineered specifically for these applications, and will provide unmatched performance,
reliability and fit. In many cases, they’re both higher-performing and smaller in size.
[28 – Lowest Return Rates in the Industry]
We’ve talked a lot about quality, but it’s not just a buzz word at DENSO. In fact, according to
AASA figures, the industry average is 5 to 7 percent. Our return rate is less than 1 percent.
[29 – Customer Awards]
And our customers appreciate that quality!
We’ve received numerous awards from them over the years, including 2013 Caterpillar
Platinum Supplier Quality Excellence Program certification and the 2013 Mitsubishi Diamond
Quality Supplier award, as well as the Pronto Buying Group’s 2013 OE Supplier of the Year
Award for 7 out of the last 8 years, and just this year, Pronto’s 2013 Mexico Supplier of the Year
Award – the first time that award has been given out.
Federated Auto Parts also honored DENSO this year by presenting us with the Education and
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Training Vendor of the Year Award.
[30 – Ease of Communications]
And we are also working to make our product information easier to understand for more of our
customers, and making our installation instructions instantly accessible. That’s why we’ve
launched a tri-lingual aftermarket website, and all of our product catalogs are now tri-lingual –
English, Spanish and French.
[31 – Ease of Installation]
Our new packaging features QR Codes, which link to installation instructions and product
information on the web. As a side note, DENSO actually invented the QR Code, back in 1994. It’s
just another way that we are making things easier for our customers.
[32 – Social Media and Mobile Website]
Social media is important to all companies. And DENSO Auto Parts has gained more than
160,000 Facebook fans in the past 24 months. In addition, we have a new mobile aftermarket
website, giving you the ability to look up product applications from the smartphone in the palm
of your hand.
[33 – My DENSO Rewards Loyalty Program]
We also have a program to reward the loyalty of our customers. The My DENSO Rewards
program was announced this past summer, and hundreds of distributors, jobbers, W/Ds and
professional technicians have signed up for this sales incentive program. Points earned can be
redeemed for everything from Amazon gift cards to power tools. The program runs through the
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end of this month.
[34 – Bringing the Future to the Aftermarket]
To sum up, DENSO has strong relationships with top buying groups, jobbers and W/Ds in North
America. We have a line of superior-quality products unmatched in the industry, with incredibly
low return rates. Aftermarket parts coverage for both domestic and imported vehicles is
extensive and growing. And we are continually investigating new products and bringing new
solutions to market, such as our superior quality TPMS sensors and our high-performing
replacement starters for fleets. We’re always looking to the future...and anticipating how we’ll
bring future technologies to the aftermarket in the coming years.
[35 – Q + A Session]
Thank you for your time!
Now we’ll take questions from the media...
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