Ceramic Products Business
Steadily Investing in Production
Facilities while Developing Products for a New Era
First, let us begin with an overview of NGK's core automotive-related products. For HONEYCERAM, despite the fact that their total demand is generally tied with the sales volume for passenger vehicles (new automobiles) worldwide, the trend of replacing them with GPFs is causing their demand to somewhat fall below overall passenger vehicle sales.
Demand for DPFs for diesel vehicles is expected to grow as exhaust regulations for trucks and off-road vehicles become increasingly stringent in China, India, and other emerging markets and demand for trucks in China, in particular, looks to keep expanding. For large HONEYCERAM as well, the increasing sales volume for trucks in the Chinese market and stronger exhaust regulations in emerging markets are projected to increase the demand.
For GPFs, product shipments in the EU are expected to ramp up fully in fiscal 2018, while demand is expected to grow in China from next fiscal year onward.
Demand for NOx sensors is expected to increase significantly as a result of more stringent exhaust regulations in Europe, which necessitate the incorporation of more sensors per diesel passenger vehicle.
All of these are internal-combustion engine-related products; however, in recent years electric vehicles (EVs) are becoming the focus of more and more governments and automakers, and the media continues to report on the decline in diesel vehicles as a percentage of the European automotive market. Nevertheless, we project that the number of internal-combustion engine passenger vehicles will continue to increase until around 2025, and that the percentage of EVs and other non-internal-combustion engine passenger vehicles will hover between 6%-12% for the 2025-2030 period.
We expect diesel vehicles to be almost nonexistent among small motor vehicles by about 2025, but diesel vehicles will still be around for among large passenger vehicles and commercial vehicles that require torque.
Based on these assumptions, NGK is currently undertaking capital investment aimed at increasing SiC-DPF production at the No. 2 Plant in Poland. Our plan moving forward is to progressively decommission the aging No. 1 Plant and shift production to new lines in the highly cost-competitive No. 2 Plant in response to carefully monitored demand trends.
Observers are saying that the automotive industry is undergoing a once-in-a-century period of innovation. In such times, it is essential that we go back to basics. We will do what we are uniquely equipped to do, which is proactively pursue solutions to customer needs before they manifest themselves in the market, all while maintaining our commitment to the core aspects of our business: safety, the environment, quality, and CSR.
For example, the growth in hybrid automobiles on the market has seen a rise in the incidence of delayed catalyst activation due to insufficiently hot exhaust produced by engines that have been dormant for an extended period. To address this problem, we are currently developing a new product that will electrically heat catalysts to improve their purifying performance.
Such a product, however, is nowhere near ready to be added to our business group's product lineup. It will take at least five to six years, with 10 years even being possible. Instead of short-cuts and clever schemes, for our quest to discover and develop products that meet the needs of the new era, we prefer a straightforward approach that relies upon on the strengths that the NGK Group achieves through its fusion of unique material technologies and production technologies.
Gasoline particulate filters (GPFs)
These particulate filters for gasoline-powered vehicles are used in direct-injection gasoline engines that provide high horsepower and excellent fuel economy.
Large-size HONEYCERAM (LSH)
Designed for large vehicles, this model of HONEYCERAM catalyst carrier removes hydrocarbons (HC), carbon monoxide (CO), and nitrogen oxide (NOx) contained in diesel exhaust gas.