Tokyo -- Automotive parts maker Kasai Kogyo Co. and Hiroshima-based Sanwa Kogyo Co., a car ceiling foam manufacturer will invest around ¥800 million ($7.5 million) to set up two joint venture companies in Japan and China for the manufacture of urethane-based car ceiling foam.
The Japanese unit, which is scheduled to start production in July, will supply headliners to Nissan and Honda and will be called SK Kogyo Co. Ltd., said Kasai, in a 28 Jan statement.
Sanwa will own 51 percent of the company, which will be located in Nittaichinoi-machi, and Kasai will own the rest.
The new venture in China, which will operate under the name Guangzhou SK Automotive Interior Co. Ltd., will be based in Guangzhou City, Guangzhou Province and will handle everything from producing urethane foam to assembling ceiling parts.
The companies will initially invest ¥500 million on the business, which is expected to start up in May and ownership will be split 75 -25 between Sanwa and Kasai respectively.
The Kasai group in the past has made its headlines by purchasing headliner substrate from outside suppliers and therefore this will be the first time that it enters into the business area of substrate material production.
In the statement, Kasai said that the joint venture would help it to increase the competitiveness of its headliners by starting in-house production of substrate which it hopes will further increase its headliner sales globally.
The company added that Sanwa Kogyo has expertise and high technology to help it achieve this aim.
In addition, Kasai plans to begin producing urethane materials in North America using Sanwa's expertise.