China's Electric Vehicle Boom Drives Surge in Japan's Auto Machine Tool Orders

According to foreign media reports, the latest data from the Japan Machine Tool Builders’ Association shows that from January to July this year, the total amount of automotive machine tool orders placed by China with Japanese companies reached 78.1 billion yen (approximately 527 million US dollars), and the annual order volume is expected to reach a new record high.

As competition among Chinese new energy vehicle manufacturers intensifies, Japanese machine tool manufacturers are benefiting from the increasing number of automotive-related equipment orders.

In 2022, the electric vehicle boom drove a surge in demand for automotive machine tools. However, as the market focus shifted back to internal combustion engine vehicles, the growth momentum of automotive machine tool orders gradually slowed. In 2024, the total value of automotive machine tool orders both domestically and internationally in Japan decreased by 3% year-on-year, falling to 324.5 billion yen. By region, domestic orders received by Japanese companies declined by 10% to 91 billion yen, orders from Europe dropped 27% to 25.2 billion yen, and orders from North America fell 23% to 41.4 billion yen. In contrast, automotive machine tool orders from China exceeded those from Japan’s domestic market, increasing by 16% year-on-year to 106.8 billion yen.

Image Source: Makino Milling Machine

The share of new energy vehicles in new car sales in China is increasing, prompting both automobile and parts manufacturers to ramp up investments in related facilities. Although Japanese machine tool manufacturers face competition from local Chinese companies, they have won customers through high-quality products, especially in finishing processes.

A representative from Makino Milling Machine stated, "Our strength lies in micron-level machining precision, and Chinese new energy vehicle manufacturers who prioritize quality have chosen us." Since receiving a large procurement order in 2021, the company has maintained a stable volume of orders.

Makino's core products are CNC machine tools that process materials through tool rotation. The company is currently focusing on expanding the production capacity of such products at its factories in Kunshan and Wuhan, China, with plans to achieve an annual production target of 2,050 units by 2029, a 21% increase compared to 2023. Although the precision of machine tools produced domestically in China has not yet reached Japanese standards, Makino is actively expanding its market clientele by offering more competitive prices and shorter delivery times.

Japanese Tsugami Company, another major machine tool manufacturer, derives over 70% of its revenue from the Chinese market. The company representative emphasized, "In addition to excellent machining quality, we have more than a thousand professional maintenance and inspection technicians in China. A comprehensive after-sales service system is the key factor for customers choosing us."

In 2024, Tsugami expanded its factory in Zhejiang Province, China. The upgrade focused mainly on lathe production, increasing capacity by 20%. The company stated that the factory can now produce 20,000 small machine tools annually.

A representative from Makino stated, "Although overall investment by Chinese automotive companies is stabilizing, demand for mold-related projects remains active."

Molds are essential for manufacturing components such as car doors, engine hoods, and battery housings. BYD has multiple mold manufacturers located in Beijing, Shenzhen, and Japan.

Meanwhile, BYD is internalizing mold production through its group company to enhance price competitiveness.

Other independent mold manufacturers are also increasing investments to meet automakers' demands for faster delivery and cost reduction. As a result, orders for CNC machine tools and other equipment from Japanese machine tool manufacturers have increased.

However, the aforementioned order growth may slow down. A representative from Tsugami revealed, “Although the current order volume remains strong, order cancellations are gradually increasing, and there is uncertainty in the market outlook.” The company pointed out that, against the backdrop of intense competition in the development and sales of new energy vehicles in China, there are signs that customers are re-evaluating their equipment procurement plans.