February 13, 2008 -- IHI Corp. (TSE:7013) plans to build a turbocharger plant in Germany via a joint venture with German automaker Daimler AG as part of efforts to bump up output in Europe.

The major maker of heavy machinery owns a 51 per cent stake in the joint venture, with Daimler holding 49 per cent.

The plant, to be located in the province of Thuringen, will come online next year, with output to reach 1 million units in fiscal 2011.

Another turbocharger plant operated by the joint venture on the outskirts of Milan, Italy, will have its annual production capacity ramped up to 1 million units by fiscal 2011. It currently churns out 600,000 turbochargers a year.

Subsequently, IHI's European turbocharger output capacity in fiscal 2011 will be 2 million units per year, more than triple the current 600,000. The company is likely to spend a total of 10 billion yen (US$93.53 million) to lift production.

Using exhaust gas, turbochargers rotate a car's turbine. The rotating force delivers air from the compressor to the engine, boosting fuel efficiency.

In Europe, turbochargers have chiefly been used to lift the power of diesel cars, which emit little carbon dioxide. But automakers are increasingly using turbochargers in gasoline-powered autos to lift fuel efficiency and maintain power, instead of trimming engine displacements. As a result, IHI sees European demand surging.

This fiscal year, IHI is forecast to make 2.7 million turbochargers, with global sales to hit roughly 70 billion yen. It hopes to lift its current global market share of 15 per cent to over 20 per cent in fiscal 2011. The company presently shares the third spot with rivals such as Mitsubishi Heavy Industries Ltd. (7011).

Source: Asia Pulse