Toa Bō Corporation is selling its Chinese subsidiary, a specialized nonwoven textile manufacturer for automotive interiors, to better manage losses amidst declining Japanese automotive production.

Target Company Overview

Toa Bō Corporation, listed under the code 3204, has decided to divest its Chinese subsidiary, Guangzhou Dongfuhui Special Textile Co., Ltd., which specializes in nonwoven fabrics for automotive interior materials. This strategic move follows the downturn in production from Japanese automotive manufacturers, triggered by the rising prominence of electric vehicles (EVs) in the Chinese market. The decision stems from ongoing financial losses at the subsidiary, as indicated by a reported sales revenue of 575 million yen, operating losses of 91 million yen, and net assets amounting to 765 million yen as of the fiscal year ending December 2024.

Industry Overview in China

The automotive industry in China is undergoing a transformative phase, driven largely by the proliferation of electric vehicles (EVs) and a shift towards sustainable practices. As traditional automakers adapt to these new market conditions, many have experienced a decline in production levels, impacting related industries such as textile production for automotive parts.

Nonwoven fabric manufacturers, like Guangzhou Dongfuhui, have endeavored to innovate and cater to the evolving demands of the automotive sector.