Mitsubishi Heavy Industries is adding new production capacity for automotive turbochargers in Shanghai, China, expecting stricter fuel economy standards here to spur local demand for a component that helps engines run more efficiently. The Japanese machinery maker plans to boost output of turbochargers by a 20% annual rate at its Shanghai production hub.
This year, the company will add two new final assembly lines, each capable of producing 200,000 units annually, followed by four more lines in the coming years to reach total yearly output of 4.35 million units. This would mark a 40% jump from the current level of 3.15 million units.
Mitsubishi Heavy will also assemble cartridges, a core turbocharger component, in China. It will set up two production lines for the part this year. The company will continue to increase annual production by a fifth after 2019.
About 40% of cars produced in China are equipped with turbochargers, most of them from U.S. and European makers like Germany's BMW and Volkswagen. But demand among Chinese automakers is also starting to rise as the government seeks to cut average fuel consumption. By 2020, the fuel economy standard will reach 5 liters per 100km from the current 6.7 liters, a gain of about 30% in efficiency. The government is considering pushing further to 4 liters several years after that.