Thursday, Aug 11, 2022

Tohoku Pioneer: constantly boosting the value of craftsmanship to pursue the ultimate sound quality

Interview - April 18, 2022

Even as the company that holds one of the largest market share in the speaker business and are widely known for their TAD Ultra High End audio systems, Tohoku Pioneer is not except from being impacted by new challenges such as the switch in the automotive industry towards EV, and the global pandemic. We sat down with President Mitsuhiro Watanabe to learn how they are turning these challenges into business opportunities and continue to innovate with technologies like their new smartphone app called Car Sound Fit in which customers can simulate the sound quality before and after fitting the speakers, as well as how they are able to increase their sales through online channels.


As a manufacturer of speakers, OLED displays, and precision resin-moulded parts, what in your view are the competitive advantages of Japanese monozukuri?

People say that Japanese manufacturers are excellent because of a culture which is driven by people in the field and also great teamwork and yes, we do have those two strengths because we are a Japanese company. However, we have two main advantages from the R&D and production perspectives.

With regard to production development, our sound business unit has adopted the so called vertical integration business model. We do everything from end to end from the initial contact with potential customers to product design and development based on the customers’ requirements. It’s all done within our group. But we are not just a mass producer of cookie-cutter products. Our strength lies in the value of the craftsmanship we’ve been able to create, and that appeals to people.


What distinguishes you as a speaker and OLED display maker, and what are your unique selling points?

The core components for sound systems like the diaphragm, the voice coil and cone paper were developed in house by us alone, and with that capability we can produce the products that best fit the customers’ request. Our sound design engineers can pursue the ultimate sound quality because they don't have to rely on a third party to develop something. That’s a big advantage for us and our product planning and production.

We select all the materials for components or parts that we design, develop and produce on our own and we can run simulations of the performance in advance so that we can be really selective about what materials we use. Our ability to make and assemble our own parts into components and products means that the end product is pretty much the same as what we had planned to build. That's the capability I’m referring to, and it’s the main source of differentiation from our competitors.

We also have advanced simulation technology so that we can reproduce the product’s performance before we actually start production or development, this allows us to reduce the lead time for development. In testing, we can feel the sound quality before assembling something.

When a sound system engineer runs a sensitivity analysis without the simulator, the result varies depending on the design so it's really hard to maintain the consistency of the testing, but with the simulation program we can overcome that issue and we don't have to repeat the trial-and-error process. That's why our lead time to production has been shortened. For us to differentiate ourselves from competitors in global competition, it's important to use a simulation of the sound itself from the very beginning of the conceptual ideation stage. When we start the simulation program, we are able to figure out what kind of core components we need, and based on that we can develop the core product on our own, in-house. That's how we can make a final product that is exactly in line with what we had planned.

Our TAD products are recognized as our flagship product range and are also recognized as Ultra High End audio systems in the market. For us to produce the TAD super high quality sound, we developed our expertise and experience in material selection, designing and production. All these things also help us to produce our OEM products. When we make a project proposal to automotive makers, we always set up a demonstration of our TAD product, so that the automotive maker can feel first-hand the difference made by our deep understanding and expertise in sound making. Sounds from the TAD speaker will always give the listener a pleasant surprise, and at the same time the sound represents our technology and potential. We take pride in the high quality sounds of TAD because that speaks to the fact that we can conquer the world market with products designed and made in Japan.

Our mainstay products were designed and developed in Japan but produced mainly in  Vietnam in order to lower the cost, but TAD products were designed and built in Japan and marketed to the world. TAD products represent the passion of craftsmen and the pride of engineers.

TAD range speakers

Could you give us an overview of some of your bestselling products, and looking to the future, which have the most growth potential, especially in overseas markets?

We have three product categories. For speakers, we have the high end TAD products that are produced only in small lots. Then we have the aftermarket products sold under  the brand name as “carrozzeria” in Japan and as “Pioneer” in other regions, and thirdly there are the OEM products, produced in large volume. Production volume wise, we are one of the largest manufacturers in the world of speakers.

Let me elaborate on TAD. The TAD branded high end speakers are produced by those who are certified as the “Takumi” which means the “meister” in English. That product quality is attributable to the handmade process used by our craftsmen. For our products we have a different product portfolio ranging from speakers with a 30 centimeter diameter to just a couple of centimeters.

Our key automotive customers are Toyota, Honda and other famous international players, and we are growing our share in higher end cars. With Toyota, almost all of all models are equipped with our speakers. Those three product types have three different target markets, and we have three different styles of production, which is another strength of ours. For exmaple, the OEM speakers for automotive manufacturers, are produced in large product lots such as 10,000, 100,000 or 1,000,000 per year but we never compromise with the product quality because automotive makers are really demanding.

Commercially available speakers bearing the”carrozzeria” brand have a wide range of products, from large diameters of 30 cm to small speakers of several cm sizes, and we are producing them with ingenuity in the production process. Basically, we manufacture on production lines that you generally imagine, but one of the features of our production is that as the model of the speaker to be produced changes, the materials and production jigs used for production are quickly re-trimmed, and the roles are divided between those who assemble and those who prepare for production, so as to avoid creating useless waiting times for each. It adopts a method of efficient production without the break of time.

So for TAD it's all about the handmade process and for the aftermarket products it's a loading-style assembly line system similar to the one for OEM products. The processes are almost all automated. In a sense, we are maintaining the technologies that were built on our traditional style of tech production, but we are also adapting to new trends in technology and the demand for new products. Depending on what is needed, we apply the required components and production process, and that kind of flexibility is also a big advantage for us. We have the spirit to pursue the ultimate sound, and when you combine that spirit with our adaptability to new production processes, this defines our productive competitiveness in production.


What challenges and opportunities do Japan’s demographic pressures present for your company?

Due to the aging society and declining population, we are seeing the younger population which used to be the main car audio purchasers declining because younger people have not seen any increase in their salaries for a long time and they are now more into games or streaming services on their smartphones and they are losing interest in cars and car audio.


What area or areas do you see as having the most potential for your products, and has the Covid pandemic had any impact on your plans?

We are expecting the shrinkage of the in-vehicle audio system market, but because of the COVID-19 pandemic, so-called ‘stay at home’ consumption and demand have been increasing and the people are realizing the limitations of their video streaming service or music subscription service, and of course the E-Sports market is also increasing so the market for good sound is growing. We expect that our business opportunities will be growing, particularly in the personal sound system market because more and more people are exposed to better sound quality in many different situations. Automobile makers are switching their focus to the electric vehicle, but on top of that, autonomous driving technology is advancing, and because of that the requirements for in-car systems has been changing.

People want higher quality sounds because they don't have to focus on driving. They just want to enjoy the sound. And at the same time there are different needs for different sounds, like the warning or beeping sound to remind the driver to pay attention to pedestrians, and noise cancelling might be needed. Due to the lower barriers to entry in the EV business, Sony, Google, Apple and other companies will be involved and high quality sound will be the norm. Consumers always want more and we need to provide things like in-car surround sound systems. We set up a new organization within the company called the Sound Business Group in August 2021. That organization will be like a centralized department for the entire Pioneer group to accumulate and leverage our expertise and technologies on sound, including sound recognition.

Japanese automakers are behind their European and French counterparts in terms of the shift towards electric vehicle production. They are feeling the pressure so they’re either retraining staff or reassigning their personnel to EV production and they need to use trusted partners for working on peripheral components. Sound system creation is something that they want to outsource.Due to supply chain disruptions, particularly the shortage of semiconductor and electronic components, automakers have had to cut production and that’s another reason they don't want to partner with any companies that could be considered risky.

Of course, no company is risk-free, but if something goes wrong the company needs to address that issue seriously to recover the damage as soon as possible and that's why when companies try to find a partner, they really want someone who is really serious about their work and have pride in their work and we are the best in these terms. We can be the best partner because we are based in the Tohoku region, Japan and people in the Tohoku region, Japan are famous for their integrity. The pandemic has brought about a behavioral change to customers, particularly in their consumption behavior, and they see things from different perspectives than before.

In the past the main customers of our branded products were large scale car dealers or car accessory retailers. Now we are sending products directly to consumers because people search websites to find bargains on good products. It's not that the volume sold to traditional retailers has decreased. Sales through online channels have been increasing so the percentage share of car accessory dealers has been decreasing. People spend more time at home because of the pandemic, and people are spending more time on do-it-yourself projects, so we’ve harnessed that trend and posted some videos online showing how to install and maintain our products in customers’ cars, and that helped us to increase sales through online channels.

Also, I want to highlight that sales of TAD speakers have increased. That's also an effect of the pandemic whereby people can't find a place to spend the large sum of money they set aside for overseas travel. Instead of going cruising for example, with the associated high risk of infection, people want to enjoy quality sound at home. Therefore we are receiving enquiries from the US, Europe and China and also some emerging nations. Only the wealthy can afford to pay for TAD speakers because they are priced at $130,000 per pair, but for aftermarket products we like to develop new customer bases so we are focusing on reaching out to younger customers.

We need to use social media platforms for our engineers to make posts about the benefits and beauty of our products. We need to take a different marketing approach for younger people. We expect online channel sales to increase further so we need to improve our website so that we can increase the number of visits and of course we need to work on increasing the conversion rate.


Are there any particular markets or regions that you consider key as part of your international business and in those regions what kind of strategy will you employ? Could please elaborate for us a little bit about your international business strategy?

We will continue focusing our efforts in the developed countries, but we will also start working to reach the Middle East, Africa and Latin American countries because of their growth potential. However, we are going to apply different strategies for different areas and at the same time, we'd like to leverage the ‘cool’ Japanese aspects in our marketing such as the shuriken or samurai and so on. We are working closely with local partners in our overseas operations in addition to Japanese expats because that's the most effective way to create the strategies that are appealing to the locals. That's one of our advantages. First of all, we employ a vertical integration style of production and we have also been continuing to deliver the values that are appealing to people’s emotions, and because we have the largest market share in the speaker business, we can leverage that in our procurement processes as well as in the improvement of our production efficiency.

We also have the capability to develop parts and components in-house so that we can focus on lighter and smaller products and their development, and that helps to make us a great OEM partner for automobile companies. We have good Pioneer products with a loyal customer base, and we cherish them and care about them, so we always keep in mind that we need to produce really top-quality products the Pioneer way for them. Our aftermarket speaker, the TS-Z900 PRS, is one of true Pioneer product and in that product, you will see technologies and expertise that are related to the TAD range.

Aftermarket speaker, the TS-Z900 PRS

For our customers to find the most suitable speakers for their car, we did a survey of various models of cars so that we were able to develop speaker-fitting manuals or guidebooks for each one in digital format, available on our website. We are not just pushing our products to potential customers. We want customers to choose what they really want and need so we developed a smartphone app called Car Sound Fit. With that app, customers can simulate the sound quality before and after fitting the speakers.

Earlier I said that we surveyed the different models of cars to create installation guides, but that's not easy to do because that survey takes a lot of time and effort. First of all, we have to rent a car and then remove the internal panel and then run a 3D scanner to collects data. That data is analyzed by our engineers and put together into a data sheet for the online manual. That's relatively easy for Japanese cars, but not for European or American models. We have to contact our distributors in Europe and the United States to find the car companies who can help us to do it.


What role do corporate social responsibility and environmental sustainability play in your midterm strategy?

The move towards carbon neutrality has been accelerating and because of that the companies were required to work on CSR or contributing to their SDG’s. European companies are ahead of companies in other regions because Europe is ahead of many other regions in terms of establishing standards and because of that, European companies are transforming the industrial structure and spearheading the innovation of the related technology. However, if we work hard to resolve issues from a CSR or SDG perspective, we can find more potential business opportunities. SDG’s are something that all countries in the world have to work together to deal with, including companies like us which have global operations.

First and foremost we are working to reduce the use of plastic and reduce CO2 emissions through the development of lighter and smaller products, which should reduce industrial waste. We believe that we need to collaborate with our customers, especially automobile manufacturers, in choosing which issues we should work on together. The good example is the subwoofer for the Lexus NX, which was able to create products that contribute to plastic reduction while maintaining function.

From this year we are hoping to increase the share of renewable electricity we use to 50% and at the same time we will collaborate with those in the upper stream of the ecosystem so that we can create synergies to reduce environmental impacts. To that end, we would like to produce results so that we can gain trust and confidence from potential partners and increase our presence in the market in better way.

Through our international operations, we were able to assess consumer preferences in different regions of the world and that helped us to create the values that meet the needs of local customers. Also, our global operations help our employees learn about the meaning and benefits of diversity, and help to develop the individual employee too. Overall, these factors will boost our presence in the markets we target.

Effective ways of promotion differ depending on cultures or countries and we can gain such knowledge through our local distributors around the world, so we really value communication with local distributors.

Headquarters in Tendo

Let's say we come back to interview you again in a few years' time. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?

We will keep pursuing the ultimate sounds because that's the only way to boost the value of our company. But the “sound” is quite a broad topic. It can't be seen, but we like to deliver the kind of sounds that only Pioneer can deliver and by improving the quality of sound we can grow our enterprise value and then be a greater company than what we are today. We will continue to create and offer great sound products by leveraging our wealth of expertise and experience in product development and manufacturing while achieving sales growth steadily..

We would also like to consolidate our position in the market as a good in-car speaker system producer. In five years’ time, electric vehicles will prevail but how much market share can we capture in the EV world in terms of in-car audio systems? That's a difficult question. It’s a challenge for us, but the size of our market share in EV car audio market will show you how close we are becoming the world’s market leader in automotive speakers.

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Manufacturing, Japan


Manufacturing, Japan
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Yosuke Kawasaki


Yasuhiro Tochimoto

President and CEO
Kawasaki Geological Engineering Co., Ltd.



Toshikazu YAGUCHI

ATOX Co., Ltd.