Seemingly oblivious to the the global slowdown, Chinese auto parts industry picks up more steam. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.
Markets all over the world may tank, auto makers may flirt with bankruptcy – the Chinese auto parts industry is unfazed. China’s auto-parts exports skyrocketed in the first seven months of 2008 by 34.9% year on year (y/y) to $8.88 billion, according to a report released by China’s Customs Bureau >.
China exported $ 8.73 billion worth of auto-parts from January to July 2008.
Most of this growth was driven by companies that usually complain the most about Chinese imports. Foreign invested companies and joint ventures exported $4.56 billion of auto-parts, up 31.6% y/y, amounting to 51.4% of the total.
The three major destination markets of China-made auto parts are the U.S., EU and Japan. Parts for $2.69 billion ( 8.8%) were sold to the U.S.A., parts for $1.6 billion ( 39.2%) were sold to the EU, and parts for $1 billion ( 36.8%) were shipped to Japan. These three markets contributed 59.6% to the total value of China’s Jan-Jul auto-parts exports.
This underscores the predictions previously made by our company:
1.) The parts market is recession-proof. Especially when targeted at after sales. People hang on longer to their cars. Wear and tear results in more parts bought.
2.) Europe takes an ever increasing amount of Chinese parts. Exports to the U.S.A. still grow, but at a more leisurely pace.
3.) The main drivers of this growth are foreign companies, who use China as a low cost production base and sell the product under their own brand name at high margins.
4.) Falling raw material prices and sinking shipping costs give reason to expect further sales increases, especially to the after sales sector. The OEM segment may also absorb even more Chinese parts. More and more auto makers aim to off-set their lower sales with lower cost parts, sourced in China.
Author: Bertel SchmittThis author has published 8 articles so far.