Better Gas Mileage

Unfazed by the global meltdown, Chinese parts auto parts industry reports record growth. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.

While markets all over the world tank, while auto maker flirt with bankruptcy, the Chinese auto parts industry goes full steam ahead. In the first seven months of 2008, China’s auto-parts exports skyrocketed by 34.9% year on year (y/y) to $8.88 billion, says a report released by China’s Customs Bureau

China exported $ 8.73 billion worth of auto-parts from January to July 2008.

Amazingly, the biggest power behind this export boom were foreign invested companies and joint ventures. They exported $4.56 billion of auto-parts, up 31.6% y/y, amounting to 51.4% of the total.

Who likes Chinese auto parts the best? The U.S., EU and Japan. The U.S.A. sourced parts for $2.69 billion ( 8.8%), Europe imported parts for $1.6 billion ( 39.2%), Japan acquired parts for $1 billion ( 36.8%). These three markets alone gobbled up 59.6% of 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.) With lower raw material prices and lower shipping costs, we expect further increases, especially in the after sales segment. The OEM segment should also grow, because the world’s auto makers try to off-set their lower sales by purchasing lower cost parts in China.

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