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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.
From January to July 2008, China exported $ 8.73 billion worth of auto-parts.
Foreign invested companies and joint ventures exported $4.56 billion auto-parts, up 31.6% y/y, accounting for 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.
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This validates the previous predictions made by our company:
1.) Especially when targeted at after sales, the parts market is recession-proof. People may stop buying cars. But they don't stop driving. Wear and tear case more parts to be sold.
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 most powerful drivers of this growth are foreign companies. They use China for low cost production base, they sell the product under their own brand name at high margins, and all too often they complain about cheap Chinese imports.
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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About the Author
Author Bertel Schmitt is CEO of Sinamotive, an auto parts sourcing company , backed by U.S. venture capital. Before founding Sinamotive, Mr. Schmitt worked for 30 years as a marketing consultant to Volkswagen AG.
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