Chinese Auto Parts Industry Surprises with 34.9% Growth

Author: Bertel Schmitt

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

Despite the global slowdown, the Chinese auto parts industry powers ahead. In the first seven months of 2008, the value of China\'s auto-parts exports grew by 34.9% year on year (y/y) to $8.88 billion, China\'s Customs Bureau said >.

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

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.

Where are Chinese auto parts most popular? In the U.S., in the EU and Japan. The U.S.A. took parts for $2.69 billion ( 8.8%), Europe imported parts for $1.6 billion ( 39.2%), Japan sourced parts for $1 billion ( 36.8%). These three markets alone accounted for 59.6% of the total value of China\'s Jan-Jul auto-parts exports.

This validates the predictions made by our company in previous months:

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 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.) 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 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.