| Auto-parts Makers in Taiwan Look For ... |
| Automechanika Malaysia |
| LAS VEGAS show in Nov.2009 |
| 2009 autoparts' catalog |
| website updated again, more America ... |
By automax
Published: 2009.07.30
Print 
Email
The global auto industry seems to be running out of gas as the flagging economy keeps buyers off the dealer lots. The woes of the Big Three have been grabbing most of the headlines in recent months, but Japan`s leaner automakers, and legions of parts suppliers, are also feeling the pain this time around. No one knows for sure when the auto market will recover, and the outlook for auto parts suppliers is equally opaque.
All of this spells new challenges for Taiwan`s auto part makers, but it also offers new opportunities as well. Taiwan provides a major share of the world`s high quality, reasonably priced aftermarket (AM) auto parts, accounting for over 80% of the collision replacement parts market in the U.S. With a small local auto market (about 250,000 units a year) and Japanese car brands in the driver`s seat, local auto parts makers have been looking for growth beyond Taiwan`s borders. In addition to the AM market, they are muscling up in the more lucrative original equipment (OE) segment, seeking a stronger foothold in the international supply chains of auto brands.
For Taiwan`s auto parts makers, the silver lining in the global economic meltdown could be a redoubled effort by automakers to cut costs, a trend that Taiwan`s low-cost, high-quality suppliers are well poised to capitalize on.
The outlook seems especially promising in the OE segment. Only about 20% of the locally made auto parts are destined for the OE market, but that ratio has been growing in recent years as producers improve quality and keep prices competitive, qualities that have endeared made-in-Taiwan parts among cost-cutting automakers and tier-one parts suppliers in Europe and the U.S.
One such company is Magna International Inc. The world`s fourth-largest auto-parts supplier, Magna has established two R&D centers in Taiwan and is bullish about the local industry`s prospects. "Taiwan has several advantages in the auto-parts industry, including rapid prototyping, solid industrial infrastructure, and advanced production techniques," says Frank O`Brien, executive vice president of Magna`s Asia-Pacific operations
Positive Signs in OEM Biz
Already the world`s No. 1 supplier of AM auto-parts, Taiwan is expected to further bolster its market share in this segment as Europe opens its replacement-parts market. Local producers are also winning a growing share of outsourcing orders from big international automakers and tier-one parts suppliers in the U.S. and Europe.
Tapping into the supply chains of automakers and tier-one parts suppliers is not an easy task since automakers and major parts suppliers are often closely joined at the hip. But automakers` supply chains break down, Taiwanese producers are expected to win a growing share of OE orders. This would also open a new door for local makers to expand beyond the saturated domestic market.
Parts suppliers in Taiwan are already increasing OE part exports, especially to the overseas plants of Japanese automakers, mainly in the ASEAN area and mainland China.
New Industry Terrain
Intense competition from Japanese auto brands has been a major factor driving U.S. automakers or tier-one parts makers in the U.S. and Europe to outsource from Taiwan parts suppliers. The trend has accelerated along with the global downturn as cost cutting becomes the mantra for survival.
Japanese auto brands have been eating away market shares from the major European and American auto players, in both regional and global markets. This has seriously endangered the survival of tier-one parts suppliers in the said two regions, as the frequent Chapter-11 news from the segment confirms. For Taiwanese parts suppliers, the fallout has opened new doors to the previously closed OE market, providing an access to the global automakers` supply chains and long-term supply partnerships.
Among the tier-ones that now outsource products from Taiwan or cooperate with local partners to cut costs include many of the industries biggest names, such as Visteon, Dana, Delphi, and Magna.