China’s Auto Parts Exports Recession-proof, Rise 34.9%

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 >.

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.

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.) More and more Chinese parts go to Europe. Export growth to the U.S.A. is diminishing.

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.