Heavy Snows Stimulate Demand for Replacement Auto Parts

The series of winter storms dumping large amounts of wet snow in the southwestern United States has driven replacement auto-parts traders to increase their inventories to levels that can meet the expected strong demand, and major Taiwanese suppliers of aftermarket (AM) replacement parts have been working overtime to fill the urgent needs of their customers. The surge in demand is further elevating their revenues in this traditional peak season.

In addition, industry sources said, legislation calling for the compulsory adoption of tire-pressure monitoring systems (TPMS) on new cars has been passed in North America, leading to an explosive demand for these systems. Several major local producers that entered the TPMS business at an early date are expected to enjoy increasing revenues as a result, including the Mobiletron Electronics Co., Cub Elecparts Inc., Tung Thih Electronic Co. (TTE), and E-Lead Electronic Co.

Local auto-parts makers noted that the fourth and first quarters are the periods of peak demand for AM replacement parts in the U.S. and Europe because of the increased number of accidents during the snow season. This year demand is stronger than ever because of vast areas of the U.S. that have been affected by heavy snows, and the accidents that occur when the snow begins to melt and roads are especially slippery are creating strong demand for collision replacement parts such as engine hoods, auto lamps, fenders, door panels, side mirrors, radiators, and  bumpers.

With an eye on the lucrative opportunities in the replacement parts market, the Tong Yang Industrial Co., already the world's largest maker of AM plastic body parts, has been aggressively developing cooling-system products such as radiators and evaporators. Through an intensive capacity-expansion project carried out over the past three years, Tong Yang has expanded its production capacity for different plastic and sheet-metal body parts as well as cooling-system parts. As a result, the company's revenues have been hitting new records monthly from the fourth quarter of 2013.

Taiwan is the world's biggest supply base for high-quality AM auto lamps, and the major domestic manufacturers TYC Brothers Industrial Co. and Depo Auto Parts Ind. Co. have reported increasing shipments in the high season. TYC's chairman, J.C. Wu, said that his company aims for its revenues to grow 20% this year, to NT$20 billion (US$666.7 million). Depo has been reporting high profits, and institutional investors are optimistic about the company's operating results.

Operating Results of Listed Taiwanese AM Auto-parts Makers*
Company	January 2014 Consolidated Revenue	YoY Growth	EPS for Q1-Q3 2013
Tong Yang	NT$1.74 billion	10.88%	NT$1.78
Y.C.C. Parts Mfg. Co.	NT$121 million	9.39%	NT$2.28
TYC Brothers	NT$1.56 billion	13.38%	NT$0.52
Gordon Auto Parts Co.	NT$196 million	-10.76%	-NT$0.02
Depo	NT$1.28 billion	13.06%	NT$5.79
*Listed on the Taiwan Stock Exchange (TSE) Source: TSE's Market Observation Post System (MOPS).