C.I. Wu, chairman of the Ta Yih Group, the largest supplier of auto lamps in Taiwan, hopes to become No. 1 in mainland China as well this year despite the continuing weakness of the world economy.

Wu is optimistic about achieving this goal because of his group's rapid expansion in both marketing and production. Both of the group's two major companies, Ta Yih Industrial Co. and TYC Brothers Industrial Co., are engaged in energetic expansions both at home and overseas.

Ta Yih Industrial will boost capacity at its factory in mainland China's Fuzhou to a level of 180,000 vehicles a year by October this year, thanks to an investment of NT$100 million (US$2.8 million). This is up from a rate of 120,000 vehicles at the end of the first quarter of this year, and just 60,000 at the end of 2001.

The company concentrates on OEM (original equipment manufacturing) contracts from carmakers. It opened the Fuzhou facility in 1999, and began turning a profit there the following year.

In Taiwan, Ta Yih Industrial controls 85% of the OEM market, with enough production to supply 450,000 vehicles a year. Its hopes, however, are focused on the mainland, where the car market is expected to soar from three million vehicles last year to four million this year.

Major customers in the mainland are Feng Hsing Motor and Southeast (Fujian Motor), both joint ventures between Taiwan's Yulon Group and mainland Chinese carmakers. In Taiwan, the biggest customers are China Motor, Yulon Motor, Ford Lio Ho Motor, and Kuo Zui Motor.


Soaring Revenues


Revenues for the Fuzhou factory soared 447% in the first quarter of this year, to NT$22 million (US$630,000), thanks to rising orders from the two big buyers there. The company predicts that revenues for all of 2003 will double last year's figure. The factory has not been affected by the SARS epidemic, chairman Wu claims.

At home, Ta Yih's first-quarter revenues rose 39% from the same period of 2002, to NT$735 million (US$21 million), and pre-tax profits for the quarter skyrocketed 140% to NT$73 million (US$2 million). The improvement is due to increased orders from domestic carmakers and aftermarket suppliers, as well as surging contracts from Japanese carmakers.

The company's total revenues reached NT$2.5l billion (US$70 million) last year, a 25% gain over 2001.



TYC Brothers, which depends on the aftermarket for over 85% of its orders, registered an even higher growth in revenue in 2002: 27%, to NT$5.6 billion (US$160 million). The figure is predicted to rise to NT$6.5 billion (US$190 million) this year.

The company is building a new factory in the southern Taiwan county of Tainan. This new facility will hike production capacity to two million sets of lamps with a value of NT$10 billion (US$290 million) a year, reports the firm's spokesman, Eric Hsia.

Thanks to marketing successes in the United States and Europe, those two areas now account for 60% and 15%, respectively, of TYC's total revenue. Last year the company struck a deal with Universal Studios for the supply of remodeling lamps for use in the moviemaker's films, and another for promotion of the lamps used in Universal's films in all of the 3,000 Auto Zone outlets in the U.S.


Insurers Come on Board


In addition, Nationwide Mutual Insurance Co., the sixth-largest insurance outfit in the U.S., recently approved the use of TYC Brothers aftermarket lamps as replacement parts following certification of those lamps by the Manufacturers' Qualification and Validation Program (MQVP). Other major American insurers, including Allstate Insurance and USAA, are expected to follow suit.

Hsia says that these insurance firms are attracted by TYC's product quality and relatively low prices, which allow insured motorists to pay lower insurance premiums than those who insist on using OEM parts.

TYC moved into the U.S. market in 1994 and now claims to control around 70% of aftermarket lamp sales there. Keystone Auto Parts absorbs 60% of TYC's global shipments, and its orders are likely to increase following its recent acquisition of rival suppliers. Other American customers include automakers Federal Mogul, Visteon, and International Truck & Engine Corp.

To serve American customers more efficiently, the company has set up warehouses in Los Angeles, Cranbury (New Jersey), Atlanta, Chicago, and Dallas.

In Europe, the company took an initial step in a plan to sell products through its own outlets by establishing its first European warehouse in Holland. (In the past, it has depended on European importers.) Over the next few years, the company plans to open four or five more warehouses throughout the continent. Among TYC's major European customers are Bosch and Siemens, the latter of which signed a pact with the Taiwan manufacturer recently for the marketing of products under the "Siemens TYC" brand. This deal alone is expected to boost TYC's parts-retail business four or five times over last year.

TYC has also added other auto parts to its product line as part of its plan to become the biggest one-stop supplier of auto parts in Taiwan.

In recent years, mainland China has emerged as both a major production base and market for TYC. The company opened its first mainland factory in Zhejiang Province in 1995 to supply OEM orders from mainland carmakers; today the factory is filled to overflowing with orders, and is undergoing a US$8.5 million expansion. Another TYC joint venture, in Harbin, is also being expanded.

The mainland market is expected to generate NT$800 million (US$23 million) in revenues for TYC this year, up from NT$330 million (US$9.4 million) in 2002.

Another enticing market for TYC is India, where, like in China, the car market is expected to grow at double-digit rates over the next few years. The company invested in a lamp factory there during the previous quarter.

Another overseas factory is in Thailand, where production started in the second half of last year. The new facility is expected to rake in revenues of 270 million baht (US$6.4 million at THB42:US$1) this year, up from 100 million bath (US$2.8 million) in 2002.

A TYC-invested factory in Iran produces OEM lamps and is expected to realize a turnover of NT$1.1 billion (US$31 million) this year, compared with NT$720 million (US$21 million) last year.

Major foreign auto companies that use TYC lamps include Ford Motor (South Africa), Magnetti Marelli (Italy and the United Kingdom), Mako (Turkey), Triumph (U.K.), and Federal Motor (Indonesia).

The Ta Yih Group is now placing emphasis on high-intensity discharge (HID) lamps and light-emitting diode (LED) lamps. Deliveries of small volumes of HID lamps for luxury cars such as Yulon's Cefiro have begun--these lamps are still too expensive for cars in general--and LED-lamp fixtures are now being developed.

Institutional investors in Taiwan are impressed by the Ta Yih Group's performance, and predict that both the group's revenues and profits will register a 20% improvement this year.