Taiwan Auto Parts Suppliers Make Headway in OE Market
2003/04/25 | By
Eyes on the World
One of the majors leading the charge into the OE market is Mobiletron Electronics Co., Ltd., one of the world's most comprehensive suppliers of automotive ignition modules and alternator components, including voltage regulators, rectifiers, and diodes. Through constant investment in mold and die development, the company now serves up over 1,000 separate models, used in nearly every make of car and light truck in the world.
Committed to achieving the very best in quality, Mobiletron has won almost all of the major international quality-standard approvals, including ISO9002, -9001 and -14001 as well as QS-9000. The company was listed on the Taiwan Stock Exchange (TSE) in 2001.
After gaining a solid foothold in the auto-parts aftermarket, Mobiletron has been upgrading its business to become a second-tier OE (original equipment) supplier to automakers around the world. The company's products are now also widely adopted on new cars made in Taiwan, mainland China, Turkey, Iran, and other nations. In Europe, Mobiletron is a major supplier to Delco Remy, one of the largest aftermarket brands there.
"There is a very high threshold in the electronic auto-parts market," says Mobiletron sales manager Miriam Lu, "because to become a comprehensive supplier constant and intensive long-term investment in mold and die development is required. Secondly, makers in the line must pass strict quality tests--a process which takes years of substantial financial and skills commitment to complete--to prove the reliability of their products. The second difficulty is more difficult to overcome since aftermarket parts must work with devices that are already quite old."
Lu claims that Mobiletron is already very well qualified to become a second-tier supplier of electronic auto parts to automakers in the U.S. and Europe. "The supply chains in the American and European automobile industry are too rigid to break into within a short period of time," Lu claims, "but Mobiletron is trying to succeed in the two markets based on our overall competitive edge."
In order to win more orders from automakers, Mobiletron has invested heavily in the development of OE and aftermarket parts that are more durable, reliable, and advanced than counterparts available on the market. The company expects to soon demonstrate several innovative electronic parts with extraordinary functions and durability, Lu claims, to consolidate its strong foothold and expand into new markets. The new items, including diode models specifically developed for automobile applications, will make automobiles safer and more convenient, the manager says.
Mobiletron is also leveraging the manufacturing advantages it has achieved as a result of a well- structured division-of-labor scheme in Taiwan and mainland China. "Mobiletron has an almost unmatched global competitive edge due to the support of the strong electronic component industry and related R&D in Taiwan, complementing the low-cost plastic and cast parts made at our mainland Chinese plant," Lu claims. This formidable combination, he says, will make it difficult for other companies to out-compete Mobiletron over the near term.
Aggressive international marketing has further contributed to Mobiletron's success. Though newcomers face a tough time breaking into long- established supply chains in the U.S. and Europe, Lu predicts that his company will eventually succeed through a combination of determination, commitment, and well-directed investment. Among auto-parts makers in Taiwan, Mobiletron is one of the most active in the international market. The company recently set up a plant and office in the U.K. to provide direct regional technical, R&D and after-sales services to customers in Europe, underscoring its ambition for a bigger piece of the maket-pie there.
No-Hands King E-Lead Electronic Co., Ltd. Is also braving the OE frontier with a host of innovative products. The TSE-listed company was established in 1983 as a cellphone-accessory maker and has since grown to become the world's largest supplier of in-car hands-free systems for cellphones.
E-Lead is currently the largest OE hands-free system supplier to almost every automaker in Taiwan, with more than an 80% share of the total market in 2002, or about 320,000 units for new cars. This year, the Taiwan company is scheduled to begin shipping this type of product to most of the leading automakers in the U.S., mainland China, and several Southeast Asia nations.
The firm stepped into the hands-free car-cellphone kit market in 1999 with the demonstration of several aftermarket models sold through 3C (computer, communication, and consumer electronics) retailers and hypermarkets in America and Europe. E-Lead is now the largest do-it- yourself (DIY) hands-free system supplier in North America, where it sells over 30,000 such units per month.
The firm successfully tapped the OE market with the development of a universal in-car hands-free system for all handset brands in 2000. According to Cupit Hsieh, manager of E-Lead's sales department, his company has won numerous patents for the universal system, which can be adapted for any handset model by simply changing the phone cable. Hsieh claims that E-Lead's universal hands-free system is currently the most versatile such product in the world, capable of processing the communication signals of over 95% of the cellphones on the market. "None of our rivals achieve such high compatibility," Hsieh claims.
E-Lead currently has 80-person R&D team, representing more than a quarter of the 350-some workers at its Taiwan headquarters in central Taiwan's Changhua County. In mainland China, E-Lead employs about 150 workers.
After gaining a solid foothold in the hands-free system market, E-Lead now is developing digital in-car multimedia and navigation products. The company has already finalized an initial slew of OE orders for the two new lines. The firm has also been picked by Microsoft as a partner to jointly develop new Windows CFA software specifically for car PCs.
E-Lead has demonstrated several advanced navigation systems, one of the most attractive of which is the EL-909. The EL-909, Hsieh says, is the world's most compact all-in-one car A/V entertainment and navigation model available, combining an AM/FM radio, GPS navigation, DVD/VCD/CD, MP-3 player, infrared remote- control sub-systems, and a seven-inch TFT active- matrix color LCD with a 16:9 aspect ratio. The manager claims that his company has seen interest in the EL-909 from a world-famous auto-parts supplier.
The company's EL-811 multimedia communications/stereo system integrates stereo functions and a Bluetooth hands-free system in a compact unit. The device also has a high-speed digital PLL AM/FM radio and DVD player (also compatible with CD, VCD, CD-R, CD-RW, DVCD and SVCD disc formats), and is Bluetooth hands-free, making it the industry-vanguard model.
Hsieh claims that E-Lead is strong enough to defeat major rivals in Japan, South Korea, Europe, and America due to its reasonable pricing, rich feature mix, and universal compatibility.
R&D Powerhouse
Elitech Technology Co. Ltd., which listed on Taiwan's Emerging Stock Market (ESM) in January 2003, has been aggressively developing its auto-parts business by tapping resources made available by its recent acquisition of a coterie of affiliates within the Ta Yih Group in Taiwan.
The Ta Yih Group is currently the largest OE auto-lamp supplier in Taiwan, accounting for over 97% of the local market. It is also one of the world's largest suppliers of aftermarket auto/motorcycle lamps.
Elitech brings its impressive capacity in mold/die development, design, and technology R&D to a division-of-labor production scheme in Taiwan and mainland China. It also can offer a comprehensive product selection of auto locks, switches, power- window switches, harnesses, and other auto accessories. These advantages, combined with active international marketing efforts, have made Elitech a key OE supplier in Asia, North America, and the Middle East.
"Auto-parts makers in Taiwan can match the Japanese on quality and beat them on pricing," boasts C.T. Chen, assistant president at Elitech's sales technical division. "At the other end of the spectrum, it will take many years for competitors in mainland China and other Southeast Asia nations to catch up with us in terms of quality, so the prospect for Taiwanese companies to develop the OE business overseas is quite bright."
Chen claims that Taiwan auto-parts suppliers are rapidly defeating more and more overseas rivals to win OE orders from automakers not only in Asia but also around the world.
Elitech is QS-9000 and ISO9001 certified and is awaiting ISO14001 approval. The company is a key OE supplier of key sets, heater controls, power-window switches and headlamps to most local automakers, and it also supplies these products to many world-class brands.
According to Chen, Elitech owes much of its competitive advantage to its efficient mold/die plant in southern Taiwan. The 80-worker mold plant develops numerous molds and dies to constantly expand Elitech's product lines and, in some cases, also meet the needs of other affiliates for urgent, high-quality items. The plant also develops many high-precision plastic injection and zinc/aluminum alloy cast dies for local optoelectronic and information-technology makers.
Another advantage, it states, is its strong R&D capability and abundance of experienced personnel. These assets have helped the company diversify into new product lines, such as high-intensity discharge (HID) headlamps.
David Ou, project manager of Elitech's domestic division, says that his company is the only local maker of HID auto headlamps and E-mark- certified conversion kits. The company is also extending its high-level R&D and design capability to other added-value auto parts, including high-end heater-control assemblies, which are supplied to China Motor Corp. on an original design manufacturer (ODM) basis.
In March 2001, Elitech's mainland subsidiary merged with Witte-Strattec LLC, the largest lock and key-set maker in the U.S., changing its name to Witte-Strattec China Co. (Elitech has a stake of over 40%). The merger has given Elitech low-cost production support from the mainland subsidiary and helped it to tap business from many major car-production ventures in mainland China, including the Southeast Motor Corp. (a subsidiary of Taiwan's China Motor), Shanghai GM, Shanghai VW, Hainan Mazda and Changan Ford.
Wu clams that his company is upgrading its product line with the roll out of new advanced items, such as transponder keys with built-in chips. It also plans to introduce high-end logic controls and advanced automatic temperature-control systems.