Foreign Makers Are Major Turners of Drive-shaft Segment in China

Other promising news, despite the gloomy auto industry globally, has been reported in the drive-shaft supply market in China, where the remarkably resilient auto market has been fueling the production of the critical part along the driveline: Chinese makers turned out 9.9 million drive shafts in 2007, including 8.6 million constant-velocity types, to generate 1.18 billion yuan in value.

Multinationals Dominate

Similar to the overall auto-parts sector in China, the drive shaft segment is also dominated by foreign firms, notably GKN Driveline which supplies 50% of sedans. Despite its overwhelming lead, GKN does not seem to be complacent, shown by its plan to build the fifth factory in 2009, in Wuhan this time and to join forces with the others in Shanghai, Chongqing, and Jilin.

　

GKN Driveline racked up revenues of US$330 million in 2007, mainly from selling 2.4 million drive shafts and 600,000 universal-joint drive shafts. In the first nine months of 2008, its corporate revenues grew 7.5% year-on-year to US$260 million, mainly from shipping 3.77 million passenger-car constant-velocity drive shafts, up 11.5%, and 180,000 commercial-vehicle drive shafts, up 20%; while 117,400 drive shafts were exported during the period.

Domestics Make Headway in Aftermarket

With auto parts supply in China still a relatively young sector, some domestic firms, despite lagging technologies, are making significant headway as aftermarket suppliers in overseas markets, due mainly to price competitiveness and flexible management. In addition and alongside the continually steady growth of the Chinese auto industry, these suppliers have also begun to tap the domestic OE (original equipment) market, with a sample of the more notable, sizable OE firms profiled below.

Wanxiang Group

A leading auto-parts supplier in China, Wanxiang Group offers a wide-ranging line covering suspension and braking products, including universal joints, bearings, constant-velocity drive shafts, drive shafts, brakes, shock absorbers, seals and rollers.

One of the major pioneers in auto-parts export in China, Wanxiang started to ship abroad universal joints in the early 1980s before diversifying into the domestic market later on. First supplying constant-velocity universal joints to Hyundais and Kias in China in January 2008, the group then became an OE supplier to Dong Feng-Citroen Automobile Co., Ltd., FAW Haima Automobile Co., Ltd., and Chery Automobile Corp. Ltd. In 2007, Wanxiang Group chalked up revenues of US$6 billion, ranking second in the Chinese auto industry.

Taizhou Hongli Automobile Parts Co., Ltd.

A China-Taiwan joint venture focusing on the OE market and planning to diversify into the aftermarket, Taizhou Hongli Automobile is the largest drive-shaft manufacturer in Taizhou, Zhejiang Provice, running two factories, one in Yuhuan and another in Pinghu. Its product range includes some 1,800 items for Chinese, Japanese, American, European, and Korean cars. The company racked up revenues of US$40 million in 2007, 90% of which derived from exports to the U.S., Australia, Southeast Asia, the Middle East, and the European Union.

GSP Group

Founded in 1985, the company mainly manufactures constant-velocity joints and drive shafts, with an annual capacity of 6 million for the former and 1.8 million for the latter. Exporting over 90% of its output to some 90 countries, the company racked up revenues of US$52 million in the first 10 months of 2007, of which US$40 million came from export.

Taizhou Heri Auto Parts Co., Ltd.

Founded in 1986, the company produces constant-velocity joints and drive shafts in a factory spread over 50,000 square meters, where the 820 work stations turn out parts that generate annual sales of US$15 million.

Taizhou Kent Driveline Co., Ltd.

Established in 1992, the company has a product range of 1,500 items, including Rzeppa constant-velocity joints and universal joints. With a monthly capacity of 60,000 Rzeppa constant-velocity joints and 30,000 drive shafts, Taizhou Kent exports to major clients in Western and Eastern Europe, as well as South America.