Taiwanese Auto Parts Makers Eye Recovering U.S. Market

Taipei, May 7, 2012 (CENS)--Sales of new cars in the U.S. grew 10% from the same period of last year (YoY), showing a positive sign for that market, as well as good news for major auto-parts suppliers in Taiwan.

Industry sources said that major American automakers are optimistic that the U.S. new-car market will reach about 15 million units this year, and Taiwan's suppliers of original equipment (OE) parts to American automakers can expect bigger orders.

Hota Industrial Manufacturing Co., Ltd., a major supplier of transmission parts, for example, currently indirectly supplies differentials and torque converters to the Big-Three American carmakers through major customer BorgWarner, is preparing for increasing orders this year.

In the third quarter of 2011, Hota won an order for torque-converter parts for Chrysler's pick-ups, saying that the order volume has been increasing month by month, leading to its record-high monthly revenues in the first three months this year.

Increasing orders from the U.S. and smooth exports to China motivate institutional investors to forecast that Hota's revenue could challenge a new high of NT$3 billion (US$100 million) this year.

The aftermarket (AM) replacement parts market in the U.S. is also expected to benefit from increasing new-car sales, said industry sources. Taiwan, as the largest supplier of AM collision replacement parts to the U.S. market, is also expected to win more orders.

Tong Yang Industrial Co., Ltd., the world's largest maker of AM plastic body-parts, began capacity expansion for AM products at its headquarter factory in Tainan, southern Taiwan in 2011, and has raised capacity of plastic parts, sheet-metal parts and cooling-system parts by 23%, 75% and 73%, respectively, hence is fully prepared for increasing AM-parts orders from the recovering U.S. market.

Crispin Wu, Tong Yang's president, pointed out that employment in the U.S. has shown recovery, and consumer spending in February set a seven-month high, in addition to new-car sales growth in March, all of which show an almost-confirmed economic recovery, which will also pump up demand for AM parts in the second half.