Taiwan to Win More Outsourcing Orders for OE Auto Parts from Japanese Automakers

Taipei, Sept. 27, 2012 (CENS)--The political tension between Japan and China over the disputed Senkaku islands, and the higher local production costs are driving Japanese automakers to shift their parts outsourcing orders from China to Taiwan, according to industry sources.

Some local industry sources said that after the massive earthquake on March 11, 2011 major Japanese automakers such as Toyota, Nissan and Honda have boosted their overseas parts outsourcing rate to 30% to counter power supply shortage and mounting costs, with the outsourcing orders mainly absorbed by suppliers in China, Thailand and Taiwan. But Taiwanese suppliers have won increasing business opportunities since the big floods erupted in Thailand last year.

The political tension between Japan and China is also Japanese automakers to switch to Taiwan parts orders originally released to Chinese suppliers to Taiwan, and industry insiders said that local parts makers are expected to play an increasingly important role in major Japanese automakers' supply chains.

Tong Yang Industrial Co., Ltd., a major original equipment (OE) body-parts supplier in Taiwan, reportedly has won big-ticket orders from Japan, and is scheduled to begin shipments soon.

Ta Yih Industrial Co., the largest OE auto-lamp supplier in Taiwan, also benefits from increasing mold-development orders from its Japanese partner Koito Manufacturing Co., a major global auto-lamp OE supplier. In addition to sales to Japan, Ta Yih is also supplying lamp molds to Koito's subsidiaries or joint ventures in China, Thailand, Indonesia, South Africa, India etc. Ta Yih said that its revenue generated from mold sales is expected to double this year.

Tong Yang pointed out that currently about half of its OE-parts output is exported to American and Japanese automakers, so the company has been enjoying smooth OE-parts sales increase.

Local parts makers said that it's not easy to win OE orders from Japanese automakers, who are particular about product quality. Over the past two years, however, they added, all signs have shown that Taiwan is a stable and reliable supply base of high-quality, reasonably-priced auto parts.

Industry sources said that the order-shifting (from China and Thailand to Taiwan) effects are expected to become increasingly clear. A good example is that representatives from different Japanese automakers have been calling upon Tong Yang and expressed willingness to place orders for an increasing number of product categories.