Snow Storms in N. America Drive Up Taiwanese AM Auto-parts Makers' Revenue

Foul wintry weather in North America has boosted revenue  of many makers of aftermarket (AM) replacement auto parts in Taiwan in the fourth quarter of 2013, a traditional high season for the business.

Tong Yang Industrial Co., Ltd., a major maker of AM body-parts and Original Equipment (OE) parts supplier to international automakers, claimed pretax consolidated earnings had increased 50% year-on-year (YoY) in November 2013 to NT$144 million (US$4.8 million), with that in the first 11 months of the year up 62% YoY to NT$1.55 billion (US$51.5 million), translating into cumulative earnings per share (EPS) of NT$2.46 (US$0.08).

Crispin Wu, Tong Yang's president, pointed out that frigid snow storms in the central and eastern regions of North America have caused many car accidents to stimulate demand for collision replacement parts. And November and December are traditional peak months for auto-parts distributors to restock which help to drive demand, he added.

In conjunction with peak season effect, some institution investors forecast that Tong Yang's December revenue will further climb to challenge NT$210 million (US$7 million), or a record monthly high in 2013.

Tong Yang has inaugurated six new production lines at its factories in Taiwan, which, according to Wu, have temporarily helped his company meet flooding orders from global customers, and achieve higher margins. To further expand market share, the company plans to set up a new plastic-injection and an electro-plating factories on the island to meet ever-increasing demand.

The leading Taiwanese auto-parts maker has also achieved clear advancement in its OE-parts exports to international automakers. In 2013, the export ratio of Tong Yang's OE body parts has already risen to 53%, from about 46% in 2012, and the pretax earnings of the business rose 52% YoY in the first 11 months. In Taiwan, Tong Yang's factory in Guanyin, Taoyuan County of northern Taiwan handles supplying OE parts to almost all major local automakers.

In the future, Wu claimed, Tong Yang's OE-parts business division will strengthen development of more instrument-panel, electro-plated parts and molds/dies, to further upgrade  profit margin and head toward becoming a Tier-1 parts supplier.

With stably growing new-car sales in China, Wu said that several Tong Yang's new parts-production ventures with Chinese automakers are scheduled to kick off production in 2014 without worrying about orders, including the Foshan plant of Faway Tong Yang in Guangdong Province, the Xiangyang Tong Yang in Hubei Province (electro-plating plant), Foshan Tong Yang etc.

Tong Yang recently bought back a 12% share in its Chinese business division from a local venture-capital firm, expecting more lucrative returns from across the Taiwan Strait in the future.