An interview with company executives found that companies producing brakes and exhaust systems, batteries and shock absorbers are trying to keep up with the pace of global auto giants' expansion in China.
Parts giants have expanded production capacity Donovan, vice president of Tenneco Automotive, said that this is a good sign and he is worried about whether he can keep up with the growth of Chinese autos. The company has three joint ventures in China. Donovan said that in the first six months of the year its company’s sales in China increased by 87% compared to the same period last year. He predicted that Tenneco’s revenue in the Chinese market will continue to grow at a rate of 25% to 30% per year over the next three years. By 2006, China's revenue will account for Tenneco's total revenue from the current 4% to approximately 6% or even 7%. Tenneco announced that its total revenue in the third quarter of 2003 was US$915 million, which was higher than US$856 million in the same period of last year.
At the same time, Chen Jinya, president of Delphi Corporation, the world's largest auto parts supplier, predicts that Delphi’s sales in China will reach approximately US$1 billion this year. Delphi will increase factory shifts and introduce new technologies to ensure that the demand for its battery, brake, and suspension systems grows. Chen Jinya said in an interview that this expansion will continue for several years. Must first increase production capacity before it realizes revenue. The Chinese market is most favored by the giants for some time. General Motors, Ford Motor, Toyota Motor, and Volkswagen have all announced that they will carry out large-scale business expansion in China. This growth has led to unimaginable expectations of the Chinese auto industry and made China the target of suppliers who may be struggling in their home markets. Donovan said that China has become the key to the automotive industry. Tenneco’s sales in the equipment and maintenance market in North America continued to shrink.
At the same time, although there are signs that the growth of the Chinese auto industry may have begun to weaken. Donovan said that, for example, the inventory of some auto companies began to grow. However, parts suppliers may not be affected by a sudden slowdown in vehicle growth to a certain extent because parts suppliers can continue to provide auto parts service.
Chen Jinya said that the crackdown on counterfeiting and increasingly fierce competition will also squeeze some inefficient Chinese component manufacturers out of the market, thus allowing foreign companies to gain more room. He said that there is a certain degree of excess production capacity, but this is mainly a problem faced by Chinese companies and is reflected in outdated production capacity.