China's Auto Part Sector Sees Surge in Overseas Mergers and Acquisitions

As China's auto part industry continues to expand globally, local manufacturers are eyeing overseas acquisitions to gain a competitive edge. The Huaxiang Group's recent acquisition of Lawrence Automotive Interiors' subsidiary and Wanxiang Group's potential buyout of Ford's auto parts assets demonstrate the trend of Chinese companies going global. Industry insiders predict that this trend will continue, with many Chinese auto part makers aspiring to become leading suppliers for overseas brands.

Key Takeaways:

• The Huaxiang Group has acquired a subsidiary of Lawrence Automotive Interiors, a world's third-largest auto part maker, for 3.4 million pounds (US$6.7 million).
• The acquisition enables Huaxiang Group to gain advanced technology in making wood veneer and become a supplier to General Motors Corp's Cadillac, Saab, and PSA Peugeot Citroen.
• Wanxiang Group, China's largest car components manufacturer, is in talks to buy Ford's assets in its auto parts sector after failing to reach an agreement with Delphi earlier this year.
• China's auto part industry is expected to see more overseas mergers and acquisitions as local manufacturers aim to become leading suppliers for overseas brands.
• Doctor Guoyan, with the China Automotive Technology and Research Centre, warns that the industry should focus on technology innovation besides cost-reduction to ensure sustainable development.
• Shen Ningwu, deputy secretary general of CAAM, advises that the industry should develop more products with higher added-value to achieve sustainable growth.
• Chen Qiaoning, analyst with TX Investment Consulting Co, Ltd, predicts that the trend of China's auto part industry going global will continue.

Statistics:

• World automobile trade volume is expected to hit US$1.2 trillion in 2010.
• Up to US$35 billion will flow into China for auto part procurement in the coming years.
• During the January-November period this year, China's auto production reached 6.59 million units, a year-on-year increase of 27.92 per cent.
• Sales grew by 25.49 per cent to 6.45 million units, according to statistics from the China Association of Automobile Manufacturers (CAAM).
• The CAAM predicts that yearly sales will exceed eight million in 2007.

Sources:

• "Asia Pulse" article dated December 27
• Statement by Chen Qiaoning, analyst with TX Investment Consulting Co, Ltd
• Quote by Doctor Guoyan, with the China Automotive Technology and Research Centre
• Interview with Shen Ningwu, deputy secretary general of CAAM
• Statistics from the China Association of Automobile Manufacturers (CAAM)