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Metal Casting Technologies : March 2007
40 www.metals.rala.com.au The New Asian Auto Makers By Gordon Feller veryone knows that the China boom is big. But which other trends in Asia's key auto markets are making waves? CHINA China's automotive-parts industry is expected to generate US$153.3B of total output value by 2010. Of this, the value of OEM supplies will be 630B yuan; after-sales maintenance and repair market is estimated at 170B yuan; exports will be 400B yuan. Exports may reach about $50B, with average growth of 27.5% each year, and 30% of the export product will enter the foreign OEM market. China plans to increase the proportion of technology- and fund-intensive products, and build a number of auto-parts export bases. China has started localizing production of Mitsubishi 4G9 engines for high-end sedans in Harbin, capital of Heilongjiang province in northeastern China. The 4G9 engine, imported from Mitsubishi, is produced by Harbin Dong'an Auto Engine, indicating the end of general assembly with imported parts, and localization of key auto parts in China. Dong'an is a JV founded by Chinese, Japanese and Malaysian companies in 1998. To promote localization of the 4G9 engine in China, the company raised 300M yuan for construction of three production lines: crankshafts, cylinder bodies and covers. Production of 4G9 engines is expected to soon reach more than 100/day. Production lines are equipped with advanced equipment imported from Germany, Japan and South Korea; annual production is 60,000 units for the first phase. China is the second largest auto consumption market in the world. Automobile sales volume reaches seven million units. China's auto industry experienced steady growth in the past year and the import volume accounted for 3% of the total China market. China imported 181,000 autos (January- October 2006), an increase of 41% over the same period in 2005. Among imported autos, sedan cars numbered 85,960, and SUV numbered 69,884, which accounted for 50.11% and 40.74% of total imports respectively. Since the tariff reduction on July 1st, automobile import volumes increased, especially for vehicles with larger engines. The number of imported sedans with engines over 3 liters increased 88% compared with the same period in 2005, and SUVs with engines over 3 liters accounted for 50% of the SUV market. Germany and Japan were the primary source of sedan imports. However, for gasoline and diesel SUVs, Japan, Korea and the U.S. were the primary import sources: 84% of total SUV imports. According to China Auto Industry Association forecasts, the auto market will reach 10 million in sales by 2010. This will provide a potential market not only for automobiles but also for the auto-parts. Presently, China has about 100 auto manufacturers, over 4000 auto-parts factories, including 1200 foreign invested auto-part factories. 70% of the top 100 world's auto parts suppliers are doing business in China. Foreign invested auto-parts factories accounted for 70% of the market share. China's auto import market will continue to increase, with a focus on high-quality sedans, luxury SUVs, and specialty autos. China's OEM manufacturers will need high quality auto parts in the coming years, and estimates are that China's auto parts sector will reach $5.2 billion or a 60% increase by 2008. INDIA Meanwhile, Indian Prime Minister Manmohan Singh lauds India's automobile and auto-components industries as proud symbols of Indian success. Manmohan's government will "take steps to turn India into a global automobile workshop". The sector "has the potential to generate millions of jobs, which our youth need. The Indian automobile industry has, like a beautiful butterfly, come out of its protective cocoon and is showing its wares across diverse continents. What is more, it has done so with virtually no state subsidy or support. It has done so based on a transparent system of taxation, pricing and technology development. It has done so on the basis of domestic talent in design, marketing and brand building". Manmohan noted that India has a 7% share in the global market. Manufacturers aim for sales of US$145B in 10 years, up from today's US$36B, meaning an average of 16% annual growth. This year could turn out to be the best for the industry, riding high on domestic and international demand. Between April- September, Indians sold more than 4.86M vehicles, including cars, two-wheelers and commercial vehicles, in the domestic market. If these trends hold, sales could reach 10M by March for the first time, an annual growth rate of 20%. After China, India's auto industry is the second-fastest-growing, totaling 8M+ vehicles. Some 1.1M passenger cars rolled off Indian assembly lines last year, and the number is forecast to nearly double to 2M by 2010, while scooters and motorbike sales are forecast to grow from 7M to 12M units in the same time. "This will double the industry's share of the gross domestic product to more than 10%, creating 25M new jobs," said Minister for Heavy Industries Dev. The last time the 20% growth figure was achieved was in 2000-01. Analysts say the boom is due to several factors, including overall economic growth, 8% excise-tax cuts in the budget for small cars and attractive discounts, loyalty bonuses, and exchange schemes offered by firms and dealers. Maruti's managing director, Jagdish Khattar is "not surprised