‘Asia a goldmine for aftermarket industry’
Strong economic growth, coupled with low car ownership rates and rising incomes, has turned Asia into a gold mine for the aftermarket segment of the automotive industry, said an Asian Supplier Report released by SupplierBusiness. The eventual focus shift to Asia of both auto parts manufacturers and retailers has led to a rapid growth in auto parts assembly in many parts of Asia, most notably China, Japan, India and South Korea.
Fueled by personalization and power tuning trends, the aftermarket industry has gone through a complete remodelling over the past decade, which has led to the emergence of a highly competitive auto parts industry. Multinational car manufacturers, likewise, have turned to Asia for the auto parts industry supply chain, and have started using local Asian suppliers for their regional and global auto parts needs.
The report, on the other hand, sounded the bell on the challenges for local and global suppliers that the focus shift presents. Small and medium size aftermarket parts suppliers are being forced to advance technological expertise as rapidly as possible, alongside meeting the requirements of much improved aftermarket quality and delivery performance.
Although targeted initially at servicing the burgeoning local aftermarket sector, new investments by suppliers could also become future substantial low-cost export bases for auto parts, the report added.
Meanwhile, in Japan, auto parts manufacturer Aisin Seiki Co. is set to spend around $81 million to put in a new engine parts production line at a subsidiary’s main plant in southern Japan, Kyodo News reported Tuesday. The increased production capacity from the line in Kumamoto prefecture will go to meet growing demand from automakers in the region and overseas.
The new facility, due to begin commercial production in September next year, is expected to generate annual sales of $63 million through March 2011, said Aisin Seiki. Construction on the line will begin in December.
The booming aftermarket business in Asia provides a sharp contrast to the fortunes of its counterparts in the US. Last week, a Florida-based auto parts manufacturer called Dura Automotive system has closed shop as it restructures operations—including divesting businesses and moving work to lower-cost facilities, a company spokesperson said. The company makes parking brakes, door frames and other products for Ford Motor Co., General Motors Corp. and the aftermarket segment.
Also last week, the federal Environmental Protection Agency proposed the tightening of the nation’s ozone emission standard from its current 0.08 parts per million to 0.075 parts per million or lower. The proposed federal standard for ozone emissions, analysts said, could cost aftermarket auto parts manufacturers and energy producers millions to try to comply with federal clean air laws.
The agency said the standard upgrade is a part of a mandatory five-year review of the country’s ozone law. Ozone, a concoction of nitrogen oxide and other organic particles, occurs naturally in Earth’s stratosphere, where it acts as a buffer against ultraviolet rays. But on hot summer days, the sun’s heat combined with auto emissions, factory smoke and other processes can create a stifling blanket of ozone at ground level that can cause breathing difficulty, lung damage and heart problems.