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Seemingly oblivious to the the global slowdown, Chinese auto parts industry picks up more steam. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.

Despite the global slowdown, the Chinese auto parts industry powers ahead. In the first seven months of 2008, the value of China's auto-parts exports grew by 34.9% year on year (y/y) to $8.88 billion, China's Customs Bureau said >.

In the period from January to July 2008, China exported a record $ 8.73 billion worth of auto-parts.

Amazingly, the biggest power behind this export boom were foreign invested companies and joint ventures. They exported $4.56 billion of auto-parts, up 31.6% y/y, amounting to 51.4% of the total.

The three major destination markets of China-made auto parts are the U.S., EU and Japan. Parts for $2.69 billion ( 8.8%) were sold to the U.S.A., parts for $1.6 billion ( 39.2%) were sold to the EU, and parts for $1 billion ( 36.8%) were shipped to Japan. These three markets contributed 59.6% to the total value of China's Jan-Jul auto-parts exports.

This validates the previous predictions made by our company:

1.) Especially when targeted at after sales, the parts market is recession-proof. People may stop buying cars. But they don't stop driving. Wear and tear case more parts to be sold.

2.) After diminishing growth in the U.S.A., more and more Chinese parts go to Europe.

3.) The most powerful drivers of this growth are foreign companies. They use China for low cost production base, they sell the product under their own brand name at high margins, and all too often they complain about cheap Chinese imports.

4.) Expect further sales increases due to falling raw material prices and sinking shipping costs. This is especially true in the after sales sector. Auto makers may also buy even more Chinese parts. They aim to off-set their diminishing sales with higher cost savings with parts, sourced in China.