The bankruptcy of Delphi, a major U.S. auto parts company, has sent shockwaves through the American automotive industry, prompting mourning among local manufacturers. Meanwhile, low-cost Chinese firms are seizing the opportunity, with the potential to secure contracts previously held by Delphi. In Taiwan, this development is expected to generate business opportunities worth up to NT$1.6 trillion.
According to reports from Taiwanese media, North American auto parts companies may release over $50 billion in procurement opportunities annually as they undergo restructuring and even seek bankruptcy protection. Wu Yushang, a spokesperson for Xingjing Machinery Co., Ltd., highlighted that in the past 20 years, half of global auto parts manufacturers have disappeared, with Europe and the U.S. being hit the hardest. He predicts that the auto parts industry will continue to consolidate, with Asia’s relatively lower costs becoming a key advantage.
Taiwan’s three main strengths include its cost competitiveness, strong technical capabilities, and support from mainland China. While Japan and South Korea lead in整车 (whole vehicle) production, Taiwan excels in spare parts manufacturing, with several mature companies already established. Moreover, the mainland’s resources offer significant opportunities for Taiwanese firms, many of which have already expanded their operations there. For example, ZTE’s affiliated enterprises have set up over 20 locations on the mainland.
Currently, these Taiwanese manufacturers hold large orders from global players such as Autoliv and Mercedes-Benz. Dongyang, another Taiwanese firm, has secured OEM contracts from top Japanese and U.S. automakers, including new orders for 2005.
Zhou Shoubin, deputy general manager of Zhejiang Taizhou Luobang Heat Dissipation System Co., Ltd., noted that the bankruptcy of Delphi removes a major competitor, giving Chinese firms more room to grow. However, challenges remain. Xu Jihua, deputy general manager of Zhejiang Zhongneng, pointed out that most multinational auto parts giants have high-tech products, while domestic manufacturers still lag behind in technology and quality.
Zhou Shoubin also admitted that many Chinese auto parts suppliers are currently limited to basic tasks like producing windshields and wipers, relying heavily on low labor costs to compete. However, he believes that these markets won’t remain exclusive forever. His company plans to enter the international mainstream aluminum brazing tank series within the next two to three years.
Wu Yushang is optimistic about the future of mainland auto parts manufacturers. Although they are not yet technologically or management-wise mature, he believes they will become the core of future production. As the global auto parts industry continues to evolve, China’s growing presence suggests a shift in the balance of power, with emerging players ready to step into the spotlight.
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