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Monday 22 June 2009
Carmakers target global component producers
Chinese car and vehicle component makers are expected to speed up acquiring global technologies as the quickest route to expanding their operating scale, market watchers say.
Chinese car and vehicle component makers are expected to speed up acquiring global technologies as the quickest route to expanding their operating scale, market watchers say.
“I think more activity will be seen in the second half, as the economic situation has begun to stabilise,” said Thomas Stanley, a partner of global financial services firm KPMG.
He added that it was now a good time for Chinese car-parts makers to compete with global firms, which were restrained from expanding aggressively by the credit squeeze.
Since January, mainland carmakers or car-parts makers have shown interest in acquiring the component-producing units of troubled US carmakers rather than their entire operations, as this could help local players grow by developing own-brand cars.
Hong Kong-listed Geely Automobile Holdings announced in March it would pay as much as A$58 million (HK$362.4 million) for Australian automatic transmission maker Drivetrain System International, a supplier to Ford Motor.
Dongfeng Motor, Chongqing Changan Automobile and Guangzhou Automotive Industry Corp are also looking for opportunities to invest in overseas parts suppliers to support their own brands.
“With markets and valuations likely beginning to reach bottom, plus growing competitive pressure inside the Chinese market, we expect to see significantly more M&A activity inside and outside China,” said Ivo Naumann, the managing director of consulting firm AlixPartners.
Three state-owned companies in Shandong - two diesel engine manufacturers and a maker of earth-moving equipment - announced last month they had started merging to form a giant maker of vehicles, engines and parts, to be called Shandong Heavy Machinery Group.
Besides encouraging big domestic carmakers to acquire global assets, Beijing has prompted them to develop core technologies for emission-free and own-brand cars.
“Big domestic carmakers should co-operate in order to commercialise the production of key car components,” said Wan Gang, the minister of science and technology, in April.
China has three leading component makers - Dongfeng Parts & Components, SAIC, and Fawer, which co-operates with the China FAW Import Export Group. Other big global component makers in the country are Visteon Corp and Johnson Control of the United States and Denso Corp of Japan.
Unlike the 50-50 joint-venture policy set for global carmakers, component producers are allowed to own their operations wholly in China.
Marcus Hoffmann of Roland Berger Strategy Consultants says China’s car-parts industry is expected to generate total revenue of about US$350 billion by 2015, up from roughly US$133 billion last year, owing to the relocation of some production from the US and Europe.
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Carmakers target global component producers
Kandy Wong
22 June 2009
Chinese car and vehicle component makers are expected to speed up acquiring global technologies as the quickest route to expanding their operating scale, market watchers say.
“I think more activity will be seen in the second half, as the economic situation has begun to stabilise,” said Thomas Stanley, a partner of global financial services firm KPMG.
He added that it was now a good time for Chinese car-parts makers to compete with global firms, which were restrained from expanding aggressively by the credit squeeze.
Since January, mainland carmakers or car-parts makers have shown interest in acquiring the component-producing units of troubled US carmakers rather than their entire operations, as this could help local players grow by developing own-brand cars.
Hong Kong-listed Geely Automobile Holdings announced in March it would pay as much as A$58 million (HK$362.4 million) for Australian automatic transmission maker Drivetrain System International, a supplier to Ford Motor.
Dongfeng Motor, Chongqing Changan Automobile and Guangzhou Automotive Industry Corp are also looking for opportunities to invest in overseas parts suppliers to support their own brands.
“With markets and valuations likely beginning to reach bottom, plus growing competitive pressure inside the Chinese market, we expect to see significantly more M&A activity inside and outside China,” said Ivo Naumann, the managing director of consulting firm AlixPartners.
Three state-owned companies in Shandong - two diesel engine manufacturers and a maker of earth-moving equipment - announced last month they had started merging to form a giant maker of vehicles, engines and parts, to be called Shandong Heavy Machinery Group.
Besides encouraging big domestic carmakers to acquire global assets, Beijing has prompted them to develop core technologies for emission-free and own-brand cars.
“Big domestic carmakers should co-operate in order to commercialise the production of key car components,” said Wan Gang, the minister of science and technology, in April.
China has three leading component makers - Dongfeng Parts & Components, SAIC, and Fawer, which co-operates with the China FAW Import Export Group. Other big global component makers in the country are Visteon Corp and Johnson Control of the United States and Denso Corp of Japan.
Unlike the 50-50 joint-venture policy set for global carmakers, component producers are allowed to own their operations wholly in China.
Marcus Hoffmann of Roland Berger Strategy Consultants says China’s car-parts industry is expected to generate total revenue of about US$350 billion by 2015, up from roughly US$133 billion last year, owing to the relocation of some production from the US and Europe.
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