Devaluing NT-dollar Fattens Margins for Local AM Auto-Parts Makers

Taipei, Oct. 5, 2011 (CENS)--The rapid, sharp depreciation of the NT dollar against greenback is fattening local auto-parts makers' profit margins, which were impacted by the uptrend of the NT dollar in the past months.

Industry sources say major auto-parts makers in Taiwan have been quoting based on US$1:NT$29 or higher, so the sharp and continued NT dollar depreciation will realize g better margins for exporters.

Some big aftermarket (AM) auto-parts suppliers on the island say the depreciating NT dollar has been fueling global customers' purchase willingness, leading to improved results in the third quarter, a traditional off season, that fourth-quarter results are expected to recover to those of the same period of last year.

Delayed purchases have depleted buyers' inventory, local AM auto-parts suppliers say, so many suppliers are busy filling orders driven by the lower NT dollar.

Quoting a recent report by US Auto Parts Network Inc., Gordon Auto Body Parts Co. in Taiwan said AM parts demand in the U.S., world's largest market, will rise due to higher service lives of passenger cars there.

Other companies said poor economic performance in the U.S. and Europe are affecting new-car purchases and fueling demand for more affordable AM parts, which are positive signs for Taiwan's AM parts industry.

Industry sources said that as the end of August, China has 219 million powered-vehicles, including over 100 million cars. Based on an average of NT$20,000 (US$667) per car for annual repair and maintenance, the overall automotive aftermarket for such cars in China is about US$66.7 billion per year.

Raymond Wu, president of Tong Yang Industrial Co., Ltd., the world's largest maker of AM plastic body parts, forecasted that by 2020, car ownership in China will exceed 200 million units. The supplier has been developing for many years mainly original equipment parts for automakers there, and has in the second quarter begun trial sales of s AM products in China.