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Three Taiwanese Performance Auto Parts Makers Share Views on Changing Market

Such cut-throat rivalry forces them to develop innovative, functional items for upscale makes and models

2014/08/26 | By Quincy Liang

By QUINCY LIANG

As in many other sectors, Taiwan was once a world-class supply base of auto tuning parts and accessories, offering quality, reasonably-priced products under OEM/ODM basis to international brands, but in recent years, the global auto-accessory market has been overwhelmed by underselling Chinese suppliers.

Such cut-throat rivalry has forced Taiwanese makers to move upmarket, developing  innovative, functional items for upscale makes and models. Taiwanese tuning-accessory makers have effectively transformed into suppliers of high-end, boutique items.

Taiwanese makers continue to maintain advantageous positions thanks to unmatched new-product development speed, product comprehensiveness, quality, and price competitiveness relative to international brands. A few major players with ample expertise have been fine-tuning business strategies to tap the new opportunities presented by global automakers by offering optional performance or cosmetic-upgrade accessories.

Camco

Bruce Liu, chairman of Camco, talks about successful experiences in confronting changes in global turning-parts market.
Bruce Liu, chairman of Camco, talks about successful experiences in confronting changes in global turning-parts market.
Bruce Liu, chairman of Camco Auto Sangyo Co., Ltd.,  a Taiwanese trading company focusing on high-end, performance-tuning auto parts and accessories for over 25 years, says that global tuning market looks to remain shaky in the second half of 2014 due to weak consumer confidence in Europe and the U.S.

The "Polar Effect" is also impacting demand for automotive tuning products, with mainly top-end owners wishing to fine-tune, personalize luxury cars, opposed to low-end owners of mainly youngsters trying to get the most for shopping dollars to modify cars for performance and cosmetic effect.

Camco is a major turning-parts supplier in Taiwan, focusing on high-end items for sales in industrially advanced nations.
Camco is a major turning-parts supplier in Taiwan, focusing on high-end items for sales in industrially advanced nations.
So players must be more careful and adopt right strategies to better survive in a lull, while waiting for another crest in demand, Liu says.

Generally most drivers wishing to modify or upgrade cars are younger, whose buying power is compromised alongside reduced parental incomes, with the phenomenon being global since economies have been on a downturn, according to Liu. Moreover, the Internet has totally changed the transaction model of the small-batch, large-variety tuning-parts business. A young car fan can now easily purchase a high-end exhaust system, brand-new or secondhand, with few simple clicks on his PC or mobile device. This business model has almost eliminated the need for jobbers in the tuning-parts business, as well as many auto tuning shops when so many DIY parts are available.

Sharing his experience in surviving slow times by foreseeing market trends and promoting suitable products, Liu says that Camco focuses on high-end performance auto parts and accessories to build steady growth.

In the past few years, according to Liu, Camco has achieved success in continuously launching performance-tuning total solutions for chassis, including high-end shock absorbers with aluminum base, oversized brake rotors, forged aluminum multi-piston brake calipers, reinforced bushings for control arms, differentials and engine mounts etc., which offer car enthusiasts a very wide range of vehicle modification and upgrading options.

The key behind smooth sales of the high-end chassis parts, Liu discloses, is that the company and suppliers sponsor racing teams, enabling road testing of parts on race tracks and under rigorous conditions. Every race offers precious data for further improvement of newly developed parts, Liu says, which means ever-refined quality, reliability and performance.

Most of the items in Camco's high-end chassis tuning parts are developed for European makes and models, Liu says, and the parts are popular among major customers in advanced markets in mainly Europe, the U.S., and Japan, which are also Camco's major export markets.

All global tuning-parts makers face underselling competition from Chinese counterparts, and the only way for local companies to cope is to move upmarket, or to develop and manufacture high-quality and reliable products for luxury cars. The golden rule to prevent being supplanted by underselling rivals is to set up higher technical and qualitative thresholds, says Liu.

For a trading company, Liu says, of course service quality and credibility are undoubtedly also important for success. Camco's lead will not be easily taken over by counterparts, because global customers know, especially in unfavorable business climate, Camco is one of the few partners providing the best and most considerate services, sincerity in maintaining long-term and mutually-trusting partnerships, professional know-how, and honest advice to save customers' cost. In addition, Camco has sound finance that has helped to achieve trustworthiness amid customers.

Dynamik

Another player is Dynamik Exhaust Industry Co. Ltd., a veteran specialist in developing and manufacturing high-performance exhaust systems and top-end tuning parts and accessories. After building a solid base in the exhaust-system market, the firm has diversified to become a versatile supplier of quality and durable turbo items for the high-end tuning market.

Jerry Huang (left), president of Dynamik, guides his company through market ups and downs by mapping out proper strategies.
Jerry Huang (left), president of Dynamik, guides his company through market ups and downs by mapping out proper strategies.

Jerry Huang, president of Dynamik, says that  the global performance exhaust market started to boom in about 1997 but started to cool in about 2005, with the market now stabilized. "In the past few years, our major customers have turned to turbocharging solutions to cope with shrinking demand. There is now a rapidly rising segment, especially in Europe, in diesel-turbo tuning, as many European carmakers are launching diesel cars as Mercedes-Benz, BMW, Volkswagen, Audi, Porsche etc.," Huang notes.

Also hampering faster development of the performance exhaust market, according to Huang, is simply "conflict-of-interest," where automakers won't allow factory exhaust to be replaced by aftermarket parts. Nowadays carmakers often install sensors to detect installation of aftermarket exhausts, with signals to be sent to in-car computers for analysis and control.

Such prevention may be due to warranty issues as well as carmakers trying to protect their business of selling factory parts, which are typically much higher priced than aftermarket ones.

As a result, Huang says, Taiwanese performance exhaust makers are choosing niches for better survival: the emerging markets at one end, and the high-end segment (for example turbo-diesel exhaust) requiring heavy investment in tooling.

As a veteran player globally with abundant experiences and stable customer base, Dynamik, Huang says, chose to stay in the higher-end segment by supplying customized items and self-developed exhaust systems for mainly Mercedes-Benz and BMW. Though the market is not expanding obviously, Huang says, Dynamik is seeing stable sales growth due to its correct market positioning.

High-end performance exhaust system made by Dynamik.
High-end performance exhaust system made by Dynamik.

Dynamik has developed dozens of exhaust systems for luxury European makes, and the products are very popular among global customers because many younger drivers may buy used luxury cars to modify for personalization, Huang explains.

Auto products to upgrade styling and performance will never disappear, and Taiwanese companies always have good chances, but they have to find viable niches. Dynamik, for example, is focusing on supplying packaged-tuning services and workshop-friendly products for select models, a new concept in Taiwan's auto tuning industry because most local companies resort to the shotgun approach in product and market development, says Huang.

Euroda

Honda Cheng, general manager of Euroda Industrial Co., Ltd., one of Taiwan's leading suppliers of automotive performance body parts, is very optimistic about the global market and his company's future business development.

Euroda is one of Taiwan's leading suppliers of automotive performance body parts.
Euroda is one of Taiwan's leading suppliers of automotive performance body parts.

The performance body-parts market has always existed, Cheng says, but has only declined in recent years due to several reasons. The first and most important one is the global economy. The market expands clearly during buoyant economy but wanes modestly in unfavorable business climate. Another factor is that more and more international automakers are engaged in  the factory tuning-parts business to have launched own brands, not only for popular Japanese brands, but also luxury European nameplates. However, the global performance body-parts market continues to do well without suffering heavy impact, not to mention growing steadily.

Taiwan has many competitive advantages in the global tuning body-parts market, Cheng explains. The first is that suppliers often offer  highly-efficient, rapid tooling, coupled with new products launched for popular makes and models. Several Taiwanese companies focus on different market positioning, offering a wide range of products of various quality and prices.

Taiwanese suppliers' second advantage, according to Cheng, is strong reverse-engineering capability and innovation, enabling production of high-precision body parts (with exacting fit) of original equipment (OE) quality level, coupled with innovation to make them more stylish and luxurious.

Furthermore, the general manager adds, Taiwan is a major production base of petrol-chemical materials, and local makers provide high-quality, reasonably-priced raw materials for making body parts, such as acrylonitrile butadiene styrene (ABS) resin, PP (polypropylene) etc., hence allowing Taiwanese body-parts makers not to use recycled petrochemicals in production to assure the best quality and durability.

Founded in 1996, Euroda refocused on performance body parts in 2002 to supply full range of body kits, including grilles, bumpers, spoilers, side skirts, hoods, fenders etc. to mainly European and Japanese makes and models.

With long-term and stable operation, Cheng says, his company always accepts customers' product samples and ideas to turn into new items, or targets world-car or popular models (especially with younger drivers) to develop body kits tuning solutions. Euroda steadily invests in mold/die development, and the firm now offers performance body kits for about 200 models. Cheng says that demand for European luxury cars often lasts for a longer period.

Cheng stresses that more and more international automakers launch different versions of a single model to expand customer base. Cheng's optimism towards the global tuning body-parts business is built on price competitiveness, whereby Euroda's products clearly and effectively upgrade vehicular cosmetics for a fraction of factory options. The body-parts business always requires heavy investment in tooling as well as higher production technical level, which set very high threshold to newcomers, especially non-Taiwanese companies without support from strong mold/die developers and globally-competitive petrochemical industry on the island.