LED Lights to Increasingly Play Bigger Role in China's Auto Lamp Sector

China (Nanjing) Auto Lamp & Lighting Expo 2007 drew a significant turnout of around 15,000 buyers and exhibitors globally when it took place last September in an area of the Jiangsu Province which is purportedly to be driven by the most powerful automobile industry in China-accounting for 40% of China's auto lamp production.

All big auto lamp producers, either domestic or foreign companies, such as Philip, Agilent Technologies, Hella, Lumileds, Nichia, Osram Opto Semiconductors, among others, took part in the most important annual event in this sector in China.

LED (light-emitting diode), which is called the 4th-generation lighting source for automotive applications, has great potential to become a shining star in China's auto lamp industry in the future because, when compared with other lighting sources, it's compact in size, powerful, highly reliable, and more energy-efficient, in addition to a much longer life cycle. LED automotive lights are theoretically the auto component that would never wear out, hence never needing replacement. So an LED bulb will supposedly last 50,000 hours, and in reality at least 20,000 hours.

Generally, an auto lamp has two primary functions: one is for lighting up roads and the other to indicate signals, such as when turning or parking lights. For the auto industry in the past, LED was the tiny bulb to light up instrument panels. Lately, it's made much larger for both interior and exterior lighting. Industrial experts estimate that a car would use around 100 LED bulbs for interior lighting except for the tiny ones used on instrument panels and another 200 LED bulbs for external lighting such as headlights, turn signals, tail lights, brake lights, and so on.

Market potential

Today, nearly all the European carmakers adopt LED lights for interior lighting. As for exterior lights, LED is now mostly used for brake lights, accounting for over 80% of such applications in Europe or Japan while showing rising applications in other exterior auto lights such as headlights and taillights.

In China, the auto light segment was estimated to be worth from US$5.8 billion to US$6.6 billion in 2005 and 2006, and predicted to exceed US$10.6 billion by 2011, with an average annual growth rate (AAGR) of 10.2%. LED now takes up a 12% share of China's auto light market, and would see rapid growth in the future.

Industrial development

It's was 1999 when China turned out its first LED auto light through a collaboration between the Auto Engineering Institute under the Shanghai Automotive Association and Shanghai Koito Automotive Lamp Co., a joint venture between the Shanghai Automotive Industry Corp. and Japan Koito Manufacturing Co.

Koito is the largest auto-lamp supplier in Japan, taking up more than a 50% market share in Japan and produces auto lamps for major Japanese carmakers such as Toyota and Nissan. With technological support from its Japanese parent company, Shanghai Koito was set up as the largest auto light R&D center in China.

Since the launch of China's first LED auto light in 1999, the Auto Engineering Institute under Shanghai Automotive Association and Shanghai Koito Automotive Lamp Co. have been working as the pioneers of China's LED auto lamp industry which, as the Chinese authority announced in 2003, is among the 15 priority technology industries to be developed in China. They developed LED auto lights for locally produced Buicks in 2003, and another 25 new types of LED auto lamps for Chinese carmakers such as Santana 2000, Polo, among others, in 2004. In 2005, they added new clients to include several major carmakers in China such a Toyota, General Motor, SAIC Shery, and so on, setting a new stage for China's LED auto lamp industry.

It was about in 2004 when China started to see thriving growth in its LED auto lamp production thanks to significant foreign investments in this sector in light of a rosy outlook in market potential in both China and globally. China itself has a huge market for auto lamps, with around 20 million households financially capable of car ownership, China is expected to challenge the U.S. as the world's largest car market by 2025.

China started its LED auto lamp industry from making headlights first, and then gradually diversifying to make full taillight sets that call for relatively higher technology for fabrication. Ourview, a Beijing-based consulting institute for the auto industry, predicts that China would reach an annual capacity of over one million sets of LED auto taillight in 2008.

"LED auto light is an auto component combining traditional mechanic and modern auto electronics technologies," said Guan-chun Xia, director of Auto Engineering Institute under the Shanghai Automotive Association. He believes that the development of the LED auto light industry in China is a critical step for the country as it evolves technology to make key auto electronic components for its own auto industry.

Hsia, however, noted a major problem with LED auto light: an LED bulb is much more expensive than a traditional one due to its relatively much higher production cost. "Even with expanded production volume to reduce unit cost, it's impossible to lower its price to levels competitive to traditional auto bulbs," Hsai said. Though, Hsia doesn't think the price problem would hinder the development of the LED auto light industry. After all, as he said, "Durable LED auto lights save consumers the trouble to replace auto bulbs from time to time."

In the early years, China's LED auto light market was dominated by foreign brands such as American Lumileds and German Osram. Now, Chinese makers have improved their product quality and gradually expanded their market shares. "When the market demand expands to a certain level, LED auto light prices will drop to further boost market demands," Hsia predicted, saying that China's LED auto light industry will see rapid growths in the following five years, with the annual productivity to triple to three billion Chinese yuan from the one billion Chinese yuan now.

When LED technology grows to a certain level, functionality will no longer be the major concern of auto lamp makers. "Aesthetic appeal is increasingly being stressed to please high-end consumers," said Hsia. "The two headlights are like the two eyes of a car, so they should look bright, smart, and stylish," he said, adding that headlights are distinguishable components to instantly identify a car's unique frontal look. Hsia's institute has been working with Mercedes Bens, Cadillac, BMW, Toyota, and Ford to develop bright and stylish LED auto lamps.