Taiwan Auto Parts Makers Rise to the Global Spotlight

Around 500 exhibitors from Taiwan displayed their latest and most innovative, and competitive products with 4,200 exhibitors from 76 other countries at Automechanika 2008.

While Taiwanese producers lack the cost advantage and domestic market scale enjoyed by counterparts in mainland China and other emerging economies, local auto parts producers on the island are polishing their reputation for innovation and quality. These assets have helped local producers pry open high-end markets in Europe and other regions, as evidenced by the large number of Taiwanese exhibitors at German trade shows.

Rapid product development and integration of cutting edge technology into new products is another trademark advantage that has helped Taiwan's auto-parts and accessory industry stay competitive. Producers on the island are supplying an ever-expanding range of products, especially in the aftermarket (AM) segment. They have also been acting on well-thought-out strategies to develop niche markets and reduce competitive pressure.

Luxury Lights

One such company is Mycarr Lighting Technology Co., Ltd., a versatile maker of high-end vehicle lighting and optoelectronic/luxury accessories. Company president Jack Shih has been aggressively leading Mycarr to leverage Taiwan's advantages in light-emitting diode (LED), electronics, precision die/mold development, optical design etc. to hone its global competitive edge.

This formula has helped Mycarr to expand its foothold in the global LED day-light (auxiliary auto-lamps that are constantly power-on to alert pedestrians) market. The firm also supplies high-end automotive interior lighting equipment to Raybrig of Japan.

"The market for LED automotive lighting is huge because every type of automotive light will eventually be replaced by LED lamps," says Jack Shih, chairman of Mycarr.

Already a strong player in the automotive aftermarket, Mycarr has been rapidly strengthening its R&D ability and extending its product lines to new application markets. For example, the firm has become a major supplier of original equipment service (OES) LED tail-lamps to legendary motorcycle brand Harley-Davison of the United States. It also supplies OE LED side-mirrors to another premium U.S. motorcycle brand Buell. "Our innovative ability, advanced technology, and unique strategy positioned us to win these orders," Shih claims. "Taiwan companies have many advantages that should help them expand their businesses in the high-end vehicle lighting and accessory markets."

The latest R&D achievement of Mycarr, according to Shih, is the world's first commercialization-ready LED and ECE-certified scooter headlamp model (using six 3W LED modules). Mycarr plans to develop three to five types of LED headlamps for powered two-wheelers (PTWs) and cars in the near future.

Sensing Opportunity

Tung Thih Enterprise Co., Ltd. (TTE), already the world's largest maker of ultrasonic-type automotive parking sensors, has been one of the most aggressive automotive-electronic players in Taiwan.

In addition to supplying major first-tier auto-electronic parts to most automakers in Taiwan as well as Ford of the United States and Nissan of Japan, TTE has been actively developing newer and better products for both the AM and original equipment (OE) markets. Fenny Huang, supervisor of TTE's overseas sales department, points out that many of TTE's high-quality, innovative auto-electronic systems are popular in industrially advanced nations but can not directly tap into the closed supply chains of automakers in such markets. However, they are widely welcome by many automakers in developing nations.

Like many of counterparts in Taiwan, TTE's strong R&D capability, advantageous cost-control ability (achieved in part by dividing manufacturing tasks between Taiwan and mainland China), and recognition as a tier-one supplier to automakers worldwide have been attracting more business to the company. This trend has been accelerating with global downturn as automakers scramble to cut costs.

At this year's Automechanika, TTE showcased its latest integrated head-up display (HUD) system. The system integrates data from a vehicle's wireless tire pressure monitoring systems (TPMS), parking sensors (front and rear), and speedometer etc. It also warns drivers of speeding and excessive rotations-per-minute (RPM) with a display module reflected onto the front windscreen. According to Huang, the integrated module has been turning heads among Asian automakers and AM parts customers.

Huang says that TTE operates an R&D center in China with over 100-member team and another center in Taiwan with over 10 people. The former works mainly on jointly developing new products in partnerships with global automakers, while the latter focuses on innovative value-added systems for domestic automakers and export markets. TTE has also set up branch offices in the U.S. and Japan to serve OE customers in the two countries.

The versatile auto-electronic company is also working on a new multimedia infotainment rearview-mirror model with OE-quality heat- and shock-resistance ability.

Engine Expert

Cada Industrial Co., Ltd. is one of the leading makers of automobile-engine gaskets in Taiwan and one of the world's most comprehensive suppliers of engine-repair kits for Japanese car models.

Cada president David Huang points out Taiwan has been extending its global lead in AM auto-engine gasket and repair-kit production, making it difficult for other players to compete beyond their regional markets.

"The global competitive edge of Taiwan's engine-gasket industry lies in its unmatched production flexibility, fast product development, small-batch, large-variety production mode, and comprehensive product line," explains Huang. Cada, for example, has developed over 3,000 engine-gasket models for trucks, commercial vehicles, passenger cars, motorcycles, and heavy-duty machines.

Another factor contributing to Taiwan's AM engine-gasket success, according to Huang, is high quality. Local producers, he says, devote considerable energy to developing new designs, but adopt the same materials as used on OE counterparts if available.

Huang says that prompt delivery and container-consolidation ability is another advantage of Taiwan suppliers. This is especially helpful in developing a small-batch, large-variety business model in the AM parts segment. Huang says that Cada keeps an enormous inventory of over 300,000 parts and components. This large ready supply, along with a self-developed inventory management system, enables the company to ship any popular gasket model or overhaul repair kit in a very short period. "Time is money and competitiveness," the president says.

"Our business is strongly supported by a comprehensive group of suppliers of various kinds of small parts," Huang says, "This helps us to cut costs and streamline our workforce." Constant product development, he adds, is also critical to the company's competitiveness. "Cada develops an average of 200 to 300 new gasket models and a similar number of engine over-haul repair kits every year, but there is never an end."

For newcomers in the line, Huang says, the biggest challenge is the difficulty of scheduling production. A new firm, he says, needs to quickly achieve a certain scale of economy to succeed.

From Tail to Head

Sonar Auto Parts Co., Ltd. is another globally competitive auto-parts maker in Taiwan. The company has joined the island's strong design and development capability with a well-conceived Blue Ocean strategy to rapidly and effectively gain a solid foothold in the global AM auto-lamp market.

Sonar was founded as a specialized supplier of performance tail-lights. Over the years, it has outmaneuvered more established rivals through a quality-focused strategy that has made it a rising star in the AM auto-lamp business.

Hubert Yang, Sonar's vice president and chief of the firm's big R&D team, claims that his company's success in sales of both tail lights and performance headlamps is attributable to its decision to take the road less traveled.

While major counterparts have focused more on AM replacement or performance lamp models, Sonar has found a niche in developing headlamp products that have stylish and innovative designs but are priced only slightly higher than regular AM replacement products.

"This type of market positioning has enabled us to quickly win customers and expand sales worldwide," Yang claims. "It also helps us avoid infringing OE design patents and face-to-face competition with AM and performance counterparts. Our innovative designs, such as the adoption of eye-catching LED modules, are attractive to younger consumers and replacement parts buyers looking to upgrade their vehicle's styling. The market response has been positive, encouraging us to more aggressively develop new products for general and luxury car models."

Indeed, Sonar's unique products were in a class of their own at the Automechanika show.

Looking Ahead in the Rearview

Already the world's largest supplier of OE motorcycle mirrors to most big brands, Ken Sean Factory Co., Ltd. has been aggressively diversifying into the automotive mirror market for several years. Today, the company is a major OE supplier of side-and rearview-mirrors to automakers in Taiwan.

Ken Sean has tapped Taiwan's strong electronic R&D capability to develop an integrated multimedia rearview-mirror with such functions as seat-belt alerts, TPMS figures, outside/inside temperature readings, and a built-in display for reverse images and GPS navigation. More than just a mirror, it serves as an information platform that can display information and in-car multimedia/entertainment functions.

Ken Sean supplies its high-quality integrated rearview mirrors to Indian automaker TATA. The mirrors were also chosen as standard OE parts on the Porsche Cayenne luxury sport utility vehicle (LSUV) for export to the Japan market.

Ken Sean has also introduced new OE and AM side-mirror models with patented LED indicator lamp strips. Designed with the most advanced light-guide technology, the indicator lamp's three LED lamps deliver the greater brightness and balance than other seven-lamp models.

According to Tony Chen, account manager of Ken Sean's overseas business division, Ken Sean has been winning more and more OE orders from global automakers, including orders from the overseas plants of several Japanese brands, Fiat, and GM.

At this year's Automechanika, a senior official of the company says OE parts suppliers in Taiwan should tap the lucrative global market because they are much more competitive than before."

Big Pitch for Small-pitch Condensers

Another Taiwan-based global leader at Automechanika was Man Zai Industrial Co., Ltd., the world's largest and most-comprehensive maker of AM automotive condensers and evaporators. Man Zai is also the first company in the world to introduce a small-pitch (6.7mm) AM condenser, which it debuted in 2006.

Man Zai also plans to roll out its first small-pitch AM radiator in 2009. The company claims that currently only Denso of Japan makes small-pitch OE condensers for Japanese car models. The small-pitch condenser features a better heat-exchange effect with about 30% more cooling channels per unit area than traditional counterparts.

Man Zai president Justine Wan attributes his company's leading status to its strenuous R&D efforts, know-how and expertise in most-advanced manufacturing techniques. The company also has well-established global sales channels to effectively promote new and improved products.

However, Wan says, global OE cooling-system parts suppliers and automakers are trying to tighten their control of the AM market to boost profits. Some new Japanese car models are using a growing array of sensors in various subsystems to monitor flow volumes and other aspects of different parts and components. Whether a non-OE part is installed to replace an OE part, the sensor will immediately detect it and indicate the change on the vehicle's instrument panel.

Such changes on new-car models, Wan says, will raise the threshold for AM parts makers and create new challenges for them. According to Wan, his company is aggressively working to adapt to the new competitive terrain.