Taiwanese Auto-parts Makers Accelerate Local and Overseas Investment Plans

Depo Auto Parts Ind. Co. Ltd., one of the largest aftermarket (AM) auto-lamp manufacturers in Taiwan, recently announced that it will invest about NT$10 billion (US$333.3 million) in different production-capacity expansion projects over next three years in Taiwan. Under the plan, the company will establish a new R&D center and extend its business scope into upstream lamp-parts production and rear-section processing. Industry sources expect these projects to help Depo to evolve as a strong supplier of original equipment (OE) auto-lamps to international automakers.

Other major auto-parts makers are also aggressively planning capacity expansion plans on the island.

Hota Industrial Manufacturing Co., Ltd., a major OE supplier of precision gears and transmission gearboxes and parts, for example, recently said that production capacity at its newly inaugurated factory in Dali, Taichung of central Taiwan, is operating at full capacity to fill international orders. Hota plans to invest NT$600 million (US$20 million) to build a third Taiwanese production site in Chiayi, central Taiwan. The new investment project will kick off in 2015.

Industry sources pointed out that the recovering economy in the U.S., China and Europe has been driving up global new-car sales volume, leading to increasing orders for auto parts. New-car sales in China, the world's largest automobile market, are expected to increase to some 25 million units this year.

Tong Yang Industrial Co., Ltd., the largest auto-parts maker in Taiwan with business scopes covering both AM replacement and OE auto parts, is scheduled to kick off production at two new Chinese factories, including one in Xiangyang, Hubei Province (Xiangyang Tong Yang) and Foshan, Guangdong Province (Foshan Tong Yang). The two new subsidiaries are located in the major automobile production bases in China, positioning them to win more orders from local automakers.

Hota is also scheduled to inaugurate a brand-new factory in Huaian, Jiangsu Province, by the end of the year. The Taiwanese auto-parts claimed that production capacity at the Huaian plant will be double that of its existing Chinese factory in Wuxi, Jiangsu Province. The new facility is expected to win OE transmission-parts orders from local automakers, Hota said.

TYC Brothers Industrial Co., Ltd., another major auto-lamp maker in Taiwan, recently set up a new lamp plant in Chongqing, Sichuan Province of China, through its Chinese subsidiary Changzhou Da Mao Precision Tooling. The new facility will supply auto lamps to local automakers Changan Ford, which has chalked up the fastest new-car sales growth in China over the past two years. Many industry sources are optimistic that the Chongqing facility will give TYC a major profit boost.

With an eye in the Southeast Asian market, Taiwanese vehicle infotainment system maker E-Lead Electronic Co., Ltd. decided to build a US$3 million factory in Indonesia, a rapidly rising automobile market in the ASEAN bloc. TYC has also set up a joint venture auto-lamp factory in Indonesia with local auto-parts maker Astra through its subsidiary Jouku Technology Co., Ltd.

Jouku and Japanese auto-lamp supplier Stanley plan to set up a joint venture lamp factory in Malaysia by the end of 2014. Stanley is a major tier-1 supplier to Honda, and the new venture is expected secure more OE orders from the local assembly plants of Japanese auto brands.

Tong Yang has announced that it will spend NT$3.9 billion (US$130 billion) in 2014 to accelerate new-product development and expand production capacity at its AM plastic parts, sheet-metal body parts, and electroplating factories in Taiwan. The company hopes that the investment will widen its lead over global counterparts.