Taiwan's Auto Parts Industry Value Could Grow 4.8% in 2021: ITRI

Taiwan's auto parts industry value could reach NTD$222.79 billion next year, a 4.8% growth compared to 2020, according to forecasts from ITRI ​​Industrial Economics and Knowledge Center (IEK). IEK advises Taiwanese firms to maintain their market reach in the U.S. and increase expansion into emerging markets.

IEK Intelligent Vehicle System Research Department Senior Researcher James Hsiao named several factors that would be advantageous for Taiwan's auto parts industry's performance next year. The first being the release of COVID-19 vaccines, and the second being a steadier U.S. exchange rate, which helps firms price their orders. He was speaking at an IEK-hosted seminar on the future of smart vehicles.

Hsiao pointed out that yearly industry value performances will depend on firms' production volume and whether firms have developed their reach in emerging markets.

Hsiao said, looking at this year's auto parts industry trends, the pandemic crisis has upended industry expectations and forced firms to observe a more conservative approach. The peak season in the aftermarket sector is concentrated in Q4 in the northern hemisphere, he says. However, the outbreak worsening in the U.S. and Japan has also led to the depreciation of the U.S. dollar. Hsiao estimates these factors would slash this year's auto parts industry value by 3.8%.

The outlook still appears optimistic, as Taiwan's AM auto parts are concentrated in after-sales repair or maintenance. The U.S. automotive market's performance will continue to bolster Taiwan's outbound auto parts as a result; forecasts indicate outbound value from Taiwan could reach NTD$178.466 billion this year, a 5.2% increase compared to 2019. Among that, Taiwan's exports to the U.S. could see NTD$87.627 billion, approximately 49.1% growth.

Auto parts doing well in the U.S. include collision parts, such as bumpers, rearview mirrors, car lights (car headlights and taillights), door handles, and water tank caps and guards. Taiwanese firms' experiences in mold production, injection molding, and obtaining certification has given them a competitive edge.

While the U.S. remains to be Taiwan's biggest export country, and in the short-term, current American policies remain in Taiwan's favor, IEK suggests firms follow the government's policy in diversifying its market reach into Southeast Asia and South Asia.