Automotive Parts Market Stabilizing: Tong Yang, Hota Expect Inventory Replenishment Boost

As tariff policies between the U.S. and China gradually stabilize, the automotive components market is expected to become clearer, leading to a potential wave of inventory replenishment shipments starting from July. Major component manufacturers such as Tong Yang, Hota, and Laster Tech are likely to benefit from this development.

Previously, the automotive components sector experienced a widespread decline in revenue in May, with major manufacturers including Tong Yang, Hota, and Laster Tech impacted by customer hesitancy and delayed shipments. This conservative trend persisted into June.

Industry insiders indicate that uncertainties surrounding tariff conditions previously led customers to delay shipments to the U.S. due to concerns over potential additional tariffs imposed after delivery. Combined with inventory digestion phases, inventory levels have continuously declined. With clearer tariff policies now emerging, a surge in inventory replenishment shipments is anticipated.

Tong Yang, a leading automotive component manufacturer, reported consolidated revenue of NT$1.802 billion in May, marking a year-on-year decrease of 16.05%. This was mainly attributed to the traditional off-season in the aftermarket (AM) segment and uncertainties from tariffs and exchange rate fluctuations, causing customers to adopt a wait-and-see approach and resulting in rare revenue declines for the company.

Laster Tech, a major LED automotive lighting module manufacturer, also noted slower shipment momentum in May due to short-term inventory adjustments by North American customers, specifically for controller products. Nevertheless, the overall visibility of Laster Tech's orders remains strong. In recent years, the company has actively expanded its global automotive client base. With growing trends toward electric and intelligent vehicles, demand for smart LED vehicle lighting continues to increase, positioning Laster Tech well within the automotive lighting market.

Hota saw significant revenue decline in May, primarily due to higher retail prices negatively impacting overall automotive demand in the U.S. market, coupled with tariff-related shipment issues. While Hota confirmed that all U.S. tariffs are fully covered by its customers, the uncertainty over tariff classifications by U.S. customs has prompted the company to adopt a conservative shipping stance. Hota also pointed out that customers' inventory levels continue to drop, anticipating significant revenue and shipment recoveries from July once tariff conditions are definitively resolved.