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Overview and Outlook for Korean Auto Parts Firms in China and India
2009-12-30MO, Se-Jun
목차
요약
Overview of Chindia's auto markets and local Korean parts firms
Among the world's markets, only China and India are maintaining rapid growth
In 2009, China's sales rose 27.6% YoY and had the highest production in the world. China is expected to become a leader in the global market following the financial crisis.
India has higher growth potential than China. In 2009, sales grew 9.9% YoY, and production rose 8% YoY to 2.23 million vehicles on the back of strong exports to Western Europe.
Korean auto parts makers are following Hyundai/Kia into overseas markets
Korean auto parts makers are expanding overseas in accordance with Hyundai/Kia's global strategy while diversifying their client base by supplying local auto makers.
In 2008, there were 99 Korean auto parts firms in China and 33 in India. India has low tariffs and only Hyundai has entered the market. As a result, fewer parts firms have entered India.
Evaluation of the operating environment for Korean auto parts firms
The performance of parts firms is reliant on Hyundai/Kia and differs by type of parts
Hyundai/Kia Group's production capacity in China is 1.03 million vehicles and 0.6 million in India. The gropu plans to complete its 3rd factory in China by 2011 to further increase production. In 2009, Hyundai/Kia's sales rose by 54.2% YoY in China and 11.6% YoY in India.
The performance of parts firms' local subsidiaries differs by category. Body, exterior and chassis firms performed well but electronics, drive-trains, and general parts firms barely broke even.
Implications
Module makers that diversify their client base will continue to grow and be profitably
Module makers that are affiliated with Hyundai/Kia or have diversified clients have high profitability and growth. General parts makers have very low profitability and will lose market power as competition with local parts suppliers intensifies.
Parts firms that are dependent on Hyundai/Kia are highly vulnerable while firms that can diversify their client base can maintain growth and stable profitability.
Simple manufacturing firms may be able to enter the Indian market and increase sales while improving their low local profitability.
Among the world's markets, only China and India are maintaining rapid growth
In 2009, China's sales rose 27.6% YoY and had the highest production in the world. China is expected to become a leader in the global market following the financial crisis.
India has higher growth potential than China. In 2009, sales grew 9.9% YoY, and production rose 8% YoY to 2.23 million vehicles on the back of strong exports to Western Europe.
Korean auto parts makers are following Hyundai/Kia into overseas markets
Korean auto parts makers are expanding overseas in accordance with Hyundai/Kia's global strategy while diversifying their client base by supplying local auto makers.
In 2008, there were 99 Korean auto parts firms in China and 33 in India. India has low tariffs and only Hyundai has entered the market. As a result, fewer parts firms have entered India.
Evaluation of the operating environment for Korean auto parts firms
The performance of parts firms is reliant on Hyundai/Kia and differs by type of parts
Hyundai/Kia Group's production capacity in China is 1.03 million vehicles and 0.6 million in India. The gropu plans to complete its 3rd factory in China by 2011 to further increase production. In 2009, Hyundai/Kia's sales rose by 54.2% YoY in China and 11.6% YoY in India.
The performance of parts firms' local subsidiaries differs by category. Body, exterior and chassis firms performed well but electronics, drive-trains, and general parts firms barely broke even.
Implications
Module makers that diversify their client base will continue to grow and be profitably
Module makers that are affiliated with Hyundai/Kia or have diversified clients have high profitability and growth. General parts makers have very low profitability and will lose market power as competition with local parts suppliers intensifies.
Parts firms that are dependent on Hyundai/Kia are highly vulnerable while firms that can diversify their client base can maintain growth and stable profitability.
Simple manufacturing firms may be able to enter the Indian market and increase sales while improving their low local profitability.
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