Is it Rough Weather For Chinese Auto Parts?

The Chinese auto parts industry has consistently performed and grown over the past few years. However, now it may up against some tough times owing to increases in wages, local currency and prices of raw-materials.

The Times Bygone

Last year in 2007, the market growth of the China experienced record high growth in terms of both production and consumption of automobiles. As people's incomes rose so did consumption. The year 2007 witnessed a production of 8.88 million units and consumption of 8.79 million units.

In terms of exports China registered US$ 2.09 billion worth of trade. A year before that in 2006, the sales revenue of the Chinese auto part manufacturers reached US$ 58.30 billion. What's even more intriguing is the fact that the Chinese auto parts production is projected to reach US$ 115.6 billion in 2010.

A lot of this growth is attributed to roughly 1,000 auto parts oriented industrial throughout the nation, and that about 10% of these lie in prime regional development zones and clusters.

The Present Scenario

The present year is being seen as a year of correction year. According to the National Statistics Bureau, China, the growth rate witnessed during the first two months of 2007 was 90%. However, over the same period this year, it's just been 37% a big difference of 53%. Undoubtedly the growth rate has suffered.

The costs of raw materials such as oil and aluminum have risen, which in turn seem to have affected the cost of production. The manufacturers of automotive wheels and tires are worst hit as a consequence. On similar lines producers of molded plastic parts and automotive accessories for cars have also taken a beating.

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