TYG Eyes Improved Sales of AM Auto Parts in Mainland China
2008/08/26 | By Quincy LiangTaipei, Aug. 26, 2008 (CENS)--Thanks to new models launched by VW and Ford in mainland China, Tong Yang Group's mainland Chinese operations are expected to see strong growth.
TYG, already the largest aftermarket (AM) auto-parts conglomerate in Taiwan, has been aggressively investing in mainland China for over 10 years to develop original equipment (OE) parts business across the Taiwan Strait, with the firm already running 14 plants in China, including eight plastic-parts factories, five coating-material facilities, and one belt plant.
Some institutional investors said that post-Olympic consumer demand might slow somewhat in China, but TYG's comprehensive business deployment there is expected to achieve increasing sales. In the first half, Chinese operations contributed net earnings of NT$34.15 million (US$1.12 million at US$1: NT$30.5) to the parent group, up 64.21% from a year earlier. This year, according to TYG, its Chinese operation is expected to generate revenue of NT$6.73 billion (US$220.66 million) and contribute net earnings of NT$128 million (US$4.2 million) to TYG.
With carmakers steadily introducing new models, TYG's Chinese operations began turning profitable in April 2007. Last year, TYG's overall operation in China generated revenue of NT$5.18 billion (US$169.67 million), up 31.15% from previous year, translating into pretax earnings of NT$773 million (US$25.34 million) and contributing profits of NT$68.85 million (US$2.26 million) to TYG.
Institutional investors estimated that most of TYG's plants in China currently report equipment-utilization ratios between 60% and 80%, while the ratio of Chongqing Dajiang Tong Yang has reached 80% to 90%.
Currently, Changchun Farwer produces mainly bumpers for the new VW Jetta and Audi B8 assembled in China, while Nanjing Kaiyang bumpers for another popular passenger car. The latter has begun mass producing instrument panels for the Ford Fiesta in the second quarter, and is expected to breakeven by the end of the year.