Tuning Parts Taiwan Tunes Competitive Edge

For international tuning-parts makers and exporters' 2004 would likely have been a cold year if they had depended heavily on the U.S. market' where many big importers and chainstores have gone bust.

Many leading companies in the line in Taiwan expect the picture in the U.S.' the largest buyer of tuning parts in the world' to remain dim over the next year or two' as buyers there seek bargain-basement prices. The one bright light' it seems' is in the high-end segment.

Buyers in Europe and Japan' on the contrary' have been much more willing to open their wallets to soup up the performance and looks of their cars. Russia and other emerging markets are also showing promise in this area.

According to Bruce Liu' president of Camco Auto Sangyo Co.' Ltd.' one of the biggest and most experienced traders of tuning parts and accessories in Taiwan' auto-tuning parts and accessories suppliers in Taiwan have been consolidating their foothold in the international market in recent years' despite increasing competition from mainland China. Many companies suffered a negative impact from the U.S. market plunge last year' he adds' except for those who have upgraded their product quality and innovation capabilities.

In the past few years' Liu says' more and more foreign buyers of tuning parts and accessories have turned to Taiwanese suppliers or Taiwan-headquartered companies with production facilities in mainland China. Mainland makers' in contrast' are rapidly losing ground as what Liu calls their relatively shoddy wares fail to meet the high quality' design and performance expectations of the car-enthusiast market.

According to Liu' Taiwan is well positioned to succeed in the tuning parts market due to the strong development capability' high product quality' and small-batch' large-variety production mode of local producers. This market also presents an opportunity for domestic auto parts makers to grow and escape the fierce competition from mainland producers in the lower-end aftermarket.



Supplier to Ferrari


A high-end focus and strong R&D and manufacturing capabilities have helped Supreme Po-Chung Co. Ltd. Succeed in the new competitive climate. As its name' implies' the company seeks to be the best' rather than just the biggest.

Supreme Po-Chung was founded in 1986 as a maker of decorative body parts and accessories for trucks. The company began making high-level tuning exhaust products in 1993 for supply to a Japanese customer.

The company is now a leading contract supplier of top-end exhaust products to many big international tuning-parts brands in Japan' the U.S.' Germany' Italy' France' and other countries.

Shirley Yeh' Supreme Po-Chung's general manager' claims that her company concentrates on producing only top-end exhaust products' including headers' middle-section pipes and catalytic-converter canisters' rear mufflers' and muffler tips (or tail pipes). All of the Supreme Po-Chung's products are made of top-grade stainless steel and titanium materials and fully processed in-house.


According to Yeh' Supreme Po-Chung decided long ago to focus on contract production for world-famous brands. Such production mode' she says' forces her company to constantly upgrade its technical ability and quality level. "We started supplying truck parts to the top-five auto brands in the U.S. 20 years ago'" Yeh says. "We know a lot about the importance of quality' on-time delivery' and technical ability. We also understand that competing on price alone is a dead-end strategy because there is always someone cheaper."

Supreme Po-Chung supplies a very wide range of top-end tuning exhaust products' including those for Porsche' Ferrari and other luxury sport cars' as well as Mercedes-Benz and BMW models. Yeh says that some exhaust products made by Supreme Po-Chung were demonstrated at Ferrari's automobile-boutique museum. She also says that her company may be the world's largest supplier of Ferrari tuning exhaust systems' as its ships about 500 sets of such product to the automaker each year.

"We pay more attention to detail and quality than our counterparts in the general market'" Yeh says. "Such efforts have earned us strong support from major customers worldwide' many of whom have never once inspected our products before shipment in the past five years."

But success does not come cheap. Supreme Po-Chung pours 15% to 20% of its annual revenue into R&D' including mold/die development' upgrading production processes' and production-equipment upgrading or manufacturing. Yeh claims that her company's revenue surged by 30% last year' and she expects a 50% jump this year.

Last year' Supreme Po-Chung launched production of top-end titanium mufflers and tips. Yeh stresses that only a few companies can rival her company's welding and polishing skill on titanium mufflers. The company expects its shipment of such high-margin products to grow steadily over the next few years. The company is also capable of custom-making super-nickel alloy mufflers' which offer better resistance to heat' erosion and impact. The company recently developed the world's first tail pipe model for the new Mercedes-Benz E-class sedan.



Tuning Specialist


About 13 years ago' Camco Auto Sangyo Co.' Ltd. Became one of the first trading companies in Taiwan to specialize in auto parts and accessories for the performance-tuning market. Today tuning parts and accessories account for about 65% of the company's revenue' and Camco is one of the best-known suppliers of such products worldwide.

Camco president Bruce Liu is confident about the prospects of the auto-tuning parts and accessories business' noting that global demand for such items has been rising along with the growing appetite of car buyers for better engine performance' more aerodynamic design' and unique exterior and interior styling.

Liu also believes that his company has a number of advantages over rivals' including its ability to quickly grasp market trends and provide products in a timely manner to meet changing customer needs. The company has benefited' moreover' from its location in Taiwan' which Liu says has the best supply base for tuning parts and accessories.

Liu decided to turn the firm's focus to auto-tuning parts and accessories after discovering that mainland Chinese rivals were rapidly catching up with Taiwan in the market for traditional auto parts.

The decision has proved to be wise. Over the years the company has gained a lot of experience and know-how in the tuning-parts market' and its customer base has steadily expanded.

From its position as a small and minor segment in the early 1990s' the auto-tuning parts and accessories sector has grown into a huge and comprehensive market that encompasses everything from car renovation to interior and exterior styling and aerodynamic design.

The tuning part market is also quickly evolving with the introduction of new products and new materials' such as high-precision aluminum and carbon rear spoilers' Liu says. Such items' once used purely for looks' now are designed to improve the aerodynamic performance of vehicles. Liu notes other examples of innovation in the segment' such as lightweight tuning mufflers made of pure carbon or titanium' and durable and lightweight engine compartment strut bars made of top-end magnesium alloy.

Camco's core competitiveness lies in its outstanding services' fast product development' quick delivery' and comprehensive product lines' Liu says. All of these strengths' he adds' result from the company's extensive experience' long-term relationships with suppliers' and sound financial backing.

Liu says that his management team constantly gathers information from customers' international auto-parts shows' and professional magazines in order to keep abreast of market changes. The more you know about what is happening in the industry' Liu says' the more business opportunities you have.

As a trading company' Camco does not have any production facilities' but it closely cooperates with about 200 local mold/die developers and manufacturers' passing new ideas to these partners' who turn concepts into finished products. The company also provides financial support to key partners to help them with product development.
This hands-on approach has proven vital to the success of traders in the tuning-parts and accessories market' says Liu. He notes that the segment is becoming more technologically sophisticated and incorporating new materials' forcing suppliers and traders to continually source new and better items.

Camco recently developed a new series of products to strengthen the company's competitiveness' including items made of high-level carbon fibers' such as engine hoods' racing pedals' lamp rims' rear panels' and other interior accessories. According to Liu' Taiwan is still several years ahead of the mainland in the carbon tuning parts and accessories market' thanks to better manufacturing techniques and stronger product development capabilities.

Camco also recently introduced a full series of chrome-plated decorative parts and accessories for the 2005 Toyota Hiace van. The company also makes such products for older Hiace models.

According to Liu' Camco is the first Taiwan company to push top-quality decorative accessories for the 2005 Hiace. It now supplies chrome grills' door handle covers' side mirror covers' trunk lid covers' and corner covers for the van. Camco will soon develop fender trims and other interior accessories for the 2005 Hiace. All the chromed items meet original equipment (OE) part quality standards.

Liu is confident about the competitiveness of Taiwan-made tuning parts and accessories due to their global reputation for high quality and reasonable prices. Taiwan's sound industrial infrastructure' including both the ample supply of high-quality materials and advanced manufacturing techniques' has helped local companies stay competitive in global markets' he says.



Market Dynamics


Another company that stresses constant product innovation and consistently high-quality manufacturing is Dynamik Exhaust Industry Co.' Ltd. Dynamik specializes in exhaust system products' and it is now expanding into other high-end segments' such as high-end' heat-press carbon-fiber tuning parts and accessories.

Jerry Huang' president of Dynamik' claims that his company now focuses mainly on OEM/ODM manufacturing for foreign port-conversion customers' including car dealers or distributors that promote special' or limited edition car models to promote sales' as well as auto makers and tuning-parts brands.

Dynamik has demonstrated titanium cat (catalytic converter)-back (including middle- and rear-section) exhaust systems for the BMW E46 M3 sports car and Mini Cooper S mini car models' as well as full converter systems' including headers' for the new Nissan 350Z sport car. The company has also developed a series of pure titanium exhaust canisters with blue-burned tips.

Huang claims that his company's titanium exhaust systems are 40% lighter than stainless steel exhaust systems and provide a power gain of eight to 15 horsepower with their dyno-proof airflow design. Huang points out that very few exhaust systems on the market today can achieve such power gains. By integrating Dynamik's stainless steel exhaust manifold and pure-titanium cat-back systems' Huang says that his company's products are the first choice of many buyers. To further ensure quality' Dynamik only uses imported aerospace-grade titanium plate and piping from Japan.

According to Huang' from 1994 the European Union (EU) started requiring automakers to adopt stainless-steel exhaust systems on new-car models to meet environmental protection concerns there. Stainless steel parts' he explains' are far more durable than parts made of other materials. Moreover' the global aftermarket demand for exhaust parts with OE look' performance' and function has been increasing. That translates into a growing market for stainless-steel exhaust system products' says Huang. For producer' however' it also requires a major investment in equipment' material research' and technical upgrading.

The increasing global demand has also been accompanied by more demanding consumers' who are becoming more knowledgeable and picky about the products they buy. Whereas most buyers in this segment were looking for a cosmetic fix' today many are demanding products that deliver a performance boost as well.

To meet this changing demand' Dynamik makes top-end items' such as pure titanium exhaust systems for many international big tuning brands. It has also changed its in-canister design and material to supply OE look and performance to auto makers and car dealers at more competitive costs. Huang is optimistic about Dynamik's future because most automakers in Europe and U.S. are outsourcing more parts from qualified suppliers in Asia' including his company.

"At Dynamik' our emphasis is on making products of consistently top quality'" Huang claims. "For example' we have had no quality issues on our shipments to a big Japanese customer' and the weight bias among those item delivered was within 20 grams."

According to Huang' Dynamik has transformed into a provider of total tuning-parts solutions' including not only exhaust systems but an almost full range of parts and accessories. "Only companies that can create value-added products and services are expected to survive in the competitive market'" Huang concludes. (April 2005)