Depo Aims for No. 1 Spot With Ambitious Expansion
May 13, 2004 Ι Industry In-Focus
Ι Auto Parts and Accessories Ι By Quincy, CENS
Taiwan's Depo Auto Parts Ind. Co. Ltd., one of the island's top two auto-lamp makers and a Taiwan Stock Exchange (TSE)-listed firm, recently announced that it would begin tapping the original-equipment supplier (OES) auto-lamp market this year.
In addition, Baring Asset Management Hong Kong, which has a 3% stake in Depo, plans to obtain a seat on the Taiwan company's board this year and to begin formally participating in the auto-lamp maker's operations.
Depo chairman Hsu Hsu-ming says that his company plans to invest about NT$340 million (US$10.21 million at US$1:NT$33.3) in setting up a new plant in southern Taiwan's Hsinying, where it currently operates a plant, and about NT$470 million (US$14.11 million) in expanding the capacities at its current three plants in Taiwan by 20%.
Depo aims to increase its revenue to about NT$4.95 billion (US$149 million) this year and challenge the No. 1 position currently owned by local counterpart TYC Brothers Industrial Co., Ltd.
Depo's image as a family-operated company has gradually faded in the past few years since the company introduced a group of outside professionals to its management team. The company recently poured about NT$920 million (US$27.6 million) into a new global operation headquarters in central Taiwan's town of Lukang.
Hsu says that his company has big ambitions for the huge mainland China market. The chairman adds that his company is planning to expand the capacity at its auto-lamp plant in Kunshan, Jiangsu Province and has bought land for a new facility.
Last year, Hsu announced Depo's "5832" corporate-vision project, under which the company aims to boost annual revenue to NT$8 billion (US$240 million), build three new plants (excluding the one in Kunshan), and set up two new regional warehouses within the next five years. Currently, Depo has delivery warehouses in California and Chicago of the U.S. as well as Toronto, Canada.
Currently, only about 2% of Depo-produced auto lamps are supplied to local automakers on an original equipment (OE) basis, with the rest going to the aftermarket (AM) replacement market. Depo currently accounts for about 35% of the American AM auto lamp market, trailing only TYC. In Europe though, its export value outstrips that of the major local rival.
In order to boost its margins, Depo plans to tap the global OES market this year. OES auto parts have the same quality and specifications of OE counterparts and are sold by wholesale parts distributors packaged in boxes with the automakers' or OE parts suppliers' names.
In order to finance its new plants and repay debt, Depo plans to issue about NT$1 billion (US$30 million) worth of five-year convertible corporate bonds and carry out cash capital increases to raise a total of about NT$1.6 billion (US$48 million). The company is scheduled to raise all of the needed funding in the third quarter this year.
TYC: Global Expansion
Although confronting fierce challenges from Depo's ambitious expansion projects, No. 1 auto lamp maker in Taiwan TYC is confident it can hold onto the market-leading position in Taiwan's auto lamp industry.
TYC stresses that its global operation headquarters in southern Taiwan's Tainan (including production facilities) has an annual production value of about NT$10 billion (US$300 million) and output is expected to grow by NT$200 million to NT$300 million (US$6 million to US$9 million) per year in coming years.
TYC also has several global expansion projects currently on the drawing boards, including projects in Europe, mainland China, and Iran. In addition, TYC is scheduled to soon set up its second distribution center in Europe, squaring off with Depo, which leads in that market.
TYC already runs production bases in Iran, Thailand and mainland China (in Changzhou, Jiangsu Province). This year, the company plans to expand its plant in Iran, which mainly supplies OE parts to automakers there. It has also set up a joint-venture auto-lamp plant with Harbin Hafei Motor in Heilongjiang Province, mainland China, which is scheduled to begin full production this November. In addition, TYC says it may set up two or three production bases in southwest and southern China this year to expand its reach in the huge market.
TYC plans to operate five production/distribution centers in Europe within the next three years, including its European headquarters set up in the Netherlands last July and an operations base in southern Europe sometime this year. The company also plans to set up an auto lamp venture in India with a local partner to tap the fast expanding market there.
In addition, Baring Asset Management Hong Kong, which has a 3% stake in Depo, plans to obtain a seat on the Taiwan company's board this year and to begin formally participating in the auto-lamp maker's operations.
Depo chairman Hsu Hsu-ming says that his company plans to invest about NT$340 million (US$10.21 million at US$1:NT$33.3) in setting up a new plant in southern Taiwan's Hsinying, where it currently operates a plant, and about NT$470 million (US$14.11 million) in expanding the capacities at its current three plants in Taiwan by 20%.
Depo aims to increase its revenue to about NT$4.95 billion (US$149 million) this year and challenge the No. 1 position currently owned by local counterpart TYC Brothers Industrial Co., Ltd.
Depo's image as a family-operated company has gradually faded in the past few years since the company introduced a group of outside professionals to its management team. The company recently poured about NT$920 million (US$27.6 million) into a new global operation headquarters in central Taiwan's town of Lukang.
Hsu says that his company has big ambitions for the huge mainland China market. The chairman adds that his company is planning to expand the capacity at its auto-lamp plant in Kunshan, Jiangsu Province and has bought land for a new facility.
Last year, Hsu announced Depo's "5832" corporate-vision project, under which the company aims to boost annual revenue to NT$8 billion (US$240 million), build three new plants (excluding the one in Kunshan), and set up two new regional warehouses within the next five years. Currently, Depo has delivery warehouses in California and Chicago of the U.S. as well as Toronto, Canada.
Currently, only about 2% of Depo-produced auto lamps are supplied to local automakers on an original equipment (OE) basis, with the rest going to the aftermarket (AM) replacement market. Depo currently accounts for about 35% of the American AM auto lamp market, trailing only TYC. In Europe though, its export value outstrips that of the major local rival.
In order to boost its margins, Depo plans to tap the global OES market this year. OES auto parts have the same quality and specifications of OE counterparts and are sold by wholesale parts distributors packaged in boxes with the automakers' or OE parts suppliers' names.
In order to finance its new plants and repay debt, Depo plans to issue about NT$1 billion (US$30 million) worth of five-year convertible corporate bonds and carry out cash capital increases to raise a total of about NT$1.6 billion (US$48 million). The company is scheduled to raise all of the needed funding in the third quarter this year.
TYC: Global Expansion
Although confronting fierce challenges from Depo's ambitious expansion projects, No. 1 auto lamp maker in Taiwan TYC is confident it can hold onto the market-leading position in Taiwan's auto lamp industry.
TYC stresses that its global operation headquarters in southern Taiwan's Tainan (including production facilities) has an annual production value of about NT$10 billion (US$300 million) and output is expected to grow by NT$200 million to NT$300 million (US$6 million to US$9 million) per year in coming years.
TYC also has several global expansion projects currently on the drawing boards, including projects in Europe, mainland China, and Iran. In addition, TYC is scheduled to soon set up its second distribution center in Europe, squaring off with Depo, which leads in that market.
TYC already runs production bases in Iran, Thailand and mainland China (in Changzhou, Jiangsu Province). This year, the company plans to expand its plant in Iran, which mainly supplies OE parts to automakers there. It has also set up a joint-venture auto-lamp plant with Harbin Hafei Motor in Heilongjiang Province, mainland China, which is scheduled to begin full production this November. In addition, TYC says it may set up two or three production bases in southwest and southern China this year to expand its reach in the huge market.
TYC plans to operate five production/distribution centers in Europe within the next three years, including its European headquarters set up in the Netherlands last July and an operations base in southern Europe sometime this year. The company also plans to set up an auto lamp venture in India with a local partner to tap the fast expanding market there.
Table:
Depo's Global Operations Goal for 2004 | ||
Plant Location | Products /Market Category | Targeted Year-End Monthly Capacity (Current in Brackets) |
Lukang (Taiwan) | Tail Lights/AM | 1.2 million (1 million) units |
Hsinying (Taiwan) | Headlights/AM | 220,000 to 230,000 (180,000) units |
Yungkang (Taiwan) | Headlights/AM | 120,000 (100,000) units |
Hsinying (Taiwan) | Auto Lamps/OES | Under planning, with an investment of NT$340 million |
Kunshan (mainland China) | Auto Lamps/Chinese OE Market | 50,000 (40,000) units. A new Kunshan plant under planning. |
Source: Depo
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