Delphi confident in auto industry
By Dai Yan (China Daily)
Updated: 2004-07-21 09:29

Delphi, the world's largest manufacturer of auto parts, remained confident about prospects for the auto industry in China, despite a sharp slowdown in sales growth in recent months.

"China has the world's highest economic growth rate and is now the world's third-largest automotive sales market, but it is without question the world's single most important automotive market," said Delphi's Chairman and Chief Executive JT Battenberg III.

Sales of China-made vehicles stood at 2,553,600 million during the first half of this year, a year-on-year increase of 24.15 per cent, compared to the corresponding figure of more than 30 per cent last year.

Passenger car sales in China grew by 31.59 per cent year-on-year to 1,132,000 units from January to June this year, a sharp slowdown compared to over 70 per cent last year.

But Battenberg dismissed concerns about an expected slowdown in the industry, saying the sector was still expanding at an impressive rate.

China's auto sector grew by 36 per cent last year and this momentum will continue over the next 3 to 5 years, Battenberg said.

He added that the sector will continue to expand over the next seven or so years at a double-digit rate - between 10 to 15 per cent annually.

"It still surpasses the expected growth rate of any other region in the world," he said.

Battenberg admitted that dipping auto prices in China impose a pressure, but Delphi will find solution as it always does.

"It (price lowering) is not unique in China. Around the world, over-capacity of the industry always drives the price down," he said.

Prices in the domestic car market declined by some 10 per cent during the first half of this year.

Delphi is working with the auto companies to try to reduce the price of the products by redesign and cutting waste, he said.

The company is expected to open its China technical centre in Shanghai in June 2005 to offer strong local technical support.

The centre, planning to develop components and support application and systems engineering for several local customers and transplant automakers, will initially employ approximately 500 engineers, scientists and technical professionals.

Battenberg expected the company's China sales to rise 15-20 per cent to over US$1 billion this year from US$850 million last year.

Its consolidated sales in China last year rose around 50 per cent to US$650 million, while non-consolidated sales were up about 35 per cent at US$200 million.

Delphi will also expand its sourcing in China, which will reach US$1 billion by 2007, up from US$247 million last year.

Delphi has invested some US$500 million in China and operates 14 joint ventures or wholly-owned companies.

Other major players in auto component production are also accelerating their efforts in China to cash in on the booming vehicle market.

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