China's exports of automotive lights are on the rise as demand from Asia, its largest market, continues to grow at double-digit levels. Overseas shipments to North America and Europe are also increasing, as policies such as the Block Exemption Regulation 1400/2002/EC of the EU expand the customer base for generic automotive parts.
In the first eight months of 2006, China exported more than US$190 million worth of products overseas, an increase of 28 percent from the same period in 2005. If the current growth rate is sustained, overseas shipments could reach US$300 million by the end of the year.
The growth is driven primarily by sales of vehicle lighting assemblies or equipment, which account for 60 percent of export value. The line currently has only a 10 percent share of volume, but is expected to take up a greater percentage in coming years.
The following are some of the other key trends we see in China's automotive lighting industry:
• Most suppliers will continue to export primarily to the aftermarket. Nevertheless, the number of makers expanding into the OEM/OES segment will grow as more companies upgrade their manufacturing systems to meet stringent requirements in this sector. Several of these makers will be obtaining ISO/TS 16949 certification in coming years
• Many suppliers will be raising prices in the next 12 months due to higher raw material costs. The intense competition will be limiting adjustments to the minimum, however, with most companies increasing quotes by 10 percent or less.
• Exports of HID and LED bulbs, and lighting assemblies using these units, are projected to remain on an uptrend as the decreasing cost of components make them more competitive against halogen models.
• More suppliers will obtain certificates of compliance with US and EU standards for their products, including RoHS, to take advantage of the expansion of the aftermarket segments in these areas.
This report covers headlamps, taillight and auxiliary lighting assemblies as well as the bulbs being incorporated in these products. The discussion of the latter revolves around halogen, HID and LED models, which are the main light sources being used and produced by suppliers in China for vehicle lighting applications.
The Products & Prices section describes each category in terms of raw materials and components used, and the key factors affecting pricing and market positioning. Upcoming designs and features are discussed in the R&D section.
The Manufacturing section describes the processes involved in the production of lighting assemblies and bulbs and how these differ in small, midsize and large companies.
The capability of these makers, as well as the composition of China's close to 500 suppliers, is discussed in the Industry Overview.
To reflect the industry structure, almost 80 percent of the companies in this report are from the provinces of the Guangdong, Zhejiang and Jiangsu, which are the top production centers for automotive lighting assemblies and bulbs. The majority of interviewed suppliers are privately owned, again indicative of the country's supplier base.
Industry Overview
China's exports of automotive lights are on an uptrend. In 2005, total shipments of vehicle lighting equipment and filament-type light bulbs grew 24 percent in terms of value, reaching more than US$234 million. Trade statistics for the first eight months of 2006 point to another strong year for these lines, with exports already 28 percent higher than the same period in 2005.
The continuing surge in export sales is due mainly to the higher value of units being sent overseas rather than a larger volume.
Outbound products in 2005 were worth about US$0.16 per unit, 23 percent more than the average value of products shipped in 2004. Exports in the period January to August 2006 were valued at US$0.19 per unit, 28 percent higher than that of the previous period.
In fact, growth in terms of volume, which is much lower than the value growth rate, has slowed considerably from 2004. In 2005, the country exported 1.5 billion automotive lights and filament-type bulbs, an increase of only 4 percent, in contrast to the 16 percent gain in 2004.
Nevertheless, the export growth rate is expected to rise during the remaining months of 2006 and through 2007. In the first eight months of this year, shipments have already increased about 7 percent year-on-year.
Exports to North America and the EU, in particular, are expected to increase steadily as policies regarding the use of generic repair and replacement parts become more favorable. The two regions currently account for about 25 percent of automotive lighting exports, but the total number of units being shipped to these markets has been growing more than 10 percent in the past two years.
The EU is seen as a market with high growth potential mainly because of the increasing number of dealers and repairers, as well as insurance companies taking advantage of Block Exemption Regulation 1400/2002/EC to use more competitively priced aftermarket parts. Designed to promote competition in vehicle sales and the provision of aftersales services and parts, the BER allows authorized dealers and repair service centers of vehicle makers in the EU to procure spare parts and components of matching or superior quality from independent or non-OEM suppliers. This creates opportunities for independent parts distributors, and consequently China-based makers of aftermarket products to expand their customer base in the region.
At present, exports to the EU constitute about 16 percent of China's automotive lighting shipments. Major markets in the region are Germany, Italy, the UK, Spain and Finland.
Supplier Profile
Beijing Hella Automotive Lighting Ltd
While it is a relatively young company, Beijing Hella specializes in high-end automotive lamps for commercial vehicles such as buses, heavy trucks and towing vehicles. The company is one of the China-based subsidiaries of Germany's Hella KgaA Hueck & Co.
The products are developed by Changchun Hella Automotive Lighting Ltd, a sister company, while another affiliate, Hella Trading (Shanghai) Co. Ltd, is marketing them.
Domestic carmakers using Beijing Hella's lamps include Jiangling Motors Co. Ltd, FAW, Beijing Jeep Corp. Ltd and Jinan Heavy Duty Truck Group.
US-based John Deere is one of the company's overseas clients. It also exports to carmakers in the EU.
Beijing Hella conforms to ISO 9000 and TS 16949 requirements.
Products
Headlight, taillight and auxiliary light assemblies, which include all the necessary fixtures and electrical components such as bulbs and switches, are Beijing Hella's main products. Models of the company conform to ECE and SAE specifications.
PP and PMMA from Rohm Co. Ltd of Japan and PC from GE Plastics of China are used to make the lenses. Polyether imide, or PEI, and ABS from Lucent's China subsidiary are adopted for the reflectors.
The fixtures are sold with halogen bulbs sourced mostly from the domestic subsidiaries of Philips or Osram. The company also purchases bulbs from suppliers in Foshan, Guangdong province. LEDs for rear lamps are procured from Germany.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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