Low prices inhibit trade with India: Chinese auto firms

Shanghai, Dec 19  India is one of the largest export after-sales market for auto components but trade with the country was still poor owing to more demand of cheaper variants, Chinese auto parts makers have said.

They say prices of auto parts sold in India were on an average 30 to 40 percent cheaper than in Europe, US, the Middle East, South America and Russia despite rising manufacturing costs in their country.

“Trading with India is low owing to lower prices. We can’t compete with them (Indian firms),” Xing Wen Chao, general manager with Xinxiang Huazheng Radiator Co. Ltd., told IANS.

He said that even export to Nigeria “is good as pricing and payment are not a problem there”.

Chao’s $7-million annual turnover company in Xinxiang city in Henan province, 1,000 km from this port city, manufactures auto radiators and inter-coolers. It also manufactures components for the People’s Liberation Army.

In 2012, China remained the world’s largest auto market and producer for the fourth consecutive year. Both sales and production were recorded at over 19 million units each, according to the China Association of Automobile Manufacturing (CAAM).

“In India, prices are too cheap. I don’t know the reason for this. We prefer to look at markets in Russia and South America, where prices are higher,” said Xueke Xu of Tirri Automobile Parts Co. Ltd. in another seaport town Ningbo in Zhzjiang province.

Alisson Grossl of Brazilian automotive supplier Gauss Industriae said the company was yet to build up its presence in India. “We didn’t find much potential in the Indian market. They (Indians) prefer to go for Chinese parts as they are cheaper,” he said.

Grossl was here to participate in the four-day Automechanika Shanghai auto trade exhibition, organised by Messe Frankfurt Co. Ltd. and the China National Automotive Industry International Corporation (CNAICO), that concluded Dec 14.

Christine Berk, project manager with Messe Frankfurt Exhibition, who was also here for the exhibition, said “our companies did good business in ACMA Automechanika in New Delhi this year”.

“The market for new vehicles and after-sale in India is enormous. We will participate in the Delhi exhibition in future too,” she added.

Helme Koop, sales manager with German automotive supplier Vierol AG, said the company would definitely test waters in India in next three-four years.

Ningbo-based Xiamen Aohang International Freight Forwarding Company’s manager Gina Jin said that on an average the company was annually shipping over 100 containers, mainly comprising auto components, to India.

Trade representatives say the auto component market in India is good in shock absorber, ignite, brake, gear shaft, spark plugs, fuel pumps, filters, panel control switches, radiators, oil and grease seal and clutch segments.

Many Chinese cities, including Tangxia in Zhejiang province, Changchun in Jilin province, Wuhu in Anhui province and Shanghai, are prominent automobile industry hubs.

PIM Ltd., a US-based firm focusing on industrial and commercial market, said China was one of the world’s largest auto components makers and exporters.

This has been attributed to heavy government support, it says.

Since 2001, the Chinese auto components industry has received approximately $27.5 billion in subsidies. Over the next decade, China’s central government has committed to disburse an additional $10.9 billion in subsidies for industrial restructuring and technological development of this vital industry.

The industry has grown more than 150 percent since 2004 to become the world’s fourth-largest auto components exporter after Germany, the US, and Japan, it said.

PIM says there has been a spike in the Chinese automobiles and auto component industry mainly because of expanding population, domestic demand and export based development.