The automotive market is booming in China, and many of the manufacturing giant’s closest neighbors are feeling the effects. After Chinese auto makers increased their sales by a whopping 33%, the country eagerly accepted bids from Singapore auto parts makers to help Chinese motorists stay on the road. Amtek, a Singaporean auto parts manufacturer that was bought out by CVC Capital in 2007 is planning to double its production space in Shanghai, China, in the near future. So far, the auto parts manufacturer has been re-listed on the Singapore Bourse, with its shares rising by more than 25% in the past 30 days.
Amtek is not the only Singapore-listed auto parts manufacturer that has seen its profits grow recently.
Armstrong Industrial and Cheung Woh Technologies have both experienced a steep rise in revenue ever since the Chinese government began offering its citizens attractive incentives for buying new cars. While just about every auto parts and car manufacturer that exports products to China has been riding the gravy train, analysts predict that the market could fall sometime in 2012. New car sales may begin to lag, but given the fact that China is the world’s largest consumer of automobiles, auto parts will always been in high demand.
Many auto manufacturers are working on hybrid and electric cars, but auto experts do not believe that countries like China will be keen on making a switch anytime soon. This means that discount auto parts manufacturers will be able to find a home in China for many years. With Chinese consumers set to purchase even more automobiles in 2011 than they did in 2010 and 2009, Singapore-listed auto parts manufacturers will probably see their best year yet. Unless the Chinese government agrees to extend tax incentives, car parts makers may end up needing to lower their prices in order to remain competitive.
