This Page Intentionally Left Blank2015 ITA <strong>Automotive</strong> <strong>Parts</strong> Top Markets Report 2
Executive Summary and Key FindingsThe automotive industry is the largest manufacturing sector in the United States. It is truly a globalindustry with automakers from the United States, Europe, Japan and Korea producing cars and automotiveparts for consumers around the world. With so much activity taking place, and growth in the sectorexpected to accelerate globally, this Top Markets Report provides U.S. auto parts suppliers the honestassessment of opportunities and challenges needed to successfully export to various markets throughoutthe world. Separate models were developed for original equipment (OE) parts and for aftermarket partsexport markets through 2020. Rankings are provided for a total of 30 markets, with detailed country casestudies written about eight different markets.The automotive parts industry has nearly doubled inthe last five years. Today, there are large domesticautomakers in countries around the world, includingChina, India and Russia -- not to mention, legacymanufacturers in the United States, Europe, and Japan.Each manufacturer produces their own parts, such asengines, transmissions, frames, and body parts. But,increasingly, many large manufacturers are turning tofirst tier suppliers for the design and production ofmost components, and even large subassemblies. Infact, large first-tier suppliers are now as global as thevehicle manufactures.The first-tier suppliers get subcomponents fromsecond and third-tier suppliers and this chaincontinues down to raw material suppliers. The goal ofautomakers is to produce in the market/region wherethe vehicle will be sold, and to shorten supply chains tothe extent that it is economically feasible. Massproducedvehicles are generally only exported tocountries where the economies of scale do not supportlocal assembly. The major exception is limitedproductionluxury, sports, or other special use vehicles.Similarly, the goal is to produce OE parts as close tothe assembly plants as possible. Modern auto plantsare built for just-in-time delivery of components,making long overseas supply chains costlier and riskier.Exceptions tend to be high tech, high cost, and lightweightcomponents, such as computer modules.Another example is exports of light weight alloy wheelsare more likely than exports of heavy and inexpensivebasic steel wheels. The situation is similar foraftermarket parts, but not always to the same degree.An aftermarket replacement part such as a shockabsorber or brake assembly could be the exact samepart, built by the same OE supplier. But this would beless true for expensive and/or high tech specialtycomponents used at the discretion of the purchaser toenhance the appearance or performance of a vehicle.As a result of these factors, you do see the massiveintra-regional trade between the United States,Canada, and Mexico in both OE and aftermarket parts,while imports are smaller in countries such as Japanand Korea. On the other hand, you find relatively largesales of aftermarket, including specialty aftermarketparts in smaller countries such as the UAE and SaudiArabia, which do not support local production.While the global automotive industry is fiercelycompetitive, there are other factors that limit or evendistort trade. For decades various governments aroundthe world have used trade distorting policies tosupport the creation/expansion of domesticautomotive industries that were not otherwiseeconomically feasible. This has been accomplishedthrough combinations of subsidies, tariffs, and nontariffbarriers.A prime example is India, which has a large and rapidlygrowing automotive industry made up of indigenousmanufacturers and foreign companies forced toproduce there by prohibitive tariffs. Brazil has a largeindustry made up of foreign manufacturers facing highlocalization requirements. The Malaysian nationalautomobile industry makes noncompetitive vehicles,but is highly subsidized and protected by barriers.Another particularly important and rapidly growingimpediment for U.S. exporters is the development oracceptance of safety and environmentalstandards/regulations that differ from the UnitedStates. This is a major problem whether these2015 ITA <strong>Automotive</strong> <strong>Parts</strong> Top Markets Report 3