Automotive Parts

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differences were created as a purposeful barrier totrade, or not.The bottom line is that exporting auto parts from theUnited States to various markets can be challenging,even for the most competitive suppliers. This TopMarkets Report examines issues related to U.S.automotive parts exports and includes eight countryspecificcase studies for Germany, Thailand, Colombia,Brazil, Mexico, Korea, China, and Saudi Arabia.Understanding the IndustryThe automotive parts manufacturing industry iscomprised primarily of two segments: originalequipment (OE) suppliers and aftermarket suppliers.OE suppliers design and manufacture parts requiredfor the assembly of passenger cars and trucks. OEproduction accounts for an estimated two-thirds tothree-fourths of the total automotive parts production.Thus, automotive parts consumption is heavily linkedto the demand for new vehicles. If vehicle productiongoes up/down in a given market, then demand for OEparts will correspondingly go up/down, as well.Conversely, if a market has little, or no, domesticvehicle production, demand for OE parts will be limitedor nonexistent.Aftermarket parts are automotive parts built orremanufactured to replace OE parts as they becomeworn or damaged. Automotive aftermarket buyersinclude: retailers, repair/service facilities, do-it-yourselfconsumers, and wholesaler/distributors. This segmentprovides parts and equipment for maintenance, repairand enhancement of vehicles. Related to this isspecialty equipment, which are the parts and tools forconsumer preference vehicle modifications. Specialtyequipment refers to parts made for comfort,convenience, performance, safety, or customization,and are designed for add-on after the originalassembly of the motor vehicle.Automotive parts include, but are not limited to:• Bodies and parts• windshields• chassis and drivetrain parts• electrical and electric components (fans,compressors, storage batteries, signalingequipment, etc.)• engines and parts• miscellaneous parts (brake fluid, anti-freeze,lifting machinery, etc.)• automotive tires and partsSee Attachment 1 for the ten digit Schedule B codes ofthe automotive parts covered in this report.Why a focus on automotive parts?Vehicle manufacturers are large companies thathistorically like to build where they sell. Companies,including Volkswagen, Ford, GM, Honda, Hyundai, etc.,typically have established manufacturing facilitiesthroughout the world. Given these manufacturers’large, international operations with marketing andmanufacturing operations, they have already tappedinto most of the markets, both large and small. Thesecompanies also already have established businessconnections with their Tier 1 suppliers, and rely heavilyon just-in-time delivery from these suppliers in orderto maintain optimal productivity through themanufacturing process. In addition, vehiclemanufacturers have very sophisticated plans in placewhen making sourcing and investment decisions.Automakers deliver vehicles either through establishedassembly plants in the markets or through complexexport operations delivering to smaller markets. Forexample, BMW manufactures products at 30 sites in 14countries on four continents. Likewise, BMW uses itsSpartanburg, South Carolina plant as a base for exportssince the mid-1990s and is the sole location forexclusive production of its X-3, X-5, and X-6 models. In2013, almost 300,000 vehicles were manufactured atthis facility with 70 percent of the plant’s productionvolume exported to 140 markets around the world.Similarly, the 2015 Mustang, assembled in Flat Rock,Michigan, will be available in more than 100 markets.Some suppliers are similar to the vehicle producers inthat they are large, complex operations withinvestments throughout the world. For example,Magna has over 130,000 employees with 312manufacturing operations and 83 productdevelopment, engineering and sales centers in 29countries. Denso has approximately 140,000employees and operates in 35 countries, with globalsales totaling $39.8 billion for the fiscal year thatended March 31, 2014. In contrast, many Tier 2 (andlower tiers) manufacturers of automotive parts aresmall and medium-size enterprises (SMEs).2015 ITA Automotive Parts Top Markets Report 4
Most U.S. SME auto suppliers do not export. Thosethat do export do so primarily to Canada and/orMexico. This demonstrates untapped potential tointroduce U.S. suppliers to foreign markets, particularlyfor the aftermarket. These SMEs do not have themarketing departments, international operations, andvast resources to readily expand their operations tonew markets throughout the world in the samecapacity as the vehicle manufacturers and many of theTier 1 suppliers.This Top Markets Report aims to identify the bestmarkets going forward for these companies to focustheir efforts in identifying export opportunities. Byfocusing on automotive parts, this study provideshelpful market information to assist these companiesin identifying promising markets to expand theirbusiness, grow exports, and remain competitive on aglobal scale.Export MarketsIn 2009, the United States exported approximately $43billion worth of automotive parts. The top five marketsin order were: Canada, Mexico, Germany, China, andJapan. By 2014, the value of automotive parts exportsfrom the United States had risen to almost $81 billion.The top five markets by 2014 had changed to: Canada,Mexico, China, Germany, and Australia. SeeAttachment 2 for a full list of the top 30 exportmarkets for U.S. automotive parts between 2009 and2014. Trade data related to auto parts does notdistinguish between OE and aftermarket parts, which isa limitation for this analysis.Of the nearly $81 billion of U.S. automotive exports in2014, Canada accounted for about $30 billion of theseexports, with Mexico accounting for almost another$29 billion. Combined, these two NAFTA partnersaccounted for almost 75 percent of all U.S. automotiveparts exports. Exports to both of these markets grewsubstantially over the same time period, with exportsto Mexico more than doubling from $12.1 billion in2009 to over $29.1 billion by 2014. As a result ofNAFTA, the U.S. auto parts industry is highly integratedin the North American supply chain, contributing to theflow of goods among the three markets. The thirdleading market for U.S. exports in 2014, China, hassteadily been growing as a market for U.S. exports overthe last five years. U.S. automotive exports to Australiamore than doubled over five years from $687 million in2009 to almost $1.5 billion in 2014.For the European market, Germany is the topdestination for U.S. automotive parts exports, followedby the United Kingdom, the Netherlands, Italy,Belgium, and France. Brazil is the top destination forU.S. parts exports in South America with exports nearlydoubling from $554 million in 2009 to $1.1 billion in2014. The next largest markets in this region for U.S.parts are Chile, Venezuela, Colombia, Argentina, andPeru.Challenges facing U.S. automotive parts exportersOne of the greatest challenges facing U.S. auto partsexporters is the global regulatory environment. Lack ofharmonization/coherence and transparency ofregulations and standards, deeply affect thecompetitiveness of U.S. vehicle and automotive partsmanufacturers worldwide. Conforming to two differentstandards is costly and time-consuming. Until recently,most developing countries have had only limitedregulatory requirements and thus they acceptedvirtually any vehicles built to minimal safety andemissions levels. This has made it possible forAmerican companies to export U.S.-compliant vehiclesand products for sale to these markets.Unfortunately, many countries are now choosing toeither accept or base their regulatory standards onthose developed by the European Union. Because ofthis, they are no longer allowing the sale of U.S.-compliant products in their markets. It is an irony thatmany of the countries that are adopting EU standardshave systems more similar to the U.S. system (e.g.,Chile, Colombia, Russia, etc.).They have been doing this largely because the EU hasbeen aggressive in marketing its regulatory system andappear to be including requirements for adopting itsstandards in its trade agreements. However, now thereis a possible threat to the EU system as well. Inaddition to the barriers cropping up from themandatory use of EU standards, there are recent hintsthat emerging markets like China or India aredeveloping their own standards. Having a third, fourth,or potentially more set of standards will make it evenharder to export to other markets, and certainly raisethe cost of doing business. This is one of the manyreasons why it is in the interest of the European and2015 ITA Automotive Parts Top Markets Report 5
Page 1 and 2: 2015 Top Markets ReportAutomotive P
Page 3 and 4: Table of ContentsExecutive Summary
Page 5: Executive Summary and Key FindingsT
Page 9 and 10: Figure 1: Near-Term Autoparts Expor
Page 11 and 12: Country Case StudiesThe following p
Page 13 and 14: MexicoType: Large Market; Large Sha
Page 15 and 16: ChinaType: Large Market; Small Shar
Page 17 and 18: A growing after-sales market and a
Page 19 and 20: GermanyType: Large Market; Large Sh
Page 21 and 22: It also seeks to establish rules of
Page 23 and 24: BrazilType: Large Market; Medium Sh
Page 25 and 26: South KoreaType: Large Market; Smal
Page 27 and 28: aftermarket, demand in Korea is for
Page 29 and 30: ThailandType: Large Market; Small S
Page 31 and 32: projects. As Thailand slowly moves
Page 33 and 34: Saudi ArabiaType: Large, Growing Ma
Page 35 and 36: ates can obviously affect U.S. auto
Page 37 and 38: ColombiaType: Medium, Growing Marke
Page 39 and 40: The Colombian government is making
Page 41 and 42: Appendix 1: Automotive Parts Codes
Page 43 and 44: Appendix 2: U.S. Automotive Parts E
Page 45 and 46: Appendix 3: MethodologyWhen trying
Page 47 and 48: Figure 2: Aftermarket Model Standar

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