"Chinese Likely To Be Buyers Of U.S. Auto Suppliers." What Else is New?

Bertel Schmitt
by Bertel Schmitt

Someone who has the same name as myself had urged Chinese parts manufacturers for more than a year to go overseas and to buy parts houses at firesale prices. Why? Because they make much more money that way. The foreign parts houses mostly produce in China anyway. Often with huge Chinese manufacturers as subcontractors. By moving closer to the customer and up the value chain, by turning from contract manufacturer to marketer, the Chinese manufacturers could realize much higher profits.

A year later, this thought finally resonates in Detroit. Under the title “Chinese likely to be buyers of U.S. auto suppliers.” Crain’s Detroit Business runs a rather belated story.

“Chinese automotive suppliers are likely to be buyers of North American auto parts companies as the industry faces 12 to 18 more months of depressed volumes and tight credit, says Dietmar Ostermann, a director with the management consultancy PRTM in Addison, Texas.” And he gets paid for that? Or rather, he wants to sell a study with that deep insight?

Long before BeijingWest Industries Co. Ltd. bought assets of Troy-based Delphi Corp.’s brake and suspension businesses, Delphi had quietly unloaded assets in China. Other western parts manufacturers in trouble have dissolved their joint ventures in China, packed up, and gone home. Old story.

The next really big story is Chinese parts makers buying into big established Western brands. Much easier than buying a car company. Continental for instance, which had long morphed from a tire manufacturer to one of the world’s largest parts suppliers, had been teetering on the brink of destruction for a while and could be an interesting takeover candidate.

A buyer would get much more than brand recognition: Component makers such as Magna, Bosch, or Continental are deeply involved in the development of a new car. If you want to know what hits the market in 5 years, become a component manufacturer. Chinese parts manufacturers could make a great 5 year leap forward by picking up a Western component maker that is on its last gasp, because the bottom has fallen out of the razor-thin OEM market.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Gimmeamanual Gimmeamanual on Oct 29, 2009

    ^Bertel, well said. Do your homework and you get what you pay for over here, be it auto parts or t-shirts.

  • PeteMoran PeteMoran on Oct 29, 2009
    Do your homework and you get what you pay for over here, be it auto parts or t-shirts. T-shirts? I'd send t-shirts to Indonesia, much cheaper.
  • Probert A few mega packs would probably have served as decent backup.
  • Lou_BC Lead sleds. Now-a-days GM would just use Bondo.
  • Jrhurren This is a great series. Thanks Corey
  • Tane94 Not as stylish as the Soul which it is replacing but a practical shape and bonus points for EV only.
  • Ronin What is the magical white swan event in the foreseeable future that will suddenly reverse the trend?Success tends to follow success, and likewise failure. The perception, other than among true believers, is that e-cars are a lost cause. Neither government fiat, nor government bribery, nor even the promise of superior virtue among one's peers have been enough to push past the early adapter curve. Either the bust-out is right now for e-cars, or it doesn't happen. Marketing 101.Even subtle language-manipulation, such as deeming those possessing common sense as suffering from some sort of vague anxiety (eg, "range anxiety") has not been enough to induce people to care.Twenty years from now funny AI-generated comedians will make fun of the '20s, and their obsession with theose silly half-forgotten EVs. They will point out that, yes, EVs actually ran on electricity generated by such organic fuels as coal and natural gas after all, and then they will perform synthesized laughter at us.