buick GL8.jpgMetaldyne, a US automotive supplier, has officially opened its first factory in China. Metaldyne has invested $10m million in the plant, in Suzhou, and and expects revenues of more than $100m when the plant reaches full capacity in a few years — see press release (pdf).

The company, which makes metal assemblies, has high hopes of China, which it expects will contribute around 6% to 7% of revenue by 2011.

That's quite an ambitious growth target as currently none of its $2bn revenues come from the PRC. Metaldyne plans to invest between $30m and $50m over the next five years is already talking about opening a second plant although a decision will not be taken until the end of this year.

Its current OEM customers in China include the Chinese JVs of DaimlerChrysler, PeugotCitroen and General Motors as well as local carmakers such as Chery and Soueast Motors. It supplies crankshaft dampers for Shanghai General Motors' Buick GL8 minivan (pictured), which was designed specifically for the Chinese market, as well as other metal parts for at least a dozen models. More on Shanghai GM in this EngagingChina story.

Metaldyne is particularly proud on an aluminium suspension system that the Suzhou factory makes for the Chrysler minivan. It says this one of the first aluminium systems produced in China, which has led other OEMs in China to sound Metaldyne out about aluminium suspension designs. Aluminium being lighter than steel reduces the weight of vehicles, although it costs more. This willingness of Chinese OEMs to use aluminium in vehicles shows just how fast China's car market is maturing.

Western automotive suppliers like Metaldyne are increasing their focus on China and other fast-growing Asian markets in a bid to reduce their dependence on slow-growing western markets. Moody's, the debt rating agency, has just produced a report on Europe's automotive supplier sector which says that suppliers are implementing measures to improve geographic and customer diversification, particularly toward Asian OEMs.

However, in the short to medium term these measures involve substantial capital expenditure and risk. Meanwhile, problems at home continue to mount. As well as facing flat car production volumes in mature markets of the west and “sizable annual price reduction requests” from OEMs, Moody's says suppliers remain exposed to continuous innovation pressures and also pressures from volatile raw material prices. Will the last car component supplier left in Europe please turn off the lights.

Elsewhere on the automotive front:

  • The first MG sports car produced by China's Nanjing Automotive was recently unveiled to die-hard MG fans at the 2007 MG Car Club gathering in the mythical Silverstone race circuit in the UK. The MG TF, which is due to go into production in the UK at the Longbridge factory later this year, is already being made in China. The MG TF features numerous innovations and cosmetic changes that NAC hope will win over fans who feared the worst when NAC bought the MG marque — see this EngagingChina story for background. More on the Silverstone debut including a photo in this Gizmag story.


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