TRAVERSE CITY, MICH. Delphi Corp. said it will report another record year in China, with revenue so far this year already surpassing 2002s $700 million.
Besides sales growth, the operation is profitable, said José Maria Alapont, Delphis president of international operations and vice president of sales and marketing.
The worlds largest auto supplier said it remains committed to the region because of Chinas recent production gains and its potential, Alapont said. He was interviewed by Crains at the Management Briefing Seminars in Traverse City.
Chinese auto production grew 30 percent from 2001 to 2002, the second straight year of double-digit growth. Delphis sales will outpace that growth in 2003, Alapont said.
That means we are gaining market share, he said.
Chinese automakers are expected to build about 3.5 million cars this year, and Alapont said he expects nearly 4 million next year.
But the real story, he said, is that analysts predict about 40 million potential car buyers in China over the next five years.
The capacity is growing fast, and the capacity is much lower than demand, Alapont said.
Delphi exported about $150 million to other regions, including North America, from its Chinese operations. So far, its Chinese auto production thats driving Delphis growth.
Despite the comparatively cheap labor, doing business in China carries other costs and risks. Raw materials are expensive; intellectual-property protection is scant. Delphi imports more than it exports from its Chinese operations.
But Delphi has built a good local supply base and joint ventures, Alapont said. The company expects to play a major role in the emerging passenger-car production market there.
If China keeps its social, (Word Trade Organization) and banking promises and other elements remain the same, growth can continue, Alapont said.
Terry Kosdrosky is a staff reporter for Crain's Detroit Business, a sister publication of Automotive News.