Best Export Markets for U.S. Automotive Parts and Accessories, 2009 Best Export Markets for U.S. Automotive Parts and Accessories was compiled by Grace Warrick, under the supervision of Maurice Kogon, Director of the El Camino College Center for International Trade Development (CITD) in Hawthorne, California. The report is based largely on 2009 Country Commercial Guides (CCGs) prepared by United States Commercial Service (USCS) posts abroad. All CCGs include a standard chapter ?Leading Sectors for U.S. Exports.? This report drew from those CCGs which specifically recommended Automotive Parts and Accessories as a best prospect for U.S. exports. CENTER FOR INTERNATIONAL TRADE DEVELOPMENT 13430 Hawthorne Blvd, Hawthorne, California 90250 USA http://elcamino.citd.org Phone: (310) 973-3173 Fax: (310) 973-3132 E-mail: mkogon@elcamino.edu. Best Export Markets For U.S. Automotive Parts and Accessories, 2009 Table of Contents Page I. Export Market Overviews 3 II. Market Potential Indicators 4-8 A. Top 30 U.S. Export Markets, 2002-2005 B. Top 30 World Exporters: Automotive Parts and Accessories, 2002-2005 (HS 8708) C. Top 30 World Importers: Automotive Parts and Accessories, 2002-2005 (HS 8708) D. Market Sizes & U.S. Share by Country, 2003-2005 III. Best Prospect Market Assessments 9-54 ? Australia ? Germany ? Saudi Arabia ? Bulgaria ? Israel ? Slovakia ? Cambodia ? Italy ? Slovenia ? Canada ? Jamaica ? South Africa ? China ? Kuwait ? South Korea ? Colombia ? Mexico ? Spain ? Costa Rica ? Netherlands ? Trinidad and Tobago ? Cote d?Ivoire ? Nicaragua ? Tunisia ? Dominican Republic ? Poland ? Ukraine ? Egypt ? Portugal ? United Kingdom ? El Salvador ? Romania ? Venezuela ? France ? Russia ? IV. Trade Events 5 V. Available Market Research 56 Appendix: Products in Automotive Parts and Accessories, 58 by HS/Schedule B Code 2 I. Export Market Brief A. Automotive Parts and Accessories -- HS 8708 This Market Brief provides an overview of the world market for Automotive Parts and Accessories (HS 8708) category, based on the latest trade statistics and market research. Export growth: U.S. exports of Automotive Parts and Accessories (HS 8708) rose from $31.2 billion in 2005 to $31.7 billion in 2008, an increase of 1.8% over the three-year period. Leading Export Markets: Canada is by far the leading market for U.S. exports of Automotive Parts and Accessories, ($15.7 billion in 2008, or 49.51% of total). Other top markets (all above $300 million) were Mexico (26.14% of total), Japan (2.99%), Germany (2.68%), Venezuela (1.63%), China (1.51%), Brazil (1.47%), Australia (1.29%), and the United Kingdom (1.05%).Other significant markets (above $150 million) were: France (0.87%), Korea (0.83%), Austria (0.79%), Belgium (0.59%), Argentina (0.58%), and Russia (0.48%). Fastest Growing Export Markets: The leading markets with both high and sustained growth rates for U.S. exports of Automotive Parts and Accessories during 2005-08 and continuing in the latest year (2007- 08) were Mexico, Venezuela, Argentina and Russia. Other significant growth markets over the 2005-08 period were Saudi Arabia, Poland, Italy, Hungary, South Africa, Singapore, India, Colombia, Egypt and United Arab Emirates. Leading Importing Countries: The top foreign importers of Automotive Parts and Accessories in 2008 (all above $11 billion) were Germany (12.2% of total), Canada (7.3%), France (6.5%), UK (6.4%), Mexico (5.5%), Belgium (4.7%), and China (4.6%). Other significant importers (all above $5 billion) were Italy (3.4%), Sweden (2.7%), Japan (2.6%), Czech Republic (2.3%), Slovakia (2.2%), Russia (2.2%), and Turkey (2.1%). Note: Data for Spain, a major importer, were not available for 2008. World Market Size & U.S. Share: Total world exports of Automotive Parts and Accessories by all countries reached $248.3 billion in 2008. The U.S. had a 12.8% share of the total world market in 2008, topped only by Germany (18.4%). Other world suppliers with significant market shares were Japan (11.9%), France (7.9%), Italy (6.6%) and China (5.9%). Best Market Prospects: The markets listed below appear to be particularly promising for U.S. exports of Automotive Parts and Accessories over the next two years: ? Australia ? Germany ? Saudi Arabia ? Bulgaria ? Israel ? Slovakia ? Cambodia ? Italy ? Slovenia ? Canada ? Jamaica ? South Africa ? China ? Kuwait ? South Korea ? Colombia ? Mexico ? Spain ? Costa Rica ? Netherlands ? Trinidad and Tobago ? Cote d?Ivoire ? Nicaragua ? Tunisia ? Dominican Republic ? Poland ? Ukraine ? Egypt ? Portugal ? United Kingdom ? El Salvador ? Romania ? Venezuela ? France ? Russia 3 III. Market Potential Indicators Automotive Parts and Accessories A. Top 30 U.S. Export Markets. These tables show the leading and fastest growing export markets for U.S. Automotive Parts and Accessories, by country, over the past four years. Source: U.S Census Bureau. B. Top 30 World Importers. These tables show the leading and fastest growing world importers of Automotive Parts and Accessories, by country, in 2007. Source: United Nations COMTRADE. C. Top 30 World Exporters & U.S. Market Share, 2007, by Country. These tables show the U.S. and competitor-country shares of total world exports of Automotive Parts and Accessories in 2007. Source: United Nations COMTRADE. D. Market Sizes & U.S. Share, 2007-2008, by Country. This table shows each ?best prospect? country?s total market, total imports, and imports from the U.S. and the U.S market share for Automotive Parts and Accessories. Source: U.S. Commercial Staff in each country. 4 III. Market Potential Indicators III. A. Top 30 U.S. Export Markets 2005?2008, by Country HSS 8708: Parts and Accessories for Tractors, Public-Transport Passenger Vehicles, Motor Cars, Goods Transport Motor Vehicles and Special Purpose Motor Vehicles 2005 2006 2007 2008 % Change %Change % Share Country In 1,000 US Dollars 2005-08 2007-08 2008 Canada 18,073,428 18,074,121 18,449,488 15,717,413 -13.04% -14.81% 49.51% Mexico 6,277,104 7,436,683 8,018,276 8,298,765 32.21% 3.50% 26.14% Japan 750,115 913,421 997,834 950,034 26.65% -4.79% 2.99% Germany 842,448 963,419 855,423 850,836 1.00% -0.54% 2.68% Venezuela 314,558 371,779 403,289 517,316 64.46% 28.27% 1.63% China 369,033 532,802 697,431 480,702 30.26% -31.08% 1.51% Brazil 427,557 449,222 489,402 468,006 9.46% -4.37% 1.47% Australia 416,567 442,678 421,520 410,495 -1.46% -2.62% 1.29% United Kingdom 432,093 390,061 360,168 333,321 -22.86% -7.45% 1.05% France 256,545 297,899 314,923 276,824 7.90% -12.10% 0.87% Korea 435,037 444,545 409,036 264,573 -39.18% -35.32% 0.83% Austria 566,621 686,488 481,816 251,887 -55.55% -47.72% 0.79% Belgium 145,617 282,189 289,772 188,871 29.70% -34.82% 0.59% Argentina 129,732 162,167 170,117 184,820 42.46% 8.64% 0.58% Russia 29,004 45,927 54,065 151,147 421.12% 179.57% 0.48% South Africa 73,163 98,411 140,120 148,340 102.75% 5.87% 0.47% Saudi Arabia 81,899 101,924 111,232 146,959 79.44% 32.12% 0.46% Sweden 136,904 130,952 136,535 136,519 -0.28% -0.01% 0.43% Chile 68,024 101,407 135,239 127,081 86.82% -6.03% 0.40% Spain 200,970 202,484 180,016 124,944 -37.83% -30.59% 0.39% Singapore 48,065 78,253 79,447 115,701 140.72% 45.63% 0.36% Netherlands 196,951 188,480 124,019 99,013 -49.73% -20.16% 0.31% United Arab Em. 43,635 61,221 72,860 98,825 126.48% 35.64% 0.31% Italy 74,156 82,961 89,201 98,377 32.66% 10.29% 0.31% India 26,455 46,576 51,472 68,395 158.53% 32.88% 0.22% Hungary 47,917 61,285 61,268 65,942 37.62% 7.63% 0.21% Poland 23,111 39,257 51,759 64,459 178.91% 24.54% 0.20% Colombia 49,973 63,513 59,109 61,406 22.88% 3.89% 0.19% Guatemala 21,616 41,095 63,304 51,981 140.47% -17.89% 0.16% Egypt 47,786 51,287 36,270 51,756 8.31% 42.70% 0.16% Subtotal : 30,606,085 32,842,507 33,804,410 30,804,707 0.65% -8.87% 97.03% All Other: 581,546 668,531 773,632 944,110 62.34% 22.04% 2.97% Total 31,187,631 33,511,039 34,578,042 31,748,817 1.80% -8.18% 100.00% Source: U.S. Census Bureau 5 III. Market Potential Indicators III.B. Top 30 Foreign Importers, by Country, 2008 HS 8708 (Parts and accessories of the motor vehicles of headings 87.01 to 87.05.) Reporter Import Value % Share Germany $29,625,127,000 12.2% Canada $17,831,405,551 7.3% France $15,906,785,358 6.5% United Kingdom $15,533,565,825 6.4% Mexico $13,257,212,903 5.5% Belgium $11,403,158,661 4.7% China $11,080,284,444 4.6% Italy $8,373,899,884 3.4% Sweden $6,467,534,488 2.7% Japan $6,417,650,249 2.6% Czech Rep. $5,653,605,057 2.3% Slovakia $5,344,206,019 2.2% Russian Federation $5,288,430,601 2.2% Turkey $5,173,790,962 2.1% Brazil $4,982,137,846 2.1% Austria $4,868,263,576 2.0% Netherlands $4,770,627,009 2.0% Thailand $3,412,065,939 1.4% Argentina $2,907,516,147 1.2% Portugal $2,201,445,884 0.9% Australia $2,185,743,317 0.9% United Arab Emirates $2,056,603,632 0.8% Singapore $1,695,150,177 0.7% Romania $1,634,828,233 0.7% South Africa $1,196,537,945 0.5% Denmark $1,074,734,602 0.4% Finland $1,044,130,546 0.4% Switzerland $1,016,832,817 0.4% Slovenia $1,016,228,729 0.4% Norway $916,171,245 0.4% Top 30 Subtotal $194,335,674,646 80.0% Other $48,678,171,627 20.0% Total $243,013,846,273 100.0% Source: United Nations COMTRADE Note: Excludes U.S. Imports 6 III. Market Potential Indicators III.C. Top 30 World Exporters & U.S. Market Share, by Country, 2008 HS 8708 (Parts and accessories of the motor vehicles of headings 87.01 to 87.05.) Trade Value in Reporter USD % Share Germany $45,613,827,000 18.4% USA $31,748,817,255 12.8% Japan $29,431,036,226 11.9% France $19,603,903,924 7.9% Italy $16,471,363,338 6.6% China $14,603,742,457 5.9% Mexico $11,750,648,111 4.7% Canada $10,507,706,528 4.2% Czech Rep. $9,573,395,567 3.9% Belgium $8,077,425,511 3.3% United Kingdom $7,042,047,456 2.8% Sweden $5,105,934,278 2.1% Austria $4,686,951,995 1.9% Thailand $4,094,798,303 1.6% Netherlands $3,682,828,531 1.5% Brazil $3,510,264,721 1.4% Turkey $2,876,613,071 1.2% Romania $2,298,210,000 0.9% Singapore $2,252,087,086 0.9% Portugal $2,226,638,978 0.9% Slovakia $2,123,013,468 0.9% United Arab Emirates $1,357,725,418 0.5% Argentina $1,261,601,564 0.5% Switzerland $1,121,672,619 0.5% Denmark $1,084,628,979 0.4% South Africa $887,164,938 0.4% Slovenia $746,964,929 0.3% Norway $625,342,135 0.3% Russian Federation $582,330,275 0.2% Australia $558,868,959 0.2% Top 30 Subtotal $245,507,553,620 98.9% Other $2,810,963,344 1.1% Total $248,318,516,964 100.0% Source: United Nations COMTRADE 7 III. Market Potential Indicators III. D. Market Sizes & U.S. Share, 2007-2008, by Country The Table below provides comparative data on total market, import market, and imports from the U.S. for 26 countries considered ?best prospects? for U.S. exports of Automotive Parts and Accessories (info. unavailable for remaining 12). The countries are listed in alphabetic order, not in rank order. The data are based on local sources and reflect best estimates of USCS commercial officers in each country. Statistical accuracy and comparability to other sources (e.g., ?USDOC Bureau of Census?) are affected by a number of factors, including lack of published figures in certain markets, variances in data collection techniques, sources of data, and industry definitions. Automotive Parts and Accessories (Values in $ Millions) % US Country Total Market Total Imports Imports from US Share % % % 2007 2008 Change 2007 2008 Change 2007 2008 Change 2008 Australia 10,400 10,580 2.00 4,043 4,980 23.18 740 779 5.27 16.00 Canada 16,444 16,775 2.00 12,107 12,349 2.00 10,354 10,562 2.01 86.00 Colombia 4867 526 -89.00 593 641 8.09 163 176 7.98 27.00 Costa Rica 166 183.7 11.00 161.4 177.8 10.16 44.8 54.2 20.98 30.00 Cote d'Ivoire N/A N/A N/A 451 N/A N/A 19 N/A N/A N/A Czech Republic 18,000 18,800 4.00 13,000 10,300 -20.77 68 158 132.35 2.00 Egypt 1,390 1,525 10.00 1,175 1,305 11.06 210 230 9.52 18.00 El Salvador 114.5 123.5 8.00 136.5 143.3 4.98 44.8 49.28 10.00 34.00 France 38,870 38,572 -1.00 28,035 30,558 9.00 820 810 -1.22 3.00 Germany 38,700 38,700 0.00 11,500 11,500 0.00 2,000 2,000 0.00 17.00 Israel 180 206 14.00 371 420 13.21 23 30 30.43 7.00 Italy 53,400 57,300 7.00 13,200 15,100 14.39 295 300 1.69 2.00 Mexico 39,700 40,900 3.00 20,000 18,700 -6.50 N/A N/A N/A N/A Netherlands 6,459 23,957 271.00 26,310 25,125 -4.50 550 603 9.64 2.00 Nicaragua N/A N/A N/A 224.8 266.8 18.68 32.2 N/A N/A N/A Poland 5301 7420 40.00 4534 6490 43.14 63.3 76 20.06 1.00 Romania 7.842 6.67 -14.00 5.94 5.46 -8.08 50 39 -22.00 714.00 Russia 9,500 10,500 11.00 4,300 5,300 23.26 1,000 1,100 10.00 21.00 Slovakia 23,997 25,192 5.00 9,774 9,642 -1.35 22 46 109.09 0.50 Slovenia 1,270 1,300 2.00 N/A N/A N/A N/A N/A N/A N/A South Africa 34,710 29,890 -14.00 14,500 12,500 -13.79 766 625 -18.41 5.00 South Korea 45,999 36,042 -22.00 3,832 3,907 1.96 N/A N/A N/A N/A Sweden 10,735 11,977 11.57 6,636 7,976 20.19 106 117 10.38 1.47 Switzerland 1,230 1,242 0.98 1,115 1,129 1.26 48 49 2.08 4.34 United Kingdom 21,896 20,755 -5.21 12,977 12,390 -4.52 345 352 2.03 2.84 Venezuela 2,253 2,200 -2.35 1,768 1,300 -26.47 530 500 -5.66 38.46 Source: U.S. Commercial Staff in each country Information unavailable for: Bulgaria, Cambodia, China, Dominican Republic, Kuwait, Jamaica, Saudi Arabia, Spain, Swaziland, Trinidad and Tobago, Tunisia, Ukraine 8 IV. Best-Prospect Market Assessments Following are overviews of ?best prospect? markets for Automotive Parts and Accessories, based on observations of U.S. Commercial Service (USCS) posts in each country. The countries appear in alphabetical order. For more detailed market research on Automotive Parts and Accessories in these and other specific markets, see relevant Market Research Reports listed in Chapter VI. For general commercial and economic information on individual countries, see the relevant Country Commercial Guides (CCGs). AUSTRALIA Overview The economic crisis will have a short-term negative impact on capital-equipment purchases within the automotive industry. It is anticipated that the slowdown of new car sales as a result of the world economic crisis will have a positive impact on the aftermarket industries as more consumers look to improve and repair their existing motor vehicles. Industry experts forecast a decrease in local production which will have a positive impact on imports; an expected 3% increase in imports from the U.S. from 2008 to 2010. The Australian Automotive Aftermarket Industry is a mature industry that is believed to be moving into decline. The Federal Chamber of Automotive Industries (FCAI) reports that new vehicle sales have decreased 2.9% or 28,048 vehicle sales from November 2007 ? November 2008. As of November 2008, market shares were; Toyota (22%), GM Holden (14%), Ford (10%), Mazda (7%), and Mitsubishi (6%). Of these companies, GM Holden, Ford, and Toyota have manufacturing facilities in Australia. The industry is increasingly driving towards the acquisition of businesses by larger companies, which has led to the consolidation and rationalization of the industry. It should be noted that cars in Australia have a right side steering column as they drive on the left side of the road. Australia has the third highest vehicle ownership rate in the world with over 600 vehicles per 1,000 people. Australia also has one of the oldest 'car parcs' in the world, at an average age of 10.8 years. Growth in Australia?s aftermarket has averaged above 5% over the past ten years. The aftermarket for replacement parts and accessories is a significant element of Australian component producers' total sales. This part of the market is estimated to be worth approximately $5 billion for replacement parts and $6 billion for accessories and is split fairly evenly between local producers and imports. According to the World Trade Atlas 2007, the United States is the leading supplier, accounting for 24% of imports or $494 million, while Japan comes second with 20%. The U.S.-Australia Free Trade Agreement (FTA) has eliminated tariffs across most U.S. automotive imports. This fact coupled with the larger size of the U.S. industry has contributed to a 10.4% increase in U.S. exports to Australia since its inception. Future growth potential may be limited by the modest size of the Australian market. Although 9 the United States is Australia?s largest import source of these components, U.S. exports to Australia represent less than 2% of total U.S. exports of motor vehicle parts. Best Products/Services The Australian automotive market provides good opportunities for U.S. suppliers of both specialty aftermarket equipment/accessories, as well as the necessary aftermarket parts such as 4WD parts and accessories, street performance parts and accessories, and automotive tools. In general, high-quality, innovative, environmentally conscious and competitively priced parts and accessories are particularly in demand. Opportunities A prime area of opportunity in Australia?s auto sector is for accessories and replacement parts for light and medium-sized family cars and sports utility vehicles. Parts and accessories for routine auto maintenance, street performance, and high-end cosmetic auto enhancement also offer considerable opportunity for U.S. firms. Sales are generally through agents or distributors. BULGARIA Overview The automotive market in Bulgaria is characterized by steady growth of new car imports and sales, and steady imports of used cars. The number of new cars sold during the first 9 months of 2008 in Bulgaria was 39,926, compared to 45,145 for all of 2007 and 42,625 in 2006. The number of trucks and buses sold in 2008 was 2,923, compared to 2,851 for 2007 and 2,675 in 2006. For the three year period 2006 through 2008, the automotive import car market in Bulgaria registered 16% growth for cars and 61.8% for trucks and busses. Nevertheless, automobiles in Bulgaria still tend to be very old with the continued import of used cars at a rate of about 150,000 per year. Almost 18% of the cars registered in Bulgaria are older than ten years. Since 2000, Bulgarian families prefer to buy cars not older than ten years. Approximately 70% of Bulgarian families own a car and almost 80% of the companies with business activities have motor pools, which could include cars, vans, minibuses, jeeps and light trucks. Companies prefer to use leasing schemes on the basis return-replace. The automotive aftermarket and collision repair car business is one of the fastest growing in Bulgaria. The growth in numbers of European cars will lead to a need for more sophisticated service and car body repair equipment, both mechanical and electronic, paint products and application methods at an affordable price. The official distributors of all new car models maintain warranty service and repair stations within their company structures. For newer used cars, sophisticated electronic car equipment requires special analyzers, testers and experts to deal with it. 10 Best Products/Services Best sales prospects include consumables, service equipment for electronic diagnosis, monitoring, testing and analyzing and auto cosmetics for the second hand car market, year 2000 or later. Very few Bulgarian companies import classic cars and/or tuning equipment. These companies suffer many tariff and non-tariff trade barriers. CAMBODIA Overview Cambodia has no municipal public transportation. The majority of people travel via motorbike or car. With Cambodia?s growing prosperity, automobile ownership is rapidly increasing. The vast majority of cars are imported second-hand vehicles. The most popular models are 4-wheel drive vehicles and mid-sized Japanese sedans; the latter are usually U.S.-made models. All car imports must be left-hand drive. The actual size of the automobile market is difficult to estimate due the routine occurrence of smuggling and theft from Thailand. However a local company estimates Cambodian demand as 2,500 new vehicles and 40,000 used vehicles per year. The U.S. appears to be the largest supplier of used vehicles. U.S. exports of new and used passenger cars to Cambodia accounted for some $86 million in 2007, nearly double the $44 million exported in 2006. A number of companies sell used and new cars in Phnom Penh. Ford has a local dealership, and the market also supports Chevrolet, Humvee, Mercedes, Ssanyong, Nissan, and Peugeot dealers as well as representatives of all major Japanese companies such as Toyota, Nissan, and Mitsubishi. Automobile parts and accessories from the U.S. are available in Cambodian markets, particularly for Toyota vehicles. Limited availability of parts for other companies? models has led customers to choose Toyotas because parts are available and affordable. As with other products, U.S. auto parts have a reputation for quality and attract a higher price than parts produced in Thailand, Taiwan, or other Asian countries. Best Products/Services Used cars, accessories, and spare parts. Resources Ministry of Public Works and Transport: www.mpwt.gov.kh CANADA Overview The Automotive Aftermarket sector is the largest retail sector in Canada ahead of clothing, food, furniture and pharmaceuticals. The sector encompasses production, re- manufacturing, distribution and retailing of replacement parts, tools, equipment, accessories, chemicals and production for fixing used cars. The sector was estimated at 11 over $16.7 billion in 2008. The sector has been growing at a steady rate of 2 to 3% over the past 4 years. This growth is expected to continue for a few more years despite the slowdown in the automotive market. The Canadian market offers U.S. suppliers the best opportunities in this sector because of a strong trade relationship and the largest market other than its own. Best Products/Services The best prospects in the automotive sector are in the aftermarket, because of the 50 million cars on the road today and the constant maintenance that they require. In other words, while the auto sales market has declined rapidly, the demand for maintenance is still very much there. Thus, the current slowdown in the auto sector will not likely catch up to the aftermarket for a few years. Until then there will still be a strong demand for aftermarket products and services. On average, each car 12 years or older requires a minimum of $1,000 in maintenance per year. This figure is important because 43% of cars on Canadian roads are on average 15 years old. Much of the market is still in mechanically installed (MI) parts; but also, we are seeing a large increase in the Do-It-Yourself (DIY) purchases and repairs. Opportunities Ontario offers the largest aftermarket potential at $7.1 billion, followed by Quebec at $4.2 billion, the Prairie Provinces (Saskatchewan, Manitoba Alberta) at $3.5 billion, British Columbia at $2.6 billion, and the Atlantic Provinces at $1.2 billion. There are still many opportunities for new companies entering the market from the United States. The recent depreciation of the Canadian dollar has lowered start-up costs for firms seeking entry into the Canadian automotive aftermarket industry. Furthermore, the substantial decline in the price of commodities used in the production of automotive parts has improved growth forecasts for the aftermarket parts. Resources ? Automotive Industries Association of Canada http://www.aiacanada.com/ ? Industry Canada http://www.ic.gc.ca/ic_wp-pa.htm ? DeRosiers Automotive Consultants http://www.desrosiers.ca/ ? CS Canada Automotive Aftermarket Sector Specialist Madellon. Lopes@mail.doc.gov. CHINA Overview China is now the second largest automotive market in the world, just barely trailing the United States. Its motorcycle market is limited by the general prohibition on motorcycles in China?s large cities. China has about 6,000 automotive enterprises, which are scattered in five sectors: motor vehicle manufacturing, vehicle refitting, motorcycle production, auto engine production, and auto parts manufacturing. This includes approximately 100 OEMs, with 40 producing passenger vehicles, and over 4000 registered auto parts/accessories companies. All tiers of the industry are being driven by the booming sales of the OEM sector. Nearly 80% of the revenue for the auto parts and accessories 12 market is through new vehicle sales. However, revenue from after market is increasing rapidly. Shanghai and its surrounding provinces (Zhejiang, Jiangsu, and Anhui) are the centers for component manufacturing, representing around 44% of national production. Shanghai is home to Shanghai General Motors, Delphi, Visteon, and other notable American automotive companies and, as such, provides a good starting point for U.S. automotive component exporters to begin to explore the Chinese market. Other major automotive centers in China include Guangzhou (South China), Chongqing (West China), and Changchun (North China). In 2008, it?s estimated that ten million new motor vehicles in China will be sold. As of November 2007, China had already produced 8.8 million vehicles, a 33.33% rise over 2006?s figures. Most Chinese car buyers are first time buyers as incomes rise and car prices decline. Additionally, as China?s restrictions on trading and distribution have been reduced over the years, American companies are gaining the right to distribute most of their own products, including automobiles and related parts, in any part of China. Car dealerships are also about to embark on the business of buying back and selling used cars. Imported used cars continue to be prohibited. The main goals for Chinese automotive components, parts, and accessories manufacturers are to improve technology and quality and to develop their own design capability. Currently, a consortium is working on developing a Chinese automatic transmission, a technology which has eluded them so far. Most of the domestic automotive parts manufacturers? R&D capabilities are limited due to the small scale of their operations and a shortage of capital as compared to international companies. However, Chinese companies are dominating the low-end components market and have aggressively sold their parts to U.S. automakers. In the next five years, the Chinese Government will continue to encourage foreign investment in automotive component development and manufacturing. In the meantime, there is still a market for imports and American products are generally highly regarded by Chinese customers. The Chinese government has launched the ?National Projects of Electric Vehicles,? that encourages the development of environmentally friendly automobiles. U.S. companies possessing clean energy parts and technologies will find more and more opportunities in the Chinese market. Best Products/Services ? Engines for motor vehicles and motorcycles (usually by U.S. companies already in China) ? Auto and motorcycle casting blanks ? Key and high tech automotive parts and components including disc-type breaking assembly, drive axle assembly, automatic transmission box,, engine admission supercharger, engine displacement control device, electric servo steering system, viscous continuous shaft device (for four-wheel drive), air shock absorber, air suspension frame, hydraulic tappet, and compound meter 13 ? Auto electronic devices and instruments (including control systems for engine, chassis and vehicle body) ? Fuel cell technology ? Automotive accessories ? After market products (that meet legislative guidelines for vehicle modification) COLOMBIA Overview Colombia has over three million cars, trucks and buses and is considered an important auto assembler in Latin America after Brazil, Mexico and Argentina. The average age of motor vehicles in circulation is 15 years or more, which makes Colombia an excellent market for spare parts for older cars. Despite the global crisis in this sector, the outlook for the auto sector continues to be excellent, with industry observers projecting a steady growth in demand for auto parts over the next five years. The United States has traditionally been Colombia?s major supplier of automotive parts and accessories, accounting for approximately 26% of total imports from 2006-2007. In 2008, the Colombian automotive sector experienced a downward trend after three years of significant growth. The market grew approximately 14% in 2008, led by increases in the local production segment. One of the reasons for this expansion was the reduction in finished vehicle exports to Venezuela. President Chavez issued a decree in January 2008 to restrict Colombia?s auto exports to 18,000 vehicles annually. The restriction provided and will continue to provide opportunities for U.S. auto parts exporters as the age of the Venezuelan fleet increases. Colombia?s road infrastructure, generally speaking, is in poor-to-fair condition which, increases the likelihood of damage to vehicles and requires constant vehicle safety checks. Another factor contributing to future growth of the automotive market is that approximately 80% of cargo transportation and passengers are moved in Colombia by land. Thus, transportation companies need to keep their vehicles in optimum condition to perform efficiently. Local carmakers are active in the market and have captured market share by increasing the variety of models produced in Colombia and for export to Venezuela, Ecuador and other Andean countries. Also, there is a permanent demand for parts and accessories for the maintenance and repair of the Bogota dedicated lane passenger bus transportation system, ?Transmilenio,? and similar systems developed for Cali, Barranquilla, Medellin, Pereira and other major cities. China is becoming a serious competitor in the automotive parts market competing mainly on price. However, consumers are wary of buying Chinese parts because of their perceived lower quality and durability compared to other vendors. According to industry sources, local companies plan to manufacture automotive parts and accessories having the largest demand in the local market. Demand for imported equipment will follow the similar trend. However, the growth brought about by expanded markets created by international trade agreements (such as the CAN-Mercosur, G-3, ALADI, and others) could translate into more opportunities for U.S. imports. Best Products/Services Best sales prospects over the short and medium term will be determined primarily by the continued demand of the aftermarket and by the demand for parts generated by the equipment already in operation. 14 ? Tires for small vehicles, trucks and buses ? Gasoline and diesel engines, piston rings, cast-iron engine parts, carburetors, engine valves, other cast-iron engine parts, fuel-injection pumps ? Parts of fans, ventilating hoods, air conditioning and parts for motor vehicles ? Ball bearings, tapered roller bearings, roller bearings, gaskets and similar joints of metal sheeting ? Electric storage batteries, nickel-cadmium storage batteries, electrical distribution parts, terminals, electrical splices and electrical couplings, boards, panels, consoles ? Cabinets for motor vehicles, bodies for passenger automobiles, body stampings, gearboxes, drive axles with differential, suspension shock absorbers, radiators, clutches, suspension systems, parts for power trains, brake parts Resources ? CS Bogota contact: Ricardo Roldan, Commercial Assistant. Email:ricardo.roldan@mail.doc.gov Tel:571-383-2731 ? Colombian Association of Automotive Parts Manufacturers-Acolfa: www.acolfa.com.co Tel:571-571-2842409 ? National Statistics Department-Dane: www.dane.gov.co Tel: 571-597-8300 COSTA RICA Overview Local production is limited to small electrical and metal parts, batteries, electrical copper cable, hydraulic seals, filters (air/gasoline), steel leaf springs, aluminum and steel wheels, windshields, carpets, hoses, mufflers, bus bodies, and tires. Major U.S. competitors in this sector are China, Japan, South Korea, Brazil, Taiwan, and Mexico. Total imports in this sector are expected to increase in 2008 by 9.6% over the previous year to about $177.8 million. The consensus within the local automotive parts industry is that the sector will grow at an annual rate of 3-4% from 2008-2010. The surge on the imports of used low cost vehicles from Asian countries during the last three years led to an increase in auto parts imports from Korea, which reduced the U.S. share of market. As a result, industry sources indicate that the U.S. share of the import market is expected to improve only slightly from 2008-2010. The U.S. market share for automotive parts for 2008 was estimated to be 30.5%. Many of the cars on Costa Rican roads are imported as ?used? from the United States, due to high taxes on new cars. For that reason, Costa Rican importers of automotive parts and accessories purchase their products in the U.S., although a significant portion of these items is not of U.S. origin. Best Products/Services According to several Costa Rican importers of automotive parts, good sales opportunities continue for virtually all categories of products in this sector. High quality, durability, availability and an assortment of vehicle parts, fast delivery, and favorable prices are the main factors for increasing U.S. sales of these products. 15 Opportunities Under DR-CAFTA, U.S. suppliers should be well positioned to expand their market share for automotive parts. CAFTA-DR better positions U.S. exporters to take advantage of this expanding market. Import taxes for automotive parts before CAFTA ranged from zero to 29.95%, depending on the product. Most of these import taxes disappeared immediately with CAFTA-DR approval; others will be gradually reduced to zero import taxes over a period of 10 years. Resources ? U.S. Commercial Service Costa Rica Industry Specialist: Victor Cambronero, Victor.Cambronero@mail.doc.gov ? U.S. Commercial Service Costa Rica: http://www.buyusa.gov/costarica/en ? Costa Rican Association of Importers of Automotive Parts (AIPA): aipacr@racsa.co.cr ? Costa Rican Importers of Used Vehicles ?CCA carballomotor@gmail.com ? Costa Rican Association of Importers of Vehicles ?AIVEMA aivema@racsa.co.cr ? Costa Rican Customs Directorate, Ministry of Finance: https://www.hacienda.go.cr COTE D?IVOIRE Overview Although total imports in this sector had decreased between 2002 and 2006 as a result of the political crisis, the used automobile market has been growing for the last seven years and reached a level of 38,308 units annually in 2006 (latest statistics available). Market liberalization measures related to used vehicles and weak credit availability for potential buyers of new cars are prime factors in the growth of the second-hand car market. Spare parts and accessories are a very attractive segment of the automobile market. Spare parts in Côte d?Ivoire are very expensive. The market for such products will grow quickly due to the age of the existing automobile fleet and growing fleet of used vehicles. Best Products/Services ? Consumables: oil and air filters, wiper blades, rubber blades, hoses, gaskets and rings, engine parts, brake parts, exhaust system parts, car body parts ? Accessories: wheel covers, car/truck bed covers, car batteries, exterior accessory lights ? Auto security products: alarms and steering wheel locks ? Service equipment for electronic diagnosis, monitoring, testing and analyzing, wheel balancing, tire changing, oil changing ? Battery chargers, quick repair kits, tools, and paints Opportunities Excellent opportunities exist in importing U.S. second-hand cars and buses (seven-year age limit), spare parts, security/antitheft devices and safety devices. Resources ? The U.S. Department of Commerce Regional Office for Central and West Africa: http://www.buyusa.gov/westafrica/en/ ? Côte d'Ivoire Investment Promotion Centre (CEPICI), http://www.cepici.net ? Chambre de Commerce et d?Industrie de Côte d?Ivoire http://www.cci-ci.org 16 ? Bureau National d?Etudes et de Developpement (BNETD): http://www.bnetd.ci ? Ivorian Customs Office: http://www.douanes.ci CZECH REPUBLIC Overview The Czech automotive industry has dominated the national economy and represented roughly 20% of its GDP in 2008. It is likely to be a negative scenario in 2009. As in most of the world, the automotive industry has been hit hard by the global financial crisis and it is predicted that there will be a 20-30% fall in sales throughout the EU (the main export market) in 2009. However, Czech output of motor vehicles reached a record level in 2008. Output of road vehicles grew by 0.81% to 947,372 units. Output of light utility and passenger cars, which made up the biggest share of total car production, grew by 0.89% to 939,600 units. Nevertheless, in January- September 2008, car production grew by 9.5% and car producers had hoped that in early autumn that annual output would exceed one million units. While total passenger car sales in EU fell 7.8%, Czech car sales increased 8.4% in 2008. Czech car maker Skoda Auto saw a drop in its output of approximately 3% to 603,200 units. Still, the company increased sales by 7% to a record 674,530 cars in 2008. Output at TPCA (Toyota- Peugeot-Citroen) increased by 5.1% to 324,289 cars. In November, 2008 South Korean car maker Hyundai launched production at its plant in Nosovice, northern Moravia. Hyundai produced 12,050 cars at the plant by year-end 2008. Truck output fell by 14% to 2,726 units. In contrast, output of buses increased slightly to 3,496 units. Motorbike production declined by 27% to 1,550 units. Best Products/Services ?Spare parts ?In-car entertainment systems ?Auto security equipment ?Car care products ?Service suppliers for global manufacturers Opportunities Toyota-Peugeot-Citroen (TPCA) is planning to increase its production capacity; however, a final decision regarding this upgrade has been postponed until the second half of 2009. DOMINICAN REPUBLIC Overview In the Dominican Republic, the demand for automotive spare parts is linked to the aging car population, the growth in total vehicle population, and the deterioration of Dominican streets and roads. According to the Motor Vehicle Department, there are 1.9 million vehicles in the Dominican Republic. There is also a general tendency in the Dominican Republic to overextend the useful life of vehicles due to their high cost. This influences the increasing demand for automotive parts and services. Although the market for these products is expected to increase by 5% only, imports from the U.S. should increase by 10%. 17 There is local production of batteries, which only covers a small percent of the total market, while the rest of the market is supplied from imports. Previous to the implementation of CAFTA-DR (March 1st, 2007), Japanese and other Asian products accounted for 50% of total imports due to the significant car population imported from Japan. Nevertheless, U.S. automotive spare parts exporters have managed to increase exports to the Dominican Republic mainly because of the CAFTA-DR, which decreased the import tax levied on U.S. products from 20 to 0% for most products, while others are going through a phase-out process of up to 10 years. As a result, the market share for U.S. products is now 55%. There are no restrictions for importation of these products into the Dominican Republic. The best way to introduce a foreign company in the Dominican market is thorough local importers and distributors. Best Products/Services For U.S. manufacturers best sales are: Suspension shock absorbers, brakes, batteries, electrical parts for motor engines (fuses, sparks plugs, ignition distribution, etc.), and parts for Japanese made light vehicles. Used automotive spare parts have also become a good prospect for the Dominican Republic. Resources Trade Specialist who handles Automobiles Parts and Services: Isolda Frias de Gottschalk: isolda.frias@mail.doc.gov EGYPT Overview Approximately 4 million vehicles occupy the roads of Egypt. This amount increases by about 20,000 every month and most vehicles in Egypt have an expected lifetime of more than 10 years, This long ownership partnered with rough road conditions and deteriorating vehicle conditions has created a huge demand for auto aftermarket products and services. The Egyptian authorities are currently taking aggressive steps to nurture a local automotive and parts market and increase vehicle safety. The Government lowered customs duties on car parts and accessories to a minimum of 10%. Lower customs duties will encourage Egyptians to purchase new car parts rather than have old parts rebuilt. As a result of these changes, industry specialists are expecting the auto parts industry to flourish in the coming years. Best Products/Services ? Comfort and Entertainment Accessories ? Spare parts ? Modern Garage Equipment ? Tires and Wheels ? Service Equipment Resources ? Commercial Service in Egypt: http://www.buyusa.gov/egypt/en/ ? Egyptian Government Web Portal: http://www.egypt.gov.eg/english/ ? The Egyptian Auto-feeders Union: http://www.eafa-egypt.com/home.asp ? Egypt's Official Automotive Portal: http://www.motoregypt.com/ ? Commercial Specialist for the Automotive Aftermarket Sector: Essam Tabarak, essam.tabarak@mail.doc.gov 18 EL SALVADOR Overview As in previous years, this sector has been identified as one of the most important sectors for U.S. exporters, since El Salvador imports almost all of its vehicles, vehicle parts, and accessories. There is strong interest from Salvadorans to learn about business opportunities with U.S. companies in this sector. CS San Salvador constantly receives inquiries from Salvadoran companies looking for U.S. suppliers, and delegations of buyers to automotive tradeshows in the U.S. are always the largest delegations compared to other industries. El Salvador has been steadily increasing its market demand for parts and accessories. ?Tuning? is now a term very well known and used by most Salvadorans; this esthetic and engine modification of vehicles has become a true passion for many vehicle owners. Other trends that result in an increase in the demand of parts and accessories include ?drifting;? each time, more and more vehicle and motorcycle owners gather to show their new abilities. Several local automotive magazines feature the latest updates and products for these trends. The market has evolved to a new phase that not only requires that the vehicle transports, but also that the vehicle reflects the personality of the owner. Another reason why this sector is an excellent business opportunity is that Salvadoran vehicles deteriorate faster and need more parts in order to maintain active use. This is due to poor maintenance of streets and roads, increasing traffic, disorganized public transportation, use of old vehicles, and importation of used vehicles. Currently, 90% of used vehicles purchased in El Salvador are imported from the United States and are bought directly from salvaged car auctions to be repaired locally and then sold. These cars require continuous maintenance and replacement services. Mechanic and repair shops are frequently purchasing parts and accessories from local automobile parts importers, as well as automotive equipment usually imported directly for use in their shops. In comparison to previous years, the demand for used imported vehicles has decreased by 5%, since well established, reliable distributors with good reputations are now distributing new Chinese brands of economical vehicles (e.g, Chery, Great Wall, Jinbei, Zot Ye, Dongfeng, and JMC) and are offering competitive prices and credit lines. Public transportation service buses/microbuses are old and require repair in order to continue providing the much-needed public transportation service. Most spare parts and accessories to keep the public transportation fleet working are imported. According to the Vice Minister of Transportation, 80% of the Salvadoran population uses this public transportation service. There are approximately 650,000 vehicles registered in the country, of which 49% of total registered vehicles are concentrated in the Department of San Salvador. Since 2005, the number for vehicles has been steadily increasing and in 2007 almost 18,000 new vehicles were sold. In 2008 El Salvador sold approximately 14,600 new vehicles. U.S. brands have a market share of almost 13%. Chevrolet is the more successful brand followed by Ford. From the 45 different auto brands distributed in El Salvador by 16 dealers, 7 brands are from the United States. These 45 brands include more than 10 Chinese brands that were introduced in El Salvador during 2007. Importers, distributors, and end users are receptive to U.S. auto parts and accessories due to the products? quality and warranty, and geographic proximity. Nevertheless, the industry is extremely 19 price oriented and this means there is strong competition in sales of parts and accessories from other countries like China, Taiwan and Brazil. Best Products/Services ? Accessories ? Tires ? Engines ? Tire repair ? Filters ? Electronic diagnostics ? Accumulators ? Tire balancing ? Wheels ? Compressors ? Radiators ? Clutches ? Sound systems ? Steering wheels ? Alarms ? Batteries ? Mufflers Opportunities There is no significant automotive parts and accessories production in the Salvadoran economy and thus, almost all parts are imported. The U.S. Central America Free Trade Agreement (CAFTA), implemented in El Salvador on March 1, 2006, provides a broader opportunity for the U.S. industry, since import tariffs for parts under HTSUS 8708 were automatically reduced to zero after CAFTA implementation. For Vehicle Accessories under HTSUS 8714, 57% of product categories already had 0% tariff and 14% of product categories became 0% after having a 5% tariff. The remaining product categories will be decreasing in tariff rates in the following 7 years. Also, American auto brands have been steadily increasing their units in the market over the past several years, and spare parts are needed. Salvadorans recognize the value of quality parts made in the U.S. Considerations for potential opportunities: ? Increased environmental awareness and concern to keep cars in better condition to avoid polluting. This will require purchase of additional parts and their necessary equipment and machinery for installation. ? High prices of gasoline and diesel also make people look for ways to make their engines more efficient. These types of products, if at competitive prices, have good opportunity in the market. Resources ? Vice Ministry of Transportation: http://www.mop.gob.sv ? Salvadoran Association of Auto Parts Importers (Asociación Salvadoreña de Importadores de Repuestos Automotrices): asira@salnet.net ? Salvadoran Association of Distributors of Vehicles: asalve@integra.com.sv ? Cecilia de Avila, Commercial Assistant: cecilia.avila@mail.doc.gov or CS San Salvador: san.salvador.office.box@mail.doc.gov FRANCE Overview France is the fourth largest European automotive market after Germany, the U.K. and Italy. With an estimated registered 2,584,035 new (not including second hand) passenger and utility vehicles in 2007, France is facing difficult times as both car production and demand have decreased. On the other hand, the average life span of cars is increasing and a higher number of used cars were registered. 20 French automotive parts suppliers? sales reached approximately $38.9 billion in 2007 (a figure comparable with 2006). Thanks to a dynamic first semester 2008 in terms of car production, French automotive parts suppliers managed to stabilize their sales in 2008. The drop in production and demand of passenger cars in France, which started in mid 2008, will continue to affect automotive parts suppliers in 2009. Figures for 2008 and 2009 are estimations only, based on the current economic situation worldwide. The main categories of automotive parts included in these figures are: power train equipment (40.2%), vehicle interiors (30.3%), tire-to-road link components (14%), body components (11.9%) and equipment for measurements, checks, diagnostics and repairs (3.6%). This equipment is sold to the OEM market (Original Equipment Manufacturers) and the aftermarket, which includes the OES (Original Equipment Suppliers) and the IAM markets (Independent Market).France?s automotive trade deficit with Germany and U.K increased by 41.4% and 2.2% respectively while the trade balance with Spain remained positive (+30.2%). Outside of Europe, where France achieved more than 83% of its sales, the sector?s balance surplus with China deteriorated significantly (-43.6%). OEM auto parts sales reached approximately $32.4 billion, a 2.2% decrease compared to 2007, mainly due to the decrease of French car production. All product categories suffered except air supply components and electrical equipment for engines, controls for transmission systems and exhaust line components. On the other hand, automotive parts suppliers? sales to the aftermarket (OES + IAM) increased by 2.1% to reach approximately $6.5 billion in 2007. This evolution is mainly due to two factors: 1) the increase in the number of second hand registered light vehicles (passenger and light commercial cars), and 2) the average age of light vehicles, which exceeded 8 years in 2007. Product categories which were successful in 2007 were: fuel circuit components, engine components, air supply components and electrical equipment for engines, controls for transmission systems, and body components. The automotive parts market in France is dominated by big multinational firms, many of them American with French or European operations. The FIEV (The French Vehicle Equipment Industries Association) regroups the main parts and equipment suppliers in France. Large U.S. suppliers are already present in France and are doing well. Among the twenty top suppliers, eight are American (Delphi, Visteon, Johnson Controls, Lear, TRW Automotive, Dana, Arvin Meritor, and Federal Mogul). There is little or no room for mid-sized exporters in this very closed environment, where competitive requirements, transportation costs, etc., make it very difficult for firms not physically established here to sell their products to OEM and OES. U.S. industry generally supplies the French market from its European subsidiaries or via local joint ventures. Direct imports from North America decreased in 2007 to reach 820 million dollars. The trend is still to source in foreign countries such as China, Japan, Taiwan and India to the detriment of the USA. The FIEV, the French Vehicle Suppliers Association, has mapped the evolution of the supply chain, and it is obvious that French manufacturers encourage their key suppliers to co-locate in manufacturing plants adjacent to the in-country assembly operations, or in European countries close by. Since France?s exports and imports of parts and components and assembled vehicles are largely within the Euro zone, the use of Euro as a transaction currency is a determining factor in source selection. 21 Most of the larger vehicle manufacturers have rationalized their suppliers? base of components and sub-assemblies and have stopped manufacturing parts in-house wherever possible. The trend is toward Tier One suppliers that provide complete sub-assemblies of parts sourced from the variety of Tier Two and Tier Three component manufacturers. Key suppliers are gaining greater competence in modules, systems, and even complete vehicle manufacture and have to meet the highest standards to be able to compete in this industry. Best Products/Services Best prospects for U.S. suppliers will be for highly technological products or those that are innovative in the context of the environment, or security and safety. On board communication tools are enjoying good growth. Resources ? French Vehicle Equipment Industries Association. Website: http://www.fiev.fr ? French Association of Automotive Independent Distributors. Website: http://feda.fr ? U.S. Commercial Service Trade Specialist: Stephanie.Pencole@mail.doc.gov Phone: (33-1) 43 12 71 38 Website: http://www.buyusa.gov/france/en GERMANY Overview In 2008, the automobile industry was one of the driving forces behind German economic growth. During the first three quarters of 2008, both domestic demand and exports of German cars increased slightly. Because of increased global sourcing by German manufacturers, and a favorable EUR-USD exchange rate, U.S. parts manufacturers were able to increase their exports to Germany. At the end of 2008, the German automotive industry was hit by the worst downturn in demand since the late 1950?s ? demand for parts and services is expected to be negatively affected. Experts anticipate that the German automotive industry will have to face serious challenges until 2013 and are not in a position to provide forecasts for 2009... Best Products/Services Engine electronics; multi-media products; forged and pressed parts. Trade Associations: VDA (German Automobile Association): www.vda.de ZKF (Central Association for Car and Body Technology): www.zkf.de Central Association for German Motor Trades and Repair: www.kfzgewerbe.de Commercial Service Contact: paul.warren-smith@mail.doc.gov ISRAEL Overview The automotive aftermarket sector in Israel consists of original equipment manufacturer (OEM) parts and their substitutes. There are 2.3 million cars on Israeli roads of which 3.8% are made in the United States and the balance from Europe (46.6%) and Asia (49.6%) - Japan 38.7% and South Korea 10.9%. In 2007, total imports of aftermarket products amounted to $371 million, of which $23 million was from the U.S., Germany ($63 million), Japan ($45 million), France ($18 million), Italy ($23 million), China ($55 million) and the balance from Korea and Taiwan. There are presently between 600?700 importers of aftermarket products and around 20 local manufacturers of aftermarket parts and accessories in Israel. About six years ago new legislation 22 was passed by the Anti-Trust Authority to stop car importers from forcing garages and car owners to use only OEM parts. American spare parts are recognized for their high quality although over the years Israel has progressively adopted European standards as the bulk of cars being imported are from Europe and the Far East. The Government of Israel has recently appointed an inter- ministerial committee to review the Israeli car market in general. One of the committee?s main objectives is to open up the Israeli car market to competition and to eventually reduce taxes on cars from 90% to 65%. Taxes in Israel are among the highest in the world, which industry sources blame as the main factor preventing the car market from reaching its potential. Discounting taxes, car prices in Israel were among the lowest in the world, up to 40% less than in Europe. Best Products/Services ? Car security and anti-theft devices: anti-theft electronic systems, locking devices ? Car body: bumpers, radiator grills, hood and trunk lids, wings, front and rear lamps (i.e. the parts most vulnerable in car accidents) ? Service parts: disc break pads, shock absorbers, front suspension parts, filters for oil and lubrication, air conditioning parts ? Replacement service parts: tires, fan belts, water hoses, water pumps, brake components, engine and transmission components, electrical components, undercarriage items that need replacing at the end of the warranty period ? Vehicle accessories: car care products, polish, wax, upholstery spray ? Water-coolants (Glycol) for radiators ? Electronic accessories: TV screens for the rear seats, GPS systems, sound systems etc. ? Universal lubricants: well-known brand names of high-grade oils, lubricating, glycol, wax. The market demands well-known brand names Resources Central Bureau of Statistics, http://www1.cbs.gov.il/reader/cw_usr_view_Folder?ID=141 ITALY Overview Recent data from ?Centro Studi Promotor?, a major Italian automotive research organization, www.centrostudipromotor.com, highlights that sales of new cars in Italy in 2008 totaled about 2,160,000 units (down 13.4% from 2007). Early forecasts for 2009 expected a further decrease to about 1,850,000 units (down 14.3% from 2008). The decreases should be particularly high in the first quarter of 2009 (-25% over the same period of 2008) and the second quarter of 2009 (- 19.5%) in the absence of ameliorative measures taken by the government. This negative result is mainly due to the global economic crisis. The Italian Government has responded to the drastic contraction in this sector with an automobile assistance package in early February 2009. This package, part of a broader group of industrial sector stimulus measures, will provide purchase incentives for new vehicles ranging from 500 to 6500 Euros. At the time of writing, the measures still required parliamentary approval, but its passage is expected. In the draft approved by the government, the plan does not discriminate against automobiles of non-Italian companies. On the other hand, the current economic difficulties offer opportunities for the used car market, which as of December 2008, represented more than 70% of the total sales (new + used). Notwithstanding the economic crisis, the local market leader, Fiat Group (with its brands Fiat, Lancia, Alfa Romeo, Ferrari, Abarth, and Maserati) improved its market share by 0.5 points as compared to 2007. Fiat success is due, in particular, to the new model ?500?, and to the range of 23 new affordable city cars. Fiat is basically the only automotive manufacturer in Italy (apart from VW-owned owned Lamborghini). Many foreign groups are active in the Italian market including Ford, GM and Chrysler; as well as PSA and Renault (France); Audi, BMW, Mercedes, Porsche, Smart, and Volkswagen (Germany); Daihatsu, Honda, Infiniti, Lexus, Mazda, Mitsubishi, Nissan, Subaru, Suzuki, and Toyota (Japan); Hyundai, Kia, and Ssangyong (South Korea); Aston Martin, Bentley, Jaguar, Land Rover, Lotus, Mini, and Rolls Royce (UK), Lada (Russia), Seat (Spain), Skoda (Czech Republic), Dacia (Romania), Volvo and Saab (Sweden). Chinese (DR, Great Wall, Shuanghuan) and Indian (Mahindra, Tata) groups are entering the Italian market too. All the Big Three US manufacturers, Chrysler, www.chrysler.com/en/, Ford Motor Company, www.ford.com, and General Motors Corp., www.gm.com, operate in the Italian market mainly through their European subsidiaries (generally headquartered in Germany). They usually sell their cars manufactured in Europe (Germany, France, Austria, Belgium, Spain, Sweden, etc.); direct imports from the U.S.A. are relatively few (GM also imports Chevrolets from South Korea). The following U.S. (or U.S. owned) brands are available in Italy: Chrysler, Dodge, and Jeep (Chrysler); Ford, Mazda, Volvo (Ford Group); Cadillac, Chevrolet, Corvette, Hummer, Saab and Opel (GM) SUV?s are the most recent automotive craze in Italy, but, as elsewhere, they are facing criticism due to their environmental impact and the difficulties in driving and parking them in the often small and crowded Italian cities. Some U.S. SUV?s are directly imported into Italy by local specialized importers and they tend to cater to the request of wealthy individuals. In recent years, Italian drivers have shown a preference for diesel cars due to the lower fuel price. Diesel engines equip not only larger cars, but also smaller ones like the city car Smart and the top selling Fiat Punto. In 2008, rising oil prices almost equalized the price of gasoline and diesel. As a consequence, gasoline cars, which have higher fuel consumption, but lower retail price and insurance costs, have retaken the lead in sales. In early 2005, the Fiat Group ended most of its financial and manufacturing agreements with GM, signed in March 2000. Nevertheless, General Motors Powertrain Europe kept its Powertrain headquarters and engineering center in Turin, which is taking the lead in the group for diesel engine manufacturing and engineering activities. GM Powertrain Europe became operational in May 2005, and has engineering and manufacturing centers in Austria, France, Germany, Hungary, Italy, Poland and Sweden. In November 2005, Fiat struck an agreement with Ford Europe to jointly develop a small car, (engine and transmission supplied by Fiat), to be produced in a Polish Fiat plant and marketed from 2007-2008. The results of the agreement are the new Fiat ?500? and the just released new Ford KA model. In January 2009, Chrysler and Fiat announced an agreement whereby Fiat would receive a 35% stake in Chrysler (which could be raised to 55%). Fiat is not paying cash, but will share products and platforms for small cars, as well as its green technologies, with Chrysler. The deal will help Fiat return to the U.S. market where it has long been absent. Chrysler will be able to sell in more foreign markets, like South America and Asia. The alliance should allow both companies to optimize their respective manufacturing footprint and global supplier base, and to save by combining their purchasing power. This alliance could lead to new opportunities for U.S. parts and components manufacturers. The local market for automotive parts and service equipment declined during recent years, due to a general decrease in passenger car production. The automotive parts market constantly changes, so it is difficult to speculate how it will develop in the future as it depends heavily on car sales. The current decrease in car sales has certainly had a negative impact on the domestic industry, 24 and will have future consequences, especially as regards the OEM market. Impact on the aftermarket should be less. Many car owners who are not replacing their old cars will still need some more maintenance to keep their old cars safe and efficient. Local motor vehicle production totaled more than 900,000 cars and 370,000 industrial vehicles in 2007. Expectations are 2008 will show a slight increase. Domestic Italian production of automotive parts and service equipment covers approximately two-thirds of the demand compared to one-third covered by imports. Sales of original equipment (OE) parts account for around 65% of the total components demand, while aftermarket (AM) sales account for 35%. Big multinational firms (many of them American with operations located in Italy) control the local tier-one parts market. The need for proximity to the manufacturer, delivery requirements, transportation costs, etc., makes it very difficult for firms not physically located in Italy to enter this competitive market. Many U.S. groups operating in the OE and AM sectors therefore have factories in Italy, including ? American Standard Companies, ? Key Plastics, www.keyplastics.com www.americanstandard.com ? Lear, www.lear.com ? ArvinMeritor, www.arvinmeritor.com ? Mark IV Automotive, ? Collins & Aikman, www.markivauto.com www.collinsaikman.com ? Tower Automotive, ? Dana, www.dana.com www.towerautomotive.com ? Exide, www.exide.com ? TRW, www.trw.com ? Federal Mogul, www.federal-mogul.com ? Visteon, www.visteon.com, etc. ? Johnson Controls, www.johnsoncontrols.com Imports are in general higher in AM rather than in OE, due to the development of modern distribution channels and transnational operators, improved performance of foreign automotive organizations and greater competitiveness of imported products. Products are imported from European countries like Germany (around one-third) and France (about one-fifth). Imports from the U.S. are relatively low, but interesting niches exist. Italy has one of the highest auto densities in