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Automobile parts exports to US may fall

By Jiang Wei (China Daily)
Updated: 2008-12-12 07:57

China's exports of auto parts to the United States may shrink as the US government's $14 billion bailout is not enough to rescue the US Big Three automakers, analysts have said.

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The US House of Representatives on Wednesday approved the loan package intended to prevent a collapse of their domestic automakers that would threaten millions of jobs. The plan is now under debate in the US Senate.

Dong Jianhua, an auto analyst with Southwest Securities, said GM, Chrysler and Ford have to continue developing their restructuring plans while the $14 billion in loans keep them operating, which means they are still very likely to close some plants that are not profitable and their sales may continue to drop.

Therefore, he said, some Chinese auto parts suppliers may see their exports to the US market decrease.

However, this is also an opportunity for Chinese complete-car makers to increase their share in the US market, Dong said.

"Chinese automakers can increase their presence in the US market with high-quality vehicles," he said.

Analysts agreed the possible rescue package may impose limited impact on the US Big Three's branches in China.

It will help their Chinese companies map out better strategic plans in the long term if the rescue package gets approved in the US, said Yale Zhang, director of Greater China Vehicle Forecasts for US auto consultancy CSM Worldwide Corp.

Meanwhile, analysts warned Chinese automakers that are interested in acquiring US auto assets and brands to be cautious regardless of whether the US approves the rescue package.

"The US auto giants are only divesting their burden and units that aren't profitable or competitive. Chinese enterprises should be prudent," said Hui Yumei, an analyst with Sinotrust, a leading automobile industry research company.