In what’s shaping up to be a win-win situation, China’s auto parts makers are gobbling up U.S. auto parts manufacturers that are struggling or near bankruptcy in the wake of the recession.
Buying auto parts makers in the U.S. is a way for Chinese firms to get a piece of the auto action here at near-bargain-basement prices. Meanwhile, the acquisitions preserve jobs and bolster the economies of many Midwestern states.
Moreover, the influx of Chinese cash will enable acquired U.S. auto parts companies to increase R&D spending so they can become more competitive.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Chinese companies could easily build their own auto parts manufacturing plants in the U.S. But going down the acquisition road offers big advantages.
“They’re buying not just a plant, but the companies’ distribution networks in the U.S., Canada and Mexico, along with the technologies and manufacturing know-how to make products sought by many customers,” says C. Peter Theut, president and CEO of China Bridge, in Ann Arbor, Mich. His firm advises U.S. businesses on setting up operations in China, as well as Chinese firms seeking footholds in the U.S. market.
It’s a strategic move, too, that recognizes rising Chinese labor costs and ocean shipping charges are bound to make products made in that country less competitive over time, says David Cole, chairman of the Center for Automotive Research, an auto industry consultancy.
In recent months, Pacific Century Motors acquired General Motors’ Nexteer steering unit for $500 million. The acquisition came a year after the automaker bought it from beleaguered supplier Delphi Automotive to assure that production there wouldn’t end. And BeijingWest Industries bought Delphi’s brake manufacturing division for around $100 million.
Among other China-based firms involved in acquisitions in the U.S.: Wanxiang America, which makes chassis components; Tempo International Group, a manufacturer of brakes, chassis and power trains; and automakers FAW Group and Shanghai Automotive Industry Corp.
-
Higher Summer Costs: Tariffs Fuel Inflation in JuneTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Don’t Miss Alabama Tax-Free Weekend 2025Tax Holiday Ready to save? Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
What New Tariffs Mean for Car ShoppersThe Kiplinger Letter Car deals are growing scarcer. Meanwhile, tax credits for EVs are on the way out, but tax breaks for car loans are coming.
-
AI’s Rapid Rise Sparks New Cyber ThreatsThe Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
Blue Collar Workers Add AI to Their ToolboxesThe Kiplinger Letter AI can’t fix a leak or install lighting, but more and more tradespeople are adopting artificial intelligence for back-office work and other tasks.
-
AI Goes To SchoolThe Kiplinger Letter Artificial intelligence is rapidly heading to K-12 classrooms nationwide. Expect tech companies to cash in on the fast-emerging trend.
-
What To Know if You’re in the Market for a New Car This YearThe Kiplinger Letter Buying a new car will get a little easier, but don’t expect many deals.
-
Will Lower Mortgage Rates Bring Relief to the Housing Market?The Kiplinger Letter As mortgage rates slowly come down here's what to expect in the housing market over the next year or so.
-
Car Prices Are Finally Coming DownThe Kiplinger Letter For the first time in years, it may be possible to snag a good deal on a new car.
-
New Graduates Navigate a Challenging Labor MarketThe Kiplinger Letter Things are getting tough for new graduates. Job offers are drying up and the jobless rate is increasing. Are internships the answer?
