DETROIT - Every major automaker in the world, and hundreds of parts suppliers, are descending on the Asia Pacific region in hopes of grabbing a share of what looks to be a vast market with huge potential. But the U.S., European and Japanese companies seeking a foothold in the region for car-assembly or parts-making ventures are finding that every viable partner is entertaining two or three offers from suitors, said J.T. Battenberg, president of Delphi Automotive Systems, a unit of General Motors Corp.
``It's almost a feeding frenzy,'' he said.
Battenberg, speaking in Detroit at an Oct. 9 University of Michigan conference on the Asian auto market, said it is important for OEMs or parts makers to establish a presence now.
``Our customers don't want to hear that it's going to take us months or years to get going,'' he said. ``Sign a contract and they want us on the ground, up and running tomorrow.''
In China alone, Delphi recently announced two new joint ventures to add to the five already in place. Another two dozen projects are under review, some of which may lead to additional parts-making deals.
Moreover, Delphi has been active in other hot spots such as Korea, Indonesia, India and Malaysia. Production of vehicles in the Asia Pacific market, according to Battenberg, is expected to increase 47 percent in the next decade to about 22 million units.
By comparison, 15.7 million cars and light trucks were built last year in North America.
But huge risks confront any company attempting to gain entry into Asia Pacific. While many of the countries in the region have huge populations, the number of consumers able to afford a new automobile is relatively small. Moreover, road systems are often appallingly bad.
Linda Lim, a University of Michigan professor of international business, also predicted that the automotive industry in Asia Pacific is likely to be tightly regulated by local governments in the near future.
``Everybody wants to make their own car so they protect their market,'' Lim said. ``The car is the pinnacle consumer good.''
Opportunities in the region may be even better for suppliers than automakers. Parts makers can both supply local content in an Asian country and export goods to a global car market.
That is true in India, where automobile production is only projected to total 250,000 units this year.
``The automobile component industry in India has a greater future than the automobile [assembly] industry,'' said Abhaya Shankar, vice president of Bharat Technologies, which has a joint venture with Tenneco Automotive to manufacture shocks and struts in India.
He said Indian parts makers are eager to cut deals with foreign partners which could provide the capital to upgrade technology and expand production. Shankar estimated that most suppliers are asking for an acquisition premium of 20 percent over fair market value.
``Today, Indian businesses are ripe for takeovers,'' he said.
