Bosch Group, the German automotive technology and service provider, is investing 1.1 billion yuan ($171 million) in a new operation in China aimed at providing car parts and servicing to the country's increasing and aging vehicle population.
The investment, to create its largest manufacturing facility overseas, will see the building of a production base and research and development hub for Bosch Automotive Aftermarket in Nanjing, Jiangsu province, which will also serve the Asia-Pacific region.
The new plant will develop and produce spark plugs, brake components and diagnostic equipment for both independent aftermarket players and original equipment suppliers, said Robert Hanser, president of Bosch Automotive Aftermarket.
"Choosing China for our largest investment in a manufacturing facility worldwide demonstrates our confidence and commitment to the growing markets in China and the region.
"The plant is a continuation of the strategy Bosch Automotive Aftermarket has pursued over recent years. We are expanding our value-added chain beyond sales to include the development and manufacture of products.
"In this way, we have turned the division into a systems supplier for the automotive spare parts and workshop business," added Hanser.
The new plant is expected to reach an annual production capacity of 125 million spark plugs by 2015, Bosch's largest and most modern production base for the part, as well as 80 million brake pads and 25,000 units of diagnostic equipment.
In 2012, more vehicles were produced in Asia Pacific than in the rest of the world combined, and within the region China experienced the highest rate of growth, while accounting for more than 40 percent of total vehicle production.
"Though China is still one of the world's newest automotive aftermarkets, we see huge potential here in five years, when the new cars registered in recent years become older and need more after-services," said Hanser.
He predicted that China's aftermarket - which involves the production, sales, distribution and installation of parts and accessories for vehicles that have already been sold - may overtake that in the United States by 2020.
"And the Chinese market will maintain that sustainability for at least 10 to 15 years after that."
Hanser told China Daily that the average age of China's car population is no more than four years now, much younger than those in other mature markets.
"Statistics show that China's car population will double between 2011 and 2017, and the age of cars will also increase, with large requirements for after-services," said Hanser.
As well as providing parts and diagnostic systems, Bosch also offers car servicing for all brands, including engine diagnostics, brakes, suspension, wheel alignment and body work repairs.
Bosch has already established nearly 1,500 Bosch Car Service workshops nationwide. It also recently opened its first Asia-Pacific flagship workshop in Beijing.
By the end of 2015, more than 2,000 Bosch Car Service workshops are expected.
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