Oxygen sensors gain ground in China's auto sector

Oxygen sensors are gaining stronghold of the expanding automotive gas sensor industry in mainland China as domestic and foreign demand for the components continues to rise.

With more than 20 million old vehicles requiring sensor replacements, as well as new vehicles needing more than 2 million oxygen sensors per year, demand prospects are looking optimistic for domestic makers.

There are about 30 oxygen sensor manufacturers on the mainland, majority of which are located in Jiangsu, Zhejiang and Guangdong provinces. To strengthen their competitive advantages, these makers are investing in new and more efficient production equipment and forge tie-ups with institutes for technology development.

On a global scale, the automotive sensor market is forecast to grow by 10.8 percent per year to reach $13.5 billion by 2012 from only $8 billion last year, according to statistics from BBC Research.

Makers to increase capacity by up to 50 percent

The expected demand growth is driving many oxygen sensor makers to increase production capacity. For instance, Fuzhou Lotus Industrial Co. Ltd and Ningbo Aopec Imp. & Exp. Co. Ltd are set to increase their monthly production capacity for oxygen sensors by 50 percent and 20 percent, respectively, by H2 2008.

The production growth, however, is primarily geared toward export markets as companies struggle for limited domestic market base due to intense competition.

Lotus Industrial hit $3 million in sales revenues from oxygen sensors last year, 60 percent of which were generated by exports to Europe, the United States and Southeast Asia. The company expects a 30 percent increase in export value this year.

With a current monthly production capacity of 50,000 units, Lotus Industrial focuses its R&D effort on the miniaturization and integration of oxygen sensors. It has teamed up with Huazhong University of Science and Technology for the development of five-line wide-range oxygen sensors.

Aopec ships 80 percent of its produced automotive sensors to countries such as the United States and Mexico. It expects a 20 percent revenue boost upon expansion to Europe and South America. The company has poured $70,000 in investments to pump up its current 30,000-unit production capacity by 20 percent.

The company said it will raise the prices of its sensors within 2008 due to increasing material cost and renminbi value.