HYUNDAI Kia Automotive Group said sourcing of car components from China has increased 40 percent over the past year.
The rise stemmed from moves to reduce production cost in the industry's bid to catch up with global rivals.
The South Korean auto giant is expected to buy US$6.02 billion worth of car components from China, compared with US$4.3 billion for last year, Hyundai Motor (China) Investment Co Ltd said in a statement yesterday.
Most of the Chinese-made auto parts went to Hyundai and its affiliate Kia's manufacturing plants.
The process of Hyundai and Kia sourcing from China has been expanding rapidly amid the makers' aggressive plans to expand overseas production and add new products to worldwide markets.
Hyundai, the world's No. 6 auto maker along with Kia, started sourcing from China in 2003 as part of its global sourcing system.
It bought US$700 million in auto parts from China in 2003, and the sourcing has been increased by 40 to 50 percent annually on average over the past four years.
"With the development of local auto parts makers, our purchase of Chinese-made spare parts would even grow at a faster pace in the following years," said Wu Yanbing, an official from Hyundai Motor China. Hyundai partnered with China's Beijing Automotive Industry Corp to form Beijing Hyundai Motor Ltd, making Sonata, Elantra and Accent sedans.
Kia also has a local connection for manufacturing Rio sedans in China.
Hyundai is among a handful of global auto giants to increase their sourcing in China as the nation's lower labor cost helped them to gain a price advantage over rivals.
Volkswagen AG's sourcing from China totalled US$1 billion last year while Ford Motor Co, the US second-largest car maker, also purchased more than US$2.6 billion worth of auto parts from China in 2006, compared with US$1.6 billion in 2005.
Meanwhile, the influx of international auto maker also helped the Chinese auto parts industry develop quickly with improved technology that could meet higher standards.