China's auto part sector will see more overseas mergers and acquisitions in the years ahead, as more local manufacturers eye overseas, insiders predicted.

Huaxiang Group, one of the world's top 500 auto part companies, announced earlier this month that it had acquired a subsidiary of the world's third largest auto part maker Lawrence Automotive Interiors with 3.4 million pounds (US$6.69 million).

The deal enables the Zhejiang-based company to take over advanced technology on making wood veneer and be a supplier of General Motors Corp's Cadillac, Saab and PSA Peugeot Citroen.

China's auto part industry is facing the trend of going global, said Chen Qiaoning, analyst with the TX Investment Consulting Co, Ltd.

Wanxiang Group, the nation's biggest car components manufacturer, was also reported to be holding talks with a view to buying Ford's assets in its auto parts sector after failing to reach an agreement with Delphi earlier this year.

A bulk of China's auto-part makers aim to become the leading part supplier for the overseas brands, said Doctor Guoyan, with the China Automotive Technology and Research Center.

Industry figures show world automobile trade volume is expected to hit 1.2 trillion U.S.dollars in 2010, and up to 35 billion U.S. dollars will flow into China for auto part procurement.

During the January-November period this year, China's auto production reached 6.59 million units, a year-on-year increase of 27.92 percent, while sales grew by 25.49 percent to 6.45 million units, statistics from the China Association of Automobile Manufacturers (CAAM) show.

Official with the CAAM predicted the yearly sales will exceed eight million in 2007.

Shen Ningwu, deputy secretary general of CAAM warned that the auto-part industry should focus on technology innovation besides cost-reduction to make sustainable development.

There should be more products with higher added-value, he said.

(Xinhua News Agency December 27, 2006)