AS wealthy Chinese clog Beijing and Shanghai’s roads with new cars, the best place for investors to profit from the country’s automobile boom may be Hong Kong.
        Shares of mainland car-parts makers listed in Hong Kong, including Weichai Power Co. and Norstar Founders Group Ltd., are poised to rise even more as domestic auto sales soar and Volkswagen AG and Nissan Motor Co. buy more Chinese-made components. The shares sell at an average of about 30 times earnings, 79 percent lower than mainland-listed parts makers, even after some of them have more than doubled in value this year.
        Exports of engine parts, wheels, tires, brakes and other components, helped by low labor costs, will almost double to US$40 billion by the end of 2010, the China Association of Automobile Manufacturers forecasts. Sales of Chinese-made parts almost tripled in the past four years.
        “We’ve got to have parts makers in our portfolio,’’ said Liu Yang, who helps manage US$3 billion at Atlantis Investment Management Ltd. in Hong Kong, including shares of Xinyi Glass Holding Co., China’s biggest exporter of auto glass.
        Weichai Power, China’s largest diesel-engine maker for heavy duty trucks, may boost profit 84 percent this year, according to Tian Sidong, an analyst at UBS Securities Asia Ltd. in Shanghai.
        Norstar, a supplier of axle modules to DaimlerChrysler AG’s China venture, may increase profit 32 percent in the year ending in March 2008 and 24 percent the following year, according to Ivan Cheung, an analyst at Kim Eng Securities Hong Kong Ltd.
        China’s car-parts industry is really going to take over the global market, predicted Jack Perkowski, chairman of Asimco Technologies Ltd., a Beijing-based components maker.
        China has more than tripled automobile output and sales since joining the World Trade Organization in 2001. Last year, it surpassed Germany as the world’s third-largest vehicle maker, as economic growth pushed domestic auto sales to 7.22 million units.
        Exports of parts surged to US$22 billion last year from US$2.1 billion in 2002, according to the automobile manufacturers association.
        Volkswagen, which sells more cars in China than any other foreign automaker, plans to buy more than US$1 billion of parts from the country a year, three times as much as in 2005. Nissan’s chief executive officer Carlos Ghosn said last month his company plans to increase the proportion of parts it buys from low-cost countries such as China to 24 percent from 14 percent.
        Chinese parts manufacturers are growing in importance to foreign automakers aiming to cut costs, said Xin Tianshu, an analyst at Global Insight in London. “Low cost is the biggest competitive advantage,’’ he said.
        Ford Motor Co. bought US$2.6 billion of auto parts from China in 2006. The volume of purchases from China has been rising at a significant pace over the last few years, Ford spokesman Kenneth Hsu said, without providing details.
        Labor costs for parts makers in China are about a 10th of those in Japan, said Koji Endo, a senior auto analyst at Credit Suisse Group in Tokyo. Even after adding transportation costs and import duties, Chinese-made parts sold in the United States are 20 percent to 30 percent cheaper than locally made parts, according to Citigroup’s Cheung.