J.D. Power and Associates, one of the few reliable sources on worldwide automotive data, have released their forecast for 2008 auto sales. Executive summary: It won’t be pretty.

All corners of the world will be affected by the slowdown. But not all corners will see equally dismal sales. The mature and saturated markets will be hit hardest by a sudden lack of appetite for new cars. Emerging markets will continue to grow – albeit at a much slower pace.

The Good: China. The formerly red-hot Chinese light vehicle market (which includes including passenger vehicle and light commercial vehicle segments) is expected to slow in 2008, but it will still grow at very healthy rates. J.D. Power expects Chinese light vehicle sales to come in at 8.9 million units in 2008, which would be an increase of 9.7 % compared to 2007. Granted, the number will be much tamer than the 24.1 % growth achieved in 2007. (The Indian light vehicle market will remain in its infancy. 1.8 million units are expected to change hands in 2008, nearly the same as in 2007. Considering that India has approximately the same population as China, 1.8 million units are pretty much a non-event when measured with a global yardstick.)

The Bad: Europe. Light-vehicle sales in Europe in Europe as a whole are projected to fall to 21.3 million units in 2008. This would a mount to a rather tame 3.1 % decline compared to 2007. For Western Europe, where markets are more saturated, J.D. Power forecasts a decline to 15.6 million units sold, which would be 7.5 % less than 2007. Eastern Europe will still see growth. Eastern European unit sales are anticipated to be 5.8 million in 2008, a surprising (giving the circumstances) jump of 11.3 % compared to 2007. However, growth in Eastern Europe is also forecasted to slow significantly.

The Downright Ugly: U.S. J.D. Power and Associates forecasts total U.S. new light-vehicle sales to plummet to 13.6 million units in 2008, a 16 % decline from the 16.1 million units sold in 2007. For 2009, J.D. Power and Associates sees even lower numbers: 13.2 units. J.D. Power says the numbers may be 200,000 lower, depending on how the 4th quarter of 2008 may play out.

Net/Net. J.D. Power doesn’t think that the market will recover anytime soon. Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates, said that “any truly pronounced recovery appears to be more than 18 months away.” And it may get worse before it gets better: “While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse,” Schuster said. “While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil.”

No crisis for after-sales. .D. Power observed that “approximately two-thirds of the decline in retail sales can be attributed to consumers delaying vehicle purchases.” People are keeping their vehicles longer. Keeping their vehicles longer means more parts and labor are needed to keep the vehicles running. Buying a new car or even a used car can be delayed. But if the brakes fail, it’s either have the brakes fixed or walk. One of the few recession proof segments in this collapsing economy appear to be parts and services.

China’s auto parts export recession-proof, rises 34.9%.

Despite the global slowdown, the Chinese auto parts industry  powers ahead. In the first seven months of 2008, the value of China's auto-parts exports grew by 34.9% year on year (y/y) to $8.88 billion, China’s customs bureau said.  From January to July 2008, China exported $ 8.73 billion worth of auto-parts.

Foreign invested companies and joint ventures exported $4.56 billion auto-parts, up 31.6% y/y, accounting for 51.4% of the total.

The three major destination markets of China-made auto parts are the U.S., EU and Japan. Parts for $2.69 billion (+8.8%) were sold to the U.S.A., parts for $1.6 billion (+39.2%) were sold to the EU, and parts for $1 billion (+36.8%) were shipped to Japan. These three markets contributed 59.6% to the total value of China's Jan-Jul auto-parts export.

This validates our previous analyses:

1.)    The  parts market, especially when targeted at after sales, is recession-proof.

2.)    After diminishing growth in the U.S.A., more and more Chinese parts go to Europe. We see an increasing trend amongst Chinese manufacturers to obtain the necessary ECE (E-Mark) certification.

3.)    The main drivers of this growth are foreign companies, who use China as a low cost production base and sell the product under their own brand name at high margins.

4.)    With lower raw material prices and lower shipping costs, we expect further increases, especially in the after sales segment. The OEM segment should also grow, because the world’s auto makers try to off-set their lower sales by purchasing lower cost parts in China.

China can't save the world: 2008 new car sales growth only in the single digits.

When auto sales cratered in the U.S. and fell dramatically in Europe, automakers looked to China as their savior. China won’t cure the world’s ailments. According to just released figures by the China Association of Automobile Manufacturers, passenger vehicle sales in China fell for a second month in a row in September, dropping 1.4% from a year earlier to 552,800 vehicles and heightening worries about a demand slowdown.

Sales of passenger vehicles in the January-September period rose  a respectable 11.4% to 5.1 million units, however, the September decline in passenger-vehicle sales  foretells a full-year sales growth in the single-digits.  2007 saw a rise of 21.8%.

September is usually a strong sales month in China, as consumers flock to showrooms to buy  cars ahead of the Golden Week holiday in October.

The notable stand-out was Volkswagen AG. They sold 772,783 vehicles in China from January to September, a 13% rise  compared to the same period in the prior year. Demand for Volkswagen's Audi luxury brand bolstered the parent company's sales.  Volkswagen wants to sell one million units in 2008, an increase of 9.8% from the 910,491 vehicles sold in 2007. The reduced domestic demand for OEM parts is expected to exert additional pricing pressure on parts manufacturers.

New car sales crater – independent workshops rejoice.

US new car sales dropped to a record low in September 2008. For the first time in more than 15 years, monthly U.S. sales fell below the 1 million mark. Overall industry sales toppled 27% to 964,873 vehicles. Like the U.S. auto market, the European new car market is on track to fall to its lowest level in more than a decade. 

This will be deadly to many new car dealerships who operate on thin margins.  According to a just published report, one in five new car dealerships in the U.S. will fail this year and in 2009. Many of Europe’s new car dealerships may suffer the same fate as their US colleagues.  Robert Rademacher, head of the German trade association ZDK, said that  “one third of Germany’s dealers operate in the reds.”   

In Europe, the drop of new car sales is expected to be less dramatic than in the U.S.  Analysts expect western European volumes to decline 5% in 2008 and 3.5% in 2009.  Analysts expect Western Europe and the US to report approximately 14 million in new cars sold in 2008, with the outlook flat to lower in 2009.  It may be worse for the U.S.:  Katsuaki Watanabe, President of the world's largest automaker, Toyota, recently said that U.S. new car sales are unlikely to reach 14 million in 2008. If his predictions come true, the U.S. auto market would, for the first time in history, be smaller than that of Western Europe.

J.D. Power & Associates warned that U.S. industry sales could "collapse" in 2009. Standard & Poor's put GM and Ford on credit watch negative "because of the rapidly weakening state of most global auto markets" and weak capital market conditions. Ford and GM promptly denied that they might consider filing for bankruptcy.

The downturn is disastrous for people who sell new cars. It is the chance of a lifetime for people who fix older cars. All the gloom doesn’t mean that people do stop driving. People simply hold on much longer to their cars. This is aided by cars having an increasingly longer usable life. Already, the average age of all cars on Germany’s streets is  more than 8 years.  10% of Germany’s cars are over 16 years old.  Some observers already talk of a “Cuba-effect” on Germany’s autobahns, a tongue-in-cheek reference to the old cars on Castro’s island.  According to a recent study, the car park in Europe will rise from currently approximately 200 million to 275 million in 2025. The study also predicts that the average age of a car on Europe's streets will rise to 10.2 years in 2025. In the new European countries, the average age of the car is expected to rise to 14 years by 2025.

 

Older car, higher maintenance
	Maintenance	Repair	Total
Less than 2	102.00 €	7.00 €	109.00 €
2 to 4 years	276.00 €	75.00 €	351.00 €
4 to 6 years	269.00 €	166.00 €	435.00 €
6 to 8 years	248.00 €	248.00 €	496.00 €
8 and over	186.00 €	306.00 €	492.00 €
Annual maintenance and repair expenditures by age of car. Source: DAT-Veedol Report 2007

For the independent workshops and franchised chains,  this is great news. Over the years, they have gained significant share of the aftersales market.  58% of  Germany’s cars older than 8 years are no longer serviced at new car dealerships, a study says.  New car dealerships are rapidly losing their profitable aftersales business. As older cars are subject to more wear and tear, expenditures for service and repair are much higher than for new cars  (where the big bills are covered by warranty anyway.)  Nobody spends more for service and repair than owners of older cars.  According to a recent DAT-Veedol Report,  the annual average spendings for maintenance and repairs by German owners of cars that are less than two years old are EUR 109. Owners of cars older than 6 years on the other hand spend approximately EUR 500 per year for maintenance and repairs.

They may spend more, but they spend it wisely. Owners of older cars are price sensitive.  The price of the repair bill should be in line with the value of the car.  The key to unlock this market are high quality, competitively priced parts. Wholesalers and service chains are turning to Sinamotive  to source these parts at competitive prices.

Prices are now more competitive than ever. Metal prices, which saw a wild run-up in the first half of 2008, have been coming down since July.  In October 2008, Aluminum fell to a 31-month trough on the deteriorating health of the car industry.

Steel prices are also in decline. There are reports of panic selling as speculative positions are being unwound.  Forbes quoted an analyst who said that steel prices are "coming down hard and fast" as the economies of the United States and Europe deteriorate and growth slows in China.

Says the Wall Street Journal: "The upshot is that steel buyers who have seen prices rise nonstop for nearly two years are finally getting some relief.  As more consumers hold off on buying new cars, they're making more repairs."

Rates for container shipping  are also coming down dramatically. "Barely 12 months ago carriers were making record profits in the Asia-Europe trade but from summer 2008, freight rates have plummeted and appear to still be in decline," said Neil Dekker, editor of the Annual Container Market Review and Forecast 2008/2009  for London-based Drewry Shipping Consultants.

Sinamotive launches private label production for several European wholesalers.

Sinamotive has signed contracts and letters of understanding with several large European wholesalers who use Sinamotive as a supplier of a range of private label products.  According to these agreements, Sinamotive supplies  brake pads, brake disks, and other products, which are certified to be of the same quality as comparable OEM products. All products come with a Certificate of OEM Quality Equivalence, issued by FAKT GmbH, an independent, KBA-accredited German testing lab.

“Auto manufacturers and large system manufacturers such as Bosch, Teves, ATE, Brembo and more have been successfully manufacturing in China for years.  To a large degree, they have kept the profits to themselves,” said Bertel Schmitt, CEO of Sinamotive. “Now, independent wholesalers can do the same with the help of Sinamotive:  High quality at high margins.”

The key to successful manufacturing in China is tight quality management. “It usually is  a costly mistake to think that one can simply go to China and buy parts,” said Schmitt, ”you have to be there, and stay there, and work with the  suppliers. Inferior quality usually is the fault of a naive buyer.”  

In FAKT, Sinamotive found a partner who’s expertise is hard to match. “You can’t monitor the production of brake pads the same way as panty hoses,” said Xaver Fackler, CEO of FAKT.  FAKT’s team consists of German testing engineers and specialists with long experience in brake manufacturing in Asia.

First product of the private label contracts is expected to hit the market by Q4 2008. Read more about private label.

Sinamotive readies over 100 brake disks.

The renowned German testing and certification lab FAKT has concluded an elaborate testing program that cleared and certified more than 100 brake disks slated for production and delivery by Sinamotive.  The disks were tested and certified to meet the stringent requirements necessary to receive the coveted German “Allgemeine Betriebserlaubnis (ABE).”

In Germany, a General Operating License is required as type-approval to use brake disks in their intended vehicles.  The rest of Europe does not yet require this type approval. In Europe, disks that carry German type approval, or ABE, are generally regarded as top of the line quality.

The tests program lasted several months. All disks entered by Sinamotive passed with flying colors. “The quality of the disks is very good,” said Xaver Fackler, CEO of FAKT GmbH. 

FAKT in Germany is generally acknowledged as the authority for brake related products. Toyota's Formula 1 team relies on FAKT for testing of the brakes of their race cars.

FAKT’s services for Sinamotive will go far beyond testing. As Sinamotive’s Quality Assurance partner, FAKT  will accompany  the production of the disks from start to finish. FAKT issues an OEM Equivalence Certificate for every disk, certifying that the product is  "Matching Quality"  according to BER 1400/2002.

Sinamotive’s line of over 100 brake disks cover most volume models on Europe’s roads.

The superior quality disks will be offered at highly competitive prices.  

The parts are manufactured from high carbon grey cast iron, generally accepted as the ideal material for brake disk rotors.

List of current brake disks.

China exports twice as many cars as it imports.

In case you haven’t noticed: It’s slowly getting time to take China’s auto exports seriously. According to statistics released by the  China Association of Automobile Manufacturers , China exported twice as many vehicles in 2007  as were imported in the same year. In 2007, China exported a total of 612,700 vehicles, up 78.95 % from a year earlier. In the same period, China imported 314,200 vehicles, up  “only” 37.80 % compared to the previous year.

However, the release of the statistics is not yet a Maalox moment for executives of automobile manufacturers in Japan, USA, and Europe.  For one, more than half of the vehicles exported, 333,300 units, are commercial vehicles. Last year, China exported a total of 248,000 heavy duty trucks (40.3 % of China's vehicle exports.)  22,200 units of super heavy trucks (total weight over 20 tons) were exported, up an amazing 372.0 % from the year  before.

With a total export of 183,300 units, sedans made only 30 % of China’s vehicles export in 2007.

Nevertheless, red alert is given each time a Chinese car shows up at an auto show in Frankfurt, Geneva, or Detroit. Weapons of mass destruction are being deployed to ward off a Chinese invasion: Chinese cars are being crashed, sometimes coincidentally timed close to those auto shows.

Not to worry, the real thrust of China’s export is aimed elsewhere.  China’s first choice: Russia.  Take a look at China's top 10 export destination countries for automobile products in 2007.   Exports to Russia grew at a whopping 250% in 2007.

Russia is next door to China. Russia’s indigenous car industry is in bad shape.  Even Russia’s own Komersant must admit: “The Russian automotive industry is unique. It produces cheap, obsolete, low-quality products whose export potential is close to zero.“  And this is not due to a lack of market potential. Russia is Europe’s hottest growth market for cars. According to a recent Polk report, Russia will become Europe's largest market for new cars by 2010.   The market share  of the home-grown Lada has plummeted from 70% in 2002 to 27% in 2007.  Appropriating weapons of the West to ward off a Chinese invasion, the Russians now also crash Chinese cars, sometimes with shocking results. 

Building parts according to tight specs is one thing. Engineering a car that is crashworthy, yet light enough to be economical, and low on emissions, that is a complex engineering dilemma, which can only be solved with the help of supercomputers.

January strongest car sales month ever in China.  

They cannot quite agree on a number yet, but one thing is sure: China’s car industry set off the  (Western)  new year with a bang. January sales and production numbers broke all records. According to China Economics Net, Chinese car makers sold “639,000 passenger vehicles, up 32 percent from the same period in 2007 and 6.7 percent up from December. “  According to  Gasgoo,  “China sold a record amount of 530,700 passenger vehicles in the first month of this year, which represents a growth of 3.5 percent month-on-month and a 35.9 percent growth year-on-year.” Both cite the National Association of Passenger Vehicles Manufacturers.as a source.  Real numbers are hard to come by in this country, but usually, the published ones are too low.  

Significant aspects:

-          For the first time in recent history, January sales exceeded preceding December sales. In China, December usually is one of the strongest sales months, and the preceding December had come in particularly strong.

-          The blizzard that brought China’s South to a grinding halt for weeks, apparently wasn’t fierce enough to dissuade Chinese from buying more new rides than ever.

-          India’s Nano that caused dropped jaws in the rest of the world, elicited yawns in China. According to Forbes,  “in the biggest emerging-car market in the world, China, the best sellers are cars--real cars--from Volkswagen, Toyota, and General Motors."  Both FAW-Volkswagen and Shanghai Volkswagen are rebounding strongly and lead the list of the Top 10 passenger car makers in China, January 2008.

Senior Chinese government officials now predict that China will replace the United States as the world's biggest auto producer by 2010.   Previous predictions had set that date for 2020.

China’s Automotive industry successful in Europe.  

Two driving factors: The falling $ makes Chinese imports more expensive in dollar terms. The EURO/RMB exchange rate on the other hand remains more or less stable. The US market is heading into a recession; analysts predict 2008 to be the worst auto sales year in the US in a decade.  Due to tough certification standards and demands for high quality, the European market is a tough nut to crack. However, once mastered, Europe promises to be a stable and profitable market, as more and more and more Chinese manufacturers already realize. This trend is buoyed by European automakers who import more and more parts from China for domestic production.  European components makers such as Bosch, ATE, Fichtel Sachs etc. increase their presence in China.

China's top 10 automotive product export destination countries 2007

Data source: China Association of Automobile Manufacturers.

Boston Consulting Group: Markets yet to take full advantage of cost savings.  

Despite significant progress, many are finding it difficult to capture the full strategic potential these countries offer.  A host of challenges -- from small R&D bases and limited sourcing volumes to a lack of locally adapted production sites -- have prevented manufacturers from taking full advantage of  China and India. The report's findings underscore the long road Western and Japanese OEMs and suppliers must travel before they can claim to have established truly localized operations in those countries.

The substantial savings available by sourcing from China and India have lured dozens of multinational OEMs and suppliers to establish sourcing offices in those countries. But, on average, China and India still represent less than 5 percent -- a tiny fraction -- of those companies' overall sourcing volumes.

The issue of how successful multinational OEMs and suppliers have been at embedding their local operations in China and India is important, because the stakes are huge. From 2001 through 2007, car sales soared at dazzling compound annual growth rates: 25 percent in China and 15 percent in India. By 2015 China is expected to represent 17 percent of the global car market (up from 12 percent in 2007) and India, 5 percent (up from 2.5 percent).

The report notes that some "localization champions" are successfully pioneering new approaches to capturing the benefits. One of the untold localization champions is Sinamotive.  The company, founded by experienced European automotive executives and  seasoned US investors, has been headquartered from the start in Hong Kong, and has sister companies in Beijing, China, and Hamburg, Germany.

From its very start, the goal of the company was to realize fully the resources and cost savings presented by the fast growing Asian powerhouses.  Sinamotive makes these savings available to a large number of wholesale partners in Western Europe, Central Europe, and North Africa. By embedding German know-how, as well as German and Chinese certification and quality assurance partners right from the start into the value chains connecting Europe’s wholesalers, workshops, and customers with  the opportunities of China and India, Sinamotive delivers “German Quality. Made in China™.”  

China’s National Center of Quality Supervision and Inspection of Automobile Parts and Sinamotive agreed to join forces in the production and promotion of OEM-like quality parts, made in China, and exported to Europe.  Officials of the Center already are at Sinamotive manufacturers, where they assist Sinamotive’s  European certification partners in matters of product testing and Quality Assurance Management.  

The Center plans to conduct a study with the goal of perfecting the implementation of the already stringent QA standards for Sinamotive products. The Center and Sinamotive will co-operate in developing additional OEM-like quality product ranges, destined for the European market.

The National Automobile Parts Quality Supervision Testing Center is located in Changchun, China.  Most their work is for China’s large automobile manufacturers. The Center’s focus is the supervision and testing of automotive parts. The state-owned center reports to the China Technology Supervision Bureau. Their lab is accredited with the China Center for Automobile Products (CCAP) and the China Quality Certification Center (CQC.)

At  this year's Automechanika, held in Shanghai  from 5th – 7th December 2007, DEKRA (Shanghai) Co., Ltd. and Sinamotive made a big splash. Both companies shared booth 1B29, prominently located between the joint German exhibit and exhibits of major Chinese parts manufacturers. 

The slogan of the joint DEKRA/Sinamotive exhibit was "German Quality. Made in China."  This message had been driven home ever since  Sinamotive and DEKRA had held a joint press conference during the Shanghai Motorshow in April 2007. 

The DEKRA Quality Seal, awarded by DEKRA to products commissioned by Sinamotive from Chinese manufacturers, dominated the exhibit.

At a joint presentation during the Automechanika, executives of both companies spoke before members of the media (both Chinese and German,)  and representatives of many manufacturers.  Presentations were given by Guenther Strobel, Managing Director of  DEKRA Shanghai, Prof. Knut Schuettemeyer, CEO of Sinamotive Germany, and Juergen Pfennig as representative of the DEKRA Technology Center in Klettwitz, Germany.

Prof. Schuettemeyer praised the capabilities of the Chinese industry. In reference to recent quality scandals, in which Mattel took the startling step of accepting the blame,  Prof. Schuettemeyer remarked that all too often, and all over the world, inferior quality is a result of bad management and lax quality assurance. "Superior quality is the result of tight cooperation between importer and manufacturer, between management and working staff, and it is a result of the end-to-end involvement of independent certification agencies and QA partners, such as DEKRA," Prof. Schuettemeyer said.

Mr. Pfennig gave an impressive presentation demonstrating the intricacies of EU product certification. Understanding and mastering this complex and ever-changing field is key to success in the European market.

The exhibit was Sinamotive’s first presence at a major international trade show. However, the event was very familiar to some of Sinamotive’s executives.  While Prof. Schuettemeyer was  Director of After Sales Worldwide at Volkswagen AG, he was instrumental in the successful launch of Automechanika Shanghai in 2004.  Bertel Schmitt, CEO of Sinamotive Group (HK) Limited, had also been present at the inaugural show in his former capacity as a consultant to Volkswagen AG.  “It was at the 2004 show when the idea to Sinamotive was conceived,” Mr. Schmitt quipped. “I liked what I saw in China. So much that I stayed.”

German DEKRA Quality Seal awarded to first brake pad manufacturer in China.

Hu Zhichao,  President Xinyi, and Bertel Schmitt, CEO Sinamotive, sealing the deal.

Dongying Xinyi Automobile Fitting Co., and Sinamotive Group (HK) Limited are proud to announce a joint breakthrough in the field of quality production.  For the first time ever in China, the coveted DEKRA Quality Seal was awarded to a range of brake pads sourced by Sinamotive ™, and made by Dongying Xiny Automobile Fitting Co. This announcement received wide coverage in the Chinese press.

According to Bertel Schmitt, CEO of Sinamotive, “after 4 months of rigorous testing, DEKRA Quality Seals have been awarded to 10 brake pads made by Xinyi. All pads submitted so far passed the stringent test regimen devised by DEKRA

(Seals for another seven brake pads were subsequently awarded on December 17th, 2007, bringing the total to 17.) 

In comparison tests with Original Equipment parts and parts by a leading European aftermarket manufacturer, Xinyi parts generally were at par, in some respects they exceeded the test results of the comparison products.

On December 3, 2007, mass production of the E-Mark certified and DEKRA-tested product began. Both companies expect to ship approximately 300,000 brake pad sets  (1.2 Million brake pads in total) within the next two months. According to Mr. Schmitt, “this is just the beginning of a very close and professional cooperation.”  All brake pad sets are made for the European market and will be distributed through Europe’s most prestigious wholesalers, who are eagerly awaiting product.

In the case of safety related brake pads, the criteria are extra stringent. Testing far exceeds the E-Mark requirements. The whole test program lasted 4 months. Tests were performed using the latest equipment provided by the Link Engineering Company. Driving tests were performed at the DEKRA Technology Center in Klettwitz, Germany. The DEKRA Technology Center is situated at the EuroSpeedway Lausitz, one of Europe’s most advanced racetracks.

In addition to testing and certification, DEKRA monitors the complete process, from supplier evaluation, pre-production certification to real-time quality control and pre-shipment sign-off.   “Quality is a matter of management, “said Berthold Schmitt. “Quality is the responsibility of manufacturer and purchaser alike. It’s teamwork. We are proud to have DEKRA on our team, and we are impressed by the professionalism of Xinyi.”

 About Xinyi: Dongying Xinyi Automobile fitting Co., Ltd., is currently the biggest OEM supplier of brake pads in China, Xinyi is OEM supplier for more than 20 domestic and international companies with more than 50 types of vehicles. OEM customers include Daimler-Chrysler, Ford, Shanghai Volkswagen, Shanghai GM, Changchun FAW, Tianjin FAW, NANQI Group, Beijing Auto Group, Xiamen Jinlong, Zhengzhou Nissan, Hafei Group, Geely Group, Chery Group, GM Wuling, Jiangling Motors, JAC, Huatai, Great Wall Automobile, Changfeng Group and China's heavy trucks.

Xinyi was awarded “A” Grade supplier of Volkswagen Group, Germany. .

The company has reached  major international quality system certifications,  including ISO 9001, VDA6.1, QS9000, ISO / TS16949: 2002, and ISO 14001: 2004 Environmental Management System certification. Additionally, the company currently has more than 200 types of products approved according to  EU ECE R90.

As a leading company in the Chinese brake pad industry, Xinyi not only plays an important role in both domestic OEM and after-market, they also perform well in North America, South America, Europe, and Middle East.