Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from Brian Drab – William Blair & Co.
Brian Drab – William Blair & Co.
I guess I'll start just with the linear motor business. First of all, your gross margin was really strong in that business. Is that a function of stronger volume but also that the gross margins in the oil pump business are a little better than the average?
Christy Shue
Yes, you are right. The main reason of higher gross margin is it has a major contribution from the oil pump business because oil pump contribute a lot more in sales in terms of percentage, so that's a [miss] there on the gross margin, that's correct.
Brian Drab – William Blair & Co.
And then how is the Chinese auto market looking from your perspective? I understand it's been difficult in the North American market, but as you pointed out your sales were flat sequentially in the micro-motor market in general and Chinese auto market has been really booming lately. Could we maybe anticipate maybe some pent-up demand and strong orders going into the fourth quarter in the auto micro-motor market just driven by China growth?
Christy Shue
Let me give this question to Mr. Yang.
Tianfu Yang [interpreted]
First of all, Mr. Yang would like to emphasize that even Chinese auto markets are going strong, the sales are going well, but even the car sales have two different situations. One is the pure Chinese-made cars and the other higher end JV or foreign-brand cars.
For our products, as you know even the specialty motors, we mainly now we're mainly serving the foreign brand and JV made cars. However – and even these cars that we're serving most of the time, most of the time they're coming back.
You know we export our motors to North America and then they put the motors on the car seat and everything and then the car seat may come back to China and put in the JV brand and foreign brand cars in China, made in China.
And we have not been very much going after the Chinese – pure Chinese brand cars which is usually cheaper, lower price and lower end cars. However, the good news is the new products we have developed in the past are mainly towards serving the Chinese cars, but made by JV and foreign brands, made in China.
- To read the full transcript on Seeking Alpha, click here »
