The quality of the auto parts industry is related to the lifeblood of independent research and development and independent brands in China and is the basis of the Chinese auto industry.
A rather cruel reality is that domestic auto parts and accessories industry is facing a new competitive pattern in internal and external problems!
Simply look at the domestic environment:
This year, for the domestic auto parts industry, it is a year in which the frost falls continuously. At the same time as the price of upstream raw materials increased, there was a weak market and the competition was intensifying, causing the downstream vehicle prices to dive. In the wind of rain and sword rain, the domestic parts and components companies are quite sighed by the “old-fashioned ship facing stormy weatherâ€.
The quality of the auto parts industry has undoubtedly become the “soft underbelly†of the development of independent brands in China’s auto industry.
Of course, we must first recognize the fact that China’s auto parts production system is relatively backward compared to developed countries, from R&D to manufacturing. Due to the weak research and development capabilities of domestic parts and components companies, market share has become unstable in competition.
In the developed countries of the automotive industry, the research and development capabilities of auto parts companies have gone ahead of the entire vehicle company and a new vehicle has been developed. Most of the intellectual property rights belong to auto parts companies. However, the R&D capabilities of domestic parts and components companies are generally weak. Many parts and components companies do not have their own technology, and they only obtain it from the main engine plant and can't help the whole vehicle manufacturer. The energy of these enterprises is mainly to meet the matching requirements of the host plant, and the simultaneous development with the vehicle can only be a dream.
Perhaps because of inertia, domestic companies suddenly can't walk out of the traditional model of “car-driven parts and components†development. What brings is that the investment of domestic parts and components companies is very limited compared with the entire vehicle industry.
Electronic and integrated R&D capabilities are poor, and product replacement is slow; at the manufacturing level, product accuracy is not high and product costs are too high. This contrasts with the development trend of the modularization and integrated production of the global automotive industry. The gap is obvious.
The vast majority of domestic parts and components companies carry "defects" of government control. Most of these companies are the product of "supplied" under the conditions of planned economy, under the birth of local protectionism, division of ownership, etc., to serve OEMs and OEMs. Even the so-called all-in-one parts companies that are “derived†by the automakers are just taking the old road of product lines that are unsurpassed. They are limited by the assembly and sales of vehicles. Many companies do not have the same scale. The cost will not fall.
In addition, China's auto parts and components companies basically do not have economies of scale in terms of raw material procurement, process control for finished products, sales of finished products, circulation, and services. Naturally, they do not even have a cost advantage. In addition to the inherent irrationality of the product structure, a considerable part of the spare parts enterprises have a serious excess of production capacity, a large number of assets are idle, and the fixed costs are increasing.
What is even more frightening is that the proportion of the direct procurement cost of domestic vehicle assembly companies and OEMs is generally much higher than international standards. In order to realize the maximization of the Group’s profits, the pressure to reduce the cost of the entire vehicle and the need to cut prices to adapt to the fierce competition will not be hesitated to be directly passed on to the parts supply companies.
However, it is also possible to look at the issue of the pressure of the entire vehicle competition transfer from a positive perspective. It is the fundamental driving force for improving the competitiveness of the parts and components industry, which is conducive to the structural adjustment of the industry and the improvement of the overall level of parts and components.
Looking at the domestic environment from the international environment:
The globalization of parts procurement is the future trend of the automotive industry. At present, many auto OEMs in the world continue to reduce their parts autonomy and reduce the number of collaborating plants, and adopt strategies for global production and global sourcing, from sourcing from multiple parts manufacturers to purchasing from a few system suppliers. Parts purchases are transformed into module purchases and transferred from domestic purchases to global purchases.
China will be a distributing center for international auto parts production and sales, and the auto parts market has great potential. According to statistics, in 2003 China's auto parts industry recorded sales of 31.8 billion U.S. dollars, including exports of 3.3 billion U.S. dollars, accounting for about 1/3 of the total sales of the automotive industry. By 2010, the demand for domestic auto parts in China will reach 1.8 trillion yuan.
There are opportunities and challenges. In recent years, tariffs have fallen rapidly. In 2001, the average tariff on auto parts was 22.3%, which fell to 16.3% in 2002 and further declined to 14% in 2003. According to China's WTO commitments, by July 1, 2006, the average tariff on auto parts will be reduced to 10%.
The continuous reduction of tax rate brings about an increase in the import volume of parts and components. In 2003, China imported 6.2 billion U.S. dollars in auto parts, which was equivalent to 30% of the total domestic parts and components in that year.
The increase in imports of parts and components, in addition to the impact of tariffs, is also due to the assembly of KD parts. It can launch new cars in a short period of time, seize the market, so as to obtain profits. The higher the car, the higher the profit, and the more serious the assembly of KD parts. As a result, one after another, new cars were launched on the market in just a few months. The CKD assembled vehicle not only eats rice from domestic parts companies, but also suppresses the survival space of domestic parts and components companies.
On the other hand, in order to shift production costs, multinational suppliers of parts and components have gradually moved their factories overseas. China, with its huge potential in the auto market, has become the main battlefield. These multinational suppliers have been able to explain the secrets. The reason why parts factories are built in emerging markets such as China is to use local cheap labor and, on the other hand, to meet the growing demand of the local market.
According to statistics, most of the world’s top 100 parts suppliers currently expand their business in China. There are nearly 1,200 wholly foreign-owned or joint venture companies that produce automotive parts and components in China. In recent years, the number has seen rapid growth.
Correspondingly, China's parts and components companies are currently in a state of chaos. There are many people in the family and the same room is serious. With regard to statistics, there are now 2,000 fixed-point parts manufacturers in China, and in fact more than 5,000. These enterprises are small in size, with only 130 of them operating at more than RMB 100 million in annual revenues, and as many as 2,700 of those with RMB 500,000 or less. Production costs are high, and the overall efficiency of the industry is low. At the same time, the traditional model of internal procurement represented by FAW, Dongfeng and SAIC will become history. Afterwards, China's full-vehicle joint venture manufacturers will find the best suppliers nationwide. The independence of suppliers will increase, and SMEs that rely mainly on vehicle groups will face a “crash†crisis.
"Wolf" has really come in, and it poses a serious threat to the survival and development of domestic parts and components companies, and will continue to be eliminated. Global sourcing is only a kind of slogan in a sense.
The outlook for the auto parts industry is not optimistic. Where is the space for development of China's spare parts companies?
The people of insight in the industry believe that China’s auto companies must renew their concepts and seek out the short-sighted behavior model of small group interests. On the one hand, the host plant must consider the strategic development of the company, establish a strategic and alliance relationship with the parts and components enterprises in a shared sense of honor and disgrace, and conduct two-way cooperation to improve the research and development capabilities of the parts and components companies as soon as possible.
On the other hand, parts and components companies take the initiative to use the method of synchronization with the development of the vehicle to shorten development time and reduce development costs. Whether it can be synchronized with the vehicle manufacturer to develop synchronous design is a key to restricting China's own brand.
At the same time, China’s parts and components companies have admitted that when there is a big gap between foreign countries in terms of core technologies such as powertrains and other aspects, they cannot be arrogant. First, some relatively strong local companies actively integrate into the international competition environment. They can learn advanced technology and management experience through cooperation with foreign companies, so as to continuously improve and expand their own development capabilities; For a small local company, if it can't do the first-tier supplier, it will strive to be a second-tier or even a third-tier supplier and gradually develop.
The separation and neutralization of parts and vehicles has become an inevitable trend in the development of auto parts and components. This tells China's spare parts companies that this kind of information, in order to get rid of historical factors and the dependence on OEMs, in order to occupy a place in the smoke-filled market, we must accelerate the improvement of our R&D capabilities, product technology and core Competitiveness to cope with the new competitive situation.
Only in this way can we have the ability and qualifications to talk about how the Chinese auto industry has built its own brand in the global economic globalization environment.
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