Analysis of Chinese auto parts industry

Auto parts usually refer to all parts and components except the car frame. Among them, parts refer to a single component that cannot be split. A component is a combination of parts that implements an action (or function). With the steady development of China’s economy and the gradual improvement of residents’ consumption level, the demand for auto parts for new cars is increasing.

At the same time, with the continuous improvement of vehicle ownership in China, the demand for spare parts in the aftermarket such as vehicle maintenance and vehicle modification is gradually expanding, and the requirements for spare parts are getting higher and higher. China’s auto parts industry has made good achievements in recent years.

1. Industry Profile: Wide coverage and diversified products.
Auto parts usually refer to all parts and components except the car frame. Among them, parts refer to a single component that cannot be split. A unit is a combination of parts that implements an action or function. A component can be a single part or a combination of parts. In this combination, one part is the main one, which performs the intended action (or function), while the other parts only perform the auxiliary functions of joining, fastening, guiding, etc.

An automobile is generally composed of four basic parts: engine, chassis, body and electrical equipment. Therefore, all kinds of subdivision products of auto parts are derived from these four basic parts. According to the nature of parts and components, they can be divided into engine system, power system, transmission system, suspension system, brake system, electrical system and other (general supplies, loading tools, etc.).

2. Panorama of industrial chain.
The upstream and downstream industries of auto parts manufacturing mainly refer to their related supply and demand industries. The upstream of the automotive parts manufacturing industry chain mainly includes markets providing raw materials, including iron and steel, non-ferrous metals, electronic components, plastics, rubber, wood, glass, ceramics, leather, etc.

Among them, large demand for raw materials are iron and steel, non-ferrous metals, electronic components, plastic, rubber, glass. The downstream includes automobile manufacturers, automobile 4S shops, auto repair shops, auto parts and accessories manufacturers and auto modification factories, etc.

The impact of upstream on the auto parts industry is mainly in the cost aspect. The price change of raw materials (including steel, aluminum, plastic, rubber, etc.) is directly related to the manufacturing cost of auto parts products. The influence of downstream on auto parts is mainly in market demand and market competition.

3. Policy promotion: Policy planning is frequently implemented to boost the healthy growth of the industry.
As each car needs about 10,000 auto parts, and these parts are involved in different industries and fields, there is a big gap in technical standards, production methods and other aspects. At present, the national policies related to auto parts manufacturing are mainly distributed in the national policies related to the auto industry.

On the whole, the country is promoting the adjustment and upgrading of China’s automobile industry, encouraging research and development and manufacturing of high-quality, high-tech independent brand cars, and maintaining greater support for new energy vehicles. The release of a series of automobile industry policies has undoubtedly put forward higher requirements for the parts industry. At the same time, in order to promote the positive and healthy development of China’s auto parts industry, China’s relevant departments have issued industry-related policy development plans in recent years.

With the development of science and technology, the upgrading of automobile products is accelerating day by day, which requires the auto parts industry to speed up technological innovation, to provide products needed by the market; Otherwise, it will face the disjointed dilemma of supply and demand, resulting in structural imbalance and product backlog.

4. Current situation of market size: The income from main business continues to expand.
China’s new car production provides development space for the development of China’s new car parts supporting market, while the increasing number of vehicles, vehicle maintenance and refit parts demand is also growing, promoting the continuous expansion of China’s auto parts industry. In 2019, under the influence of factors such as the overall decline of the automobile market, the decline of subsidies for new energy vehicles, and the gradual rise of emission standards, component companies are facing unprecedented pressure. However, China’s auto parts manufacturing industry still shows a steady growth trend. According to the statistics of China Association of Automobile Manufacturers on 13,750 auto parts enterprises above designated size, the accumulative revenue of their main business reached 3.6 trillion yuan, up 0.35% year on year. According to preliminary estimates, the main business income of China’s auto parts manufacturing industry in 2020 will be about 3.74 trillion yuan.

Note
1. The year-on-year growth rate data varies from year to year due to changes in the number of enterprises above designated size. The year-on-year data are all the production data of enterprises above designated size in the same year.
2. 2020 data are preliminary calculation data and are for reference only.

Development trend: The automotive aftermarket has become a major growth point.
Influenced by the policy tendency of “reforming cars and light parts”, China’s auto parts enterprises have long faced the crisis of technology hollowing out. A large number of small and medium-sized auto parts suppliers have single product line, low technology content and weak ability to resist external risks. In recent years, the rising cost of raw materials and labor makes the profit margin of auto parts enterprises fluctuate and slide.

“Medium and long-term Development Plan of Automobile Industry” points out that cultivating parts suppliers with international competitiveness, forming a complete industrial system from parts to vehicles. By 2020, a number of auto parts enterprise groups with a scale of over 100 billion yuan will be formed; By 2025, several auto parts enterprise groups will be formed in the world’s top ten.

In the future, under the policy support, China’s auto parts enterprises will gradually improve the technical level and innovation ability, master the core technology of key parts; Driven by the development of independent brand vehicle enterprises, domestic parts enterprises will gradually expand their market share, and the proportion of foreign or joint venture brands will decrease.

At the same time, China aims to form a number of top 10 auto parts groups in the world in 2025. Mergers in the industry will increase, and resources will be concentrated in the head enterprises. As auto production and sales reach the ceiling, the development of auto parts in the field of new car accessories is limited, and the huge after-sales market will become one of the growth points of auto parts industry.


Post time: May-23-2022