The adoption of parts of each vehicle series

　　With China becoming the world's largest country in automobile production and sales, the auto parts industry is also growing. From the perspective of the world pattern, China's parts industry has broad development space for both horizontal scale development and vertical technology upgrading. However, the pattern of local parts industry is weak, small and scattered. Although the industry scale is large, it lacks scale effect, and almost all the key parts fields are occupied by foreign capital. The competitiveness of the industry is mainly reflected in the cheap labor and resource cost. In the context of global procurement of auto parts, local parts enterprises with advantages in technology, r&d and scale will have greater development space.

　　Industry operation status

　　From January to October 2010, the total profit of auto parts industry is still growing, but the growth rate is slowing down. The import and export volume also increased, but the import products were mainly high-profit, high-value-added and high-tech products such as gearbox and engine parts, while the export products were mainly labor-intensive and resource-consuming products with low entry barriers and thin profit margins such as tires and electronic instruments.

　　The downstream vehicle industry is currently suffering from excess capacity. Despite the unconventional rapid growth in 2010 under various national stimulus policies, the production and sales growth slowed down and the pressure of excess capacity increased in 2011. Affected by this, the parts industry may bear the pressure of large profits in the second half of the year.

　　Major problems facing the industry

　　Upstream and downstream two ends suffer squeeze, the industry faces double pressure

　　The parts industry is a two - sided industry, lack of bargaining power on the upstream and downstream. The upstream raw materials are mainly steel, rubber, plastic, fabric, etc., whose prices are ultimately determined by the prices of steel, oil, natural rubber and other commodities. Auto parts companies can only avoid risks by judging the trend of upstream commodity prices. At the same time, the downstream vehicle manufacturers are mostly large enterprises and groups, which are in a strong position in the interest game with the parts manufacturers and have strong negotiation ability, and can transfer the cost pressure to the auto parts industry. Therefore, parts are actually in the sandwich position of being squeezed at both ends.

　　The scale of the industry is large, but the scale effect is lacking

　　According to the statistics of the society of automotive engineering, the output value of China's parts industry has exceeded 1.2 trillion yuan, with a large industrial scale. However, there are more than 20,000 enterprises engaged in this industry, and the average output value of each enterprise is only about 60 million yuan. Take Bosch, the global leader in auto parts industry, for example, its sales revenue in 2010 was nearly 50 billion us dollars, while wanxiang group, the largest parts company in China, only generated 3.3 billion us dollars. The competitiveness of China's auto parts industry is mainly reflected in the cost of cheap labor and resources, as well as the lack of high-end product technology and r&d capacity. According to a survey of the auto parts industry conducted by the institute of automotive engineering in 2009, the r&d investment of Chinese auto parts companies currently accounts for only 1.4% of the sales revenue, far lower than the average level of 5% of multinational companies.

　　Core components research and development ability weak spot is impeding the development of the industry, the automatic transmission, ABS, airbag, and other products is still the domestic blank, in the face of the vertical division of labor system in the global automotive industry value chain low-end, a high technology content products while have a certain amount of research and development ability, but cannot assure quality stability, still can't for commercial applications.

　　Domestic components are mainly used in self-owned brand cars, with a low market share

　　, according to data from the Ministry of Commerce of foreign capital control most of auto parts market share, local parts sales accounts for only 20% of the industry - 25%, with foreign background of auto parts manufacturers account for more than 75% of the industry, in these foreign suppliers, wholly owned enterprises accounted for 55%, sino-foreign joint ventures accounted for 45%, local parts mainly used in the independent brand cars, low market share. In high-tech fields such as automotive electronics and engine parts, the market share of foreign enterprises is as high as 90%. Among them, the production of core parts such as electric injection system, engine management system, ABS and airbag, automatic transmission, etc. of automobiles is 100%, 100%, 91% and 69% respectively.

　　The international trade situation is getting more and more serious

　　Since China's accession to the wto, the auto parts to a large number of entering the international market, China's auto parts products abroad despite a bargain, but due to the lack of core competitiveness, alternative products is strong, so often are kept out of the way with all sorts of trade protectionism, tight firmware to auto tires, wheel, etc, China auto parts export trade friction has never been interrupted.

　　Industry development trend

　　In the context of global procurement of auto parts, local parts enterprises in China are facing the dual pressure of uncompetitive high-end products and increasingly high labor cost of low-end products. In the future, those enterprises with technological advantages and scale advantages and good brand building will gain greater development space. Companies that acquire technology through overseas acquisitions and are related to big auto groups will grow quickly.

　　The fundamental way for Chinese parts enterprises to become bigger and stronger is to improve their r&d and technology level and upgrade their industrial chain status, so as to effectively break the bottleneck of the industry and achieve rapid development. However, at present, China's parts manufacturing enterprises lag behind the international advanced level for at least a decade, and the convenient way to achieve rapid development in the short term in the absence of talents and technology is to rely on the power of capital. As a result, there are two types of companies that will grow rapidly in the future: those that acquire technology through overseas mergers and acquisitions, such as Beijing Pacific century's recent purchase of Nextee steering systems from general motors of the U.S. and weichai power's purchase of MoteursBaudouin, a French engine maker. The other is with the large automotive group blood relationship, with the strength of the group to achieve large-scale operation of enterprises. The auto industry adjustment and revitalization plan issued in 2009 also clearly states that the vehicle industry will consolidate the automobile enterprise groups with the production and sales scale accounting for more than 90% of the market share into less than 10 through mergers and reorganizations. This trend will be passed on to the parts enterprises, and the parts manufacturers relying on the large auto groups will achieve rapid development.

　　System and module suppliers and brand and technology makers will stand out from the competition.

　　The international auto parts industry pattern is a pyramid, the spire is the system supplier, the tower is the module supplier, the base is the parts supplier, the corresponding profit distribution from high to low, China's auto parts industry as a whole at the bottom of the tower, low profit margin, survival pressure. Therefore, those parts companies that actively expand their business to the upper end and move towards module or system suppliers, or those manufacturers that focus on technology upgrading or brand building in the parts field, will stand out from the competition.