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Liu Shiyu “In 2005, due to the continued impact of rising prices of raw materials such as steel, our performance will decline, but because we have learned from the past, we have fully considered the impact of many factors and made preparations. The year-on-year rate of decline was basically the same as 2004. Moreover, we have begun to seriously consider whether to enter the auto parts industry.†Recently, the foreign manufacturers of foreign parts and components, which are mainly supplied by truck manufacturers, are the global market and marketing of ASIMCO Group. President Ni Wei said.
The price of vehicles is falling every day, and the new car is on a monthly basis. The Chinese auto market has slowly passed through 2005 in this “normalityâ€. Yu Wei of the auto market is still in the cold winter, and people in the industry once said that this year is still a “cold marketâ€. However, when people are still planning to resist the snowstorm in the auto market, this snowstorm has brought the auto parts industry into the winter.
According to statistics, in the first five months of 2005, the auto parts industry experienced its first profit decline in 10 years. Industry analysts believe that although on the surface, the domestic spare parts industry has a large space for development, the situation seems to be very good, but due to the challenges of raw material prices, the price of vehicle manufacturers, the competition of giant auto parts companies, and domestic components The winter of the market has arrived.
In 2005, China's auto parts industry has both natural and man-made disasters. The increase in the prices of raw materials for parts and components for two consecutive years can be regarded as a “natural disaster†for the domestic parts and components industry. According to statistics, in 2005, the prices of various imported iron ore raw materials increased by about 7% compared with 2004. According to past experience, the increase in the price of imported iron ore will increase the price of all kinds of steel materials manufactured by automobiles by about 8%. The vast majority of this rising cost is borne by the parts and components companies. The entire automobile factory or whole machine factory will not share the worries of the parts and components companies because of the rising raw material prices.
If the rise in the price of raw materials such as steel for more than two consecutive years is regarded as the only natural disaster, then man-made disasters are multifaceted. According to incomplete statistics, from January to June 2005, the profits of the entire automotive industry fell by about 50%, of which the profits of 15 large groups fell by about 70%. According to industry analysts, in 2005 the overall profit of the automotive industry fell by 50%, and almost all vehicle manufacturers will directly transfer the pressure of profit decline to parts suppliers, making parts suppliers miserable. It is understood that in order to realize the maximization of the group’s profits, the OEMs require that the price of parts and components be reduced by 8% to 10% each year in actual procurement. Recently, there has been a host plant upstream components companies have clearly stated that the required parts and components companies in the specified time to reduce the price to the prescribed range, if the upstream parts factory can not be implemented in place, the host plant will cancel its supporting qualifications.
In addition to the pressure from automakers, parts manufacturers also face tremendous pressure from competition with the industry. According to statistics, in 2004 China's spare parts industry reached a record high of 440 billion yuan. Wang Zude, an intelligence researcher at the China Automotive Technology and Research Center, said that in 2005 the scale of the entire auto parts market was more than 500 billion yuan. At the same time, according to the latest forecast by the Ministry of Industry Economic Research of the Development Research Center of the State Council on the total demand of the Chinese market, the number of domestic cars will reach 35.63 million this year, reaching 56.69 million in 2010 and reaching 13.103 million by 2020. In 2004, the parts and components industry had basically remained the same as the total vehicle sales. According to the standards of international operation, the ratio of the entire automobile and parts of the automobile industry should be 1:1.7. Therefore, it can be inferred that there is still much room for the auto parts industry.
It is these attractive figures that have made all parts and components manufacturers rush and have also increased competition in the parts and components industry. In the face of immense temptations, not only has China's large and small parts factories and industrial bases emerged in the country, international parts giants have also begun to accelerate their march to China. Bosch, Delphi, Visteon and other multinational auto parts giants have established a foothold in China, occupying 15% of China’s market share by companies that lack 1% of the total number of domestic auto parts companies. Delphi, for example, although Delphi filed for bankruptcy protection in October last year due to a sharp decline in business performance, Delphi’s business in China has been razed to the brim with 15 companies, 1 technology center, and 1 training center, including 4 A wholly-owned company with a total investment of more than US$500 million has become the most powerful component group in the Chinese market. Secondly, internationally renowned tire companies such as Michelin and Goodyear have also begun to build the Chinese market. In July this year, Goodyear made it clear that at least one new product will be introduced in China each year, and at the same time it will begin to implement a full range of marketing strategies.
In October 2005, Pirelli, the second largest multinational company in Italy and the world’s fifth-largest tire manufacturer, its first joint venture with China was put into operation in Shandong. The goal was to strive for 30% of the truck radial tire market by the end of 2006. Share. In 2005, the international parts manufacturers began to seize large parts in the Chinese parts market. The domestic parts and components companies lacking technological advantages have only lost their unique “low labor costs†as the only “shelterâ€. To counter the "invasion" of the "powerful" international spare parts. Under the strong “attack†of international parts and components companies, the profits of parts and components have dropped sharply, and the enterprises with technology can still maintain a certain amount of profit, while enterprises with low labor costs are struggling.
As of 2005, at least 70% of the world’s top 100 parts suppliers have started business in China. There are nearly 1,200 wholly foreign-owned or joint venture companies that manufacture automotive parts in China. The joint venture company accounts for more than 50% of the share. In contrast, there are more than 5,000 domestic parts and components companies in China, which are small in scale, low in concentration and serious in disorder, resulting in a very low overall industry efficiency. At present, foreign auto parts and components are rushing in and are likely to involve dumping problems in China. In view of this, in November last year, the Department of Commerce’s parts and components industry suffered an early warning of damage. Wang Qinhua, director of the Bureau of Industrial Injury Investigation of the Ministry of Commerce, pointed out that we should pay special attention to the automotive industry and pay special attention to parts and components. She said: "Although anti-dumping and safeguard measures have not yet been launched for automotive products, some products in upstream and downstream industries such as steel products have already been involved."
The lack of technology has always been the weakness of China's spare parts industry. This has already triggered a series of reactions. Recently, the Vice Minister of Purchasing of Guangzhou Honda made it clear in a media interview that Chinese parts and components companies lacked "synchronous" development capabilities. He said: "The low quality of China's parts companies and the lack of long-term stability in supply are two major reasons why it is difficult for them to participate in international competition."
In addition to the “man-made disasters†mentioned above, since January 1, 2005, the tariffs on auto parts in China have dropped to 13%, and the global procurement of vehicle manufacturers will be further implemented. The prices of domestic parts and components and product quality will be further improved. , market competitiveness and other aspects will face more severe tests. Industry insiders said that in the face of fierce competition, the cake in the Chinese auto parts market has already begun to shrink, and as such, this piece of cake will not belong to the Chinese parts and components companies.
Since 2006, China's spare parts market has entered a severe winter. Compared with the entire vehicle industry, this severe winter will be even colder and longer.