Automotive parts market is not optimistic about shrinking profits

In the face of rising raw materials and intensified labor shortage, parts and components manufacturers have complained about shrinking profit margins. However, it is understood that China’s auto parts suppliers are currently the most profitable in the world. Last year, China’s auto parts sales revenue. It was 1.644 trillion yuan. Thanks to the recovery of spare parts export demand in 2010, the growth rate of auto parts sales was also higher than that of the entire vehicle industry. Sales revenue was about 7% higher than that of the entire vehicle.

Affected by the country's adjustment to the automobile market policy this year, the domestic automobile market slowed down in the first five months. Especially in the Beijing market where the purchase restriction policy is implemented, many dealers even face the issue of survival. In the eyes of dealers and vehicle manufacturers, the aftermarket has become the key to guaranteeing profits and market share.

Opportunity: After the growth potential of the after-sales market, a large number of days ago, for the development trend of the Chinese auto market in the next few years, the expectations of executives are obviously more optimistic. They predict that the sales of the Chinese auto industry will maintain a growth rate of 12% to 15% over the next five years.

Among them, Chinese-made parts and components have a sharp increase in market share in countries such as the United States, Japan, South Korea, and Germany, and the export growth in the above major destinations is between 36% and 54%. Last year, the domestic aftermarket demand accounted for 14% of all domestic sales of parts and components. With the aging of vehicles and the growth of holdings, demand in the aftermarket will become its main growth driver. It is estimated that by 2015, China’s car ownership will grow by more than 145 million vehicles from the current 60 million, and this will drive the aftermarket parts and service industry to grow by more than 30% annually.

Challenge: Core Technology or Restricting the Development of Parts and Components Industry In fact, according to the typical characteristics of the current Beijing market, all dealers who maintain a good level of profitability in the market basically rely on sales to make profits later.

Although the profitability of the parts and components industry is high, some experts also pointed out that the current domestic parts and components industry is not strong in key technologies and independent innovation, and many key parts and components are foreign-owned, such as the DSG gearbox factory of the Volkswagen Group in China. This is very unfavorable for the development of Chinese domestic parts and components companies.

For this reason, in the past two years, under the financial crisis's blow to the auto industry, many international parts and components companies were in crisis, which gave Chinese parts and components companies opportunities.

Recently, it is reported that Bosch will sell its basic brake business to Asian companies. However, according to sources who said the news, due to the technical content of the business is not high, so its large competitors are not interested. On the contrary, parts and components companies including South Korea and China are targets of this sale.