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The Auto Parts Industry: A Decade of Rapid Growth

Release time:

2017-08-18

In 2003, China's automobile sales exceeded 4 million units; in the first 10 months of 2013, China's automobile sales exceeded 17.8 million units, and exceeding 20 million units for the whole year has become a certainty. In ten years, the scale of China's automobile market has more than quadrupled, and the automobile parts industry has also experienced an extraordinary period of growth. According to statistics, from 2003 to 2012, China's sales revenue of automobile parts and accessories increased from 300.3 billion yuan to 2226.73 billion yuan, a net increase of nearly 2 trillion yuan. While the market scale has expanded, the development of new products and technological innovation by parts companies have also continuously yielded fruitful results, and some have even...

　　In ten years, the scale of China's automobile market has more than quadrupled, and the automotive parts industry has also experienced an extraordinary period of growth. According to statistics, from 2003 to 2012, China's sales revenue of automotive parts and accessories increased from 300.3 billion yuan to 2226.73 billion yuan, a net increase of nearly 2 trillion yuan. While the market scale expanded, the development of new products and technological innovation by parts companies continued to bear fruit. Furthermore, some parts companies began to go global, exporting products, making overseas acquisitions, and investing in factories, showcasing their expertise on the international stage and writing a colorful chapter.

　　Market size and strength have greatly increased

　　Over the past ten years, the market size of China's automotive parts has continued to expand. In 2012, the cumulative export value of automotive parts reached US$55.322 billion, of which the export value of auto parts, accessories, and bodies reached US$27.877 billion, a year-on-year increase of 2.74%.

　　The market size of some domestic auto parts companies is also expanding, and the development prospects are very broad. For example, Fast's sales revenue increased from 1.17 billion yuan in 2003 to 8.17 billion yuan in 2012, an increase of seven times; the annual output value of Hangsheng increased from 800 million yuan in 2003 to 3 billion yuan in 2012; the sales revenue of XiChai products was only 4.79 billion yuan in 2003, exceeding 10 billion yuan in 2010, reaching 13.05 billion yuan in sales revenue. These changing data allow us to see intuitively the tremendous changes in the scale of domestic auto parts companies over the past ten years.

　　In addition, with the continuous expansion of the scale and the continuous improvement of performance, many auto parts companies have successfully been selected for the "2013 Top 100 Chinese Auto Parts Companies," such as Weichai Power Co., Ltd., Shaanxi Fast Automotive Transmission Group Co., Ltd., Shaanxi Han De Axle Co., Ltd., and Nanjing Auto-Oteka Refrigeration Co., Ltd. In addition, five companies—Weichai Power, Zhongce Rubber, Dechang Motor, Linglong Tire, and CITIC Dicast—entered the "2013 Top 100 International Auto Parts Companies" list with their strength comparable to that of major global auto parts companies.

　　Increased investment in R&D of new products and technologies

　　Product technology strength is a core element for companies to participate in market competition. The strength of foreign parts companies comes from huge R&D investment and continuous technological innovation, which has always been lacking in domestic companies. However, with the intensification of competition in the automotive parts market, domestic parts companies have gradually increased their investment in the R&D of new products and technologies.

　　According to the data on R&D investment from the 2012 annual reports of the top 30 automotive parts listed companies compiled by this newspaper, the average proportion of R&D investment to operating revenue for most companies is 2.70%, with an average investment of 244 million yuan, an increase compared to last year. Among them, Weichai Power's R&D investment accounted for 4.14% of operating revenue, with a total amount of 1.996 billion yuan. Yunnei Power's R&D investment in 2012 increased by 22.15% year-on-year, and it also increased investment in R&D projects such as the "D25TCI electronic control common rail project" and "Euro 5 diesel engine development".

　　The direct result of increased R&D investment is that in recent years, many new technologies and products have emerged in the automotive parts industry, such as in-cylinder direct injection technology, electronic control high-pressure common rail technology, dual-clutch transmission technology, etc. In recent years, turbocharging technology has also been continuously improved. In terms of new products, Yuchai's National V natural gas engine series of products, and Shengrui's independently developed world's first front-wheel-drive 8-speed automatic transmission, etc. In addition, many parts companies have established national-level technology centers to strengthen the R&D of new products and technologies, such as Shaanxi Fast Automotive Transmission Group Co., Ltd., Liaoning Dawn Automobile Group Co., Ltd., Zhejiang Wan'an Technology Co., Ltd., and Hunan Tianyan Machinery Co., Ltd.

　　Parts companies implement the "going global" strategy

　　Over the past ten years, the development momentum of parts companies has been good, but there is still a large gap compared with the international level of parts. As mentioned earlier, technological strength is the main bottleneck restricting the development of domestic parts companies. For domestic parts companies, "going global" for overseas mergers and acquisitions is an effective means to improve their own technological strength and break the foreign monopoly of key technologies and markets. This trend has become increasingly apparent in recent years.

　　In 2007, Ningbo Huaxiang acquired the UK's Lawrence Interior Parts Co., Ltd. In 2011, Ningbo Junshi Investment Group Co., Ltd.'s automotive electronic parts manufacturing company acquired Germany's Preh; Nanyang Xijian Automobile Shock Absorber Co., Ltd. acquired Europe's largest automotive shock absorber company, WayAssauto; in 2012, China North Industries Group's Lingyun Company completed the acquisition of Germany's Keysight. Although not every one of these overseas mergers and acquisitions has been successful, they at least show a positive attitude of domestic parts companies "going global" to participate in international competition.

　　In addition, this year, Shaanxi Fast Automotive Transmission Group established Fast Automotive Transmission (Thailand) Co., Ltd. in Thailand, and Fuyao Glass Industry Group Co., Ltd. also announced that it will establish "Fuyao Russia Float Glass Co., Ltd." in Russia and "Fuyao Glass USA Co., Ltd." in the United States. This shows that domestic auto parts companies are seeking other ways besides overseas mergers and acquisitions to enhance their own strength. Of course, overseas factory construction requires stronger corporate strength to support it, and it is not suitable for every auto parts company, but this new "going global" strategy shows from the side that after ten years of accumulation, domestic parts companies have the strength to achieve a breakthrough.