Analysis of Five Development Trends in Auto Parts Industry

In recent years, thanks to the rapid development of the entire vehicle industry, the development speed of China's auto parts industry has accelerated significantly. As a support for the development of China's auto industry, the auto parts industry is showing five major trends.

Trend 1: Cluster development will drive the rapid growth of regional economy

The auto parts industry has formed six auto parts industrial clusters in the Northeast, Beijing-Tianjin, Central China, Southwest China, Yangtze River Delta and Pearl River Delta. The industrial clustering makes the division of labor more elaborate, more professional, and easier to achieve scale, so that the information is more concentrated and faster, the pace of technological innovation is faster, logistics is easier to organize, and economic benefits are significantly improved.

Trend 2: Foreign-funded parts companies accelerate their entry into China

With the development of the Chinese auto industry in depth, many foreign auto parts companies have accelerated their investment in China. For example, the second plant of the world-famous parts and components supplier German Bosch chassis system has settled down in Chengdu.

In addition, the introduction of regional overall investment forms in some parts of the country will further accelerate the pace of foreign investment in China. For example, the introduction of the auto parts supporting industry in ASEAN countries planned by Liuzhou, Guangxi, may form a new upsurge in the construction of foreign industrial parks in China.

Trend 3: mergers and acquisitions, overseas mergers and acquisitions will gradually accelerate

The increasingly fierce price war in the entire vehicle market is also eroding the profitability of the parts and components industry. The requirements for vehicle manufacturers to reduce costs and ensure profit are increasingly demanding. Although the scale of China's auto parts industry is large, but it does not exert scale effect, the integration and reorganization of the auto parts industry is imperative. It can be foreseen that China's auto parts industry will enter an accelerated integration stage in the next few years. On the one hand, horizontal and vertical integration between domestic enterprises can achieve economies of scale; on the other hand, overseas acquisitions can be used to realize resources such as production and markets in the world. Optimized configuration of scope and access to advanced technology and management experience.

Trend 4: Upstream steel companies will expand the extension of the downstream industry chain

Affected by rising raw material prices, many domestic iron and steel companies are seeking new profit points to enter the downstream auto parts industry. In addition, more and more large steel companies around the world have not missed the opportunity to share the big cake in the Chinese auto parts market.

Trend 5: New energy auto parts will become investment hot spots

China has listed new energy vehicles in strategic emerging industries. The National Energy Conservation and New Energy Vehicle Industry Development Plan (2012-2020) promulgated by the state proposes that in 2020 China will form key components supporting large-scale industrialization of electric vehicles. The industrial system realizes the localization of key materials and production equipment for power batteries; it forms a large-scale enterprise group of key components. Under this situation, the establishment of new energy vehicles and key component industrial bases throughout the country has begun in full swing, and investment in domestic new energy vehicles and key components will continue to increase.

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