90% of auto parts companies will be eliminated: the main reason for lack of technology

The top 100 auto parts companies in China for 12 consecutive years have lost some celebrations this year, replacing the heavy worries about the future. "One common phenomenon among the top 100 component companies this year is that the profit margin has dropped significantly." Li Qingwen, chairman of China Energy Automotive Communications Group and president of China Automotive News, pointed out.

On the other hand, the overall performance of the auto market this year is good. According to the data of the China Automobile Association, from January to November, China's automobile production and sales reached 21.43 million and 210.791 million, an increase of 7.21% and 6.14%. Among them, the growth rate of production and sales of passenger cars is around 10%, which is the decline in the overall growth rate of commercial vehicles.

An important reason for the decline in the profitability of component companies is that parts suppliers that lack technology are losing customers. “In the past, independent brands were the biggest customers. Now they are gradually turning to international parts suppliers. The joint venture system is difficult to enter and is being abandoned by the OEMs.” On December 9, at the top 100 parts and components meeting, Talking about the status quo of domestic parts development, Wang Ruixiang, president of China Machinery Industry Federation, expressed his concerns fiercely.

Wang Ruixiang believes that the independent parts and components enterprises have been abandoned in the original sandwich layer, indicating that the entire auto parts industry has reached a critical period. Parts and components are the basis, but at present, domestic independent parts have been difficult to support the development of the whole vehicle, especially in high-tech and high value-added products, when it is necessary to change.

Wang Ruixiang predicts that in the next 5-6 years, independent parts will be eliminated by 90%. "There are about 200,000 parts and components enterprises, and more than 13,000 in size. After 2020, there may be only about 2,000 or so. Most of them will be Be eliminated."

Slow progress in parts

In recent years, with the significant improvement in the quality and technical level of independent brand products, independent brand automakers are increasingly inclined to adopt international brand parts and use this as a product selling point.

For example, Chery Ariza 3, which has just been listed, uses more than a dozen well-known foreign suppliers such as Bosch in Germany and Valeo in France. For example, when the Great Wall's main model, the H6, was publicized, it also told consumers that its parts suppliers were strong. "The domestic spare parts suppliers are only limited to the body chrome-plated strips, simple interior fittings and other aspects. On the core components, it is difficult to enter the opportunity." Wang Ruixiang said.

"Fundamentally, the biggest advantage of independent parts companies is the price/performance ratio, but there is still a gap in technology," said Guo Konghui, an academician of the Chinese Academy of Engineering. In the field of basic peripheral parts, such as knuckle, wheel hub, navigation, reversing radar, the level of domestic independent parts can be compared with the international standard, but in the core technical fields of body controller, brake system, steering system, engine, automatic transmission, etc. There is still a big gap with foreign capital.

At the same time, however, domestic independent brand vehicle manufacturers have entered a new stage of development with consumption upgrades. "The implementation of the National Three Guarantees Act, as well as the consumer's demand for quality to force the whole vehicle to improve quality, this also puts new demands on the parts and components. However, when the whole vehicle is moving forward rapidly, the parts and components are not Keep up." Wang Ruixiang pointed out.

The lack of technical independent parts and components gradually fell into the fate of being abandoned by independent automakers, and it is obviously more difficult for foreign brands and even joint venture brands to enter their supply systems. According to industry insiders, although the joint venture claims that the localization rate is as high as 95%, in fact, more than 80% of the suppliers are from the original parent brand system. When they are domestically produced, they follow the whole vehicle to build factories in China, and they are really from domestic suppliers. Very few.

Reflected in the company's performance, it is the continued decline in the profit margin of independent parts companies. Ping An Securities said in the research report that the profit growth rate of the auto parts industry in 2013 has gradually flattened, and the profit rate has been declining year by year. In the first eight months of 2014, the profit increased by 20.6%, which was lower than the 21.6% increase last year.

90% of parts and components will be eliminated

A local parts supplier said that an important reason for the inability of local parts manufacturers to advance in technology is that they lack investment in R&D and remain at the original stage. “I asked how GM entered their supply chain. Their response was that they had to spend 10%-20% of their profits each year as research and development expenses. If they persist for 3-5 years, they will be able to compete with Taiwan.”

But to make such a huge share of profits, for most local parts manufacturers, it is still a very difficult thing. "Our own profit is thin, and the family is weak. How can it be put into research and development like the powerful international component giants, forming a vicious circle." The above-mentioned component suppliers said.

By 2020, the development of China's own brand cars will face the most important historical stage. At the same time, parts and components will also usher in an important point of adjustment. "As experienced in the United States and other developed countries, parts and components will be further integrated to form a large-scale operation. In addition, how to keep up with the development of automobile vehicles and how to build and develop parts brands are strategic issues. "Wang Ruixiang said.

In the realm of reality, some local component manufacturers are breaking through in a variety of ways. Among them, such as Shengrui Transmission and Longsheng Technology, they insist on independent development and master core technologies. There are also supply chains such as Junsheng Electronics and Shandong Yongtai that have quickly entered foreign brands by acquiring foreign parts companies.

“M&A is the quickest way at present, but if you want to be able to control the acquired company, it will become a burden.” Zhang Qiansen, chairman of Zhejiang Qianjiang Spring, said. Qianjiang Spring had planned to acquire a wholly-owned spring manufacturing plant in the United States, but due to cultural differences, it eventually gave up.

"The car's strong national dream needs to be based on the spare parts industry, otherwise it is a castle in the air, and people are crazy about it." Academician Guo Konghui bluntly said that the current state should pay more attention to the development of parts and components, and build a strong foundation, rather than just keen on the development of the whole vehicle.

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