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2021

The Competitive Landscape of the Automotive Components Industry

As the foundation of the automotive industry, automotive components are a crucial factor in sustaining the industry’s continued, healthy development. With intensifying competition in the automotive components sector, mergers, acquisitions, and capital operations among large automotive component manufacturers are becoming increasingly frequent. Domestic leading automotive component producers are placing ever greater emphasis on market research, particularly in-depth studies of the business environment and evolving customer needs. In particular, the vigorous and rapidly advancing efforts currently underway in the automotive industry to foster independent R&D and innovation are even more reliant on a robust components ecosystem for support.

　　As competition in the automotive components industry continues to intensify, mergers, acquisitions, and capital operations among major automotive component manufacturers are becoming increasingly frequent. Domestic leading automotive component producers are placing ever greater emphasis on market research, particularly in-depth studies of the business environment and evolving customer needs. As a result, a large number of outstanding domestic automotive component brands have risen rapidly, gradually emerging as industry leaders—see the “In-Depth Market Research and Investment Prospects Forecast Analysis Report on China’s Automotive Components Manufacturing Industry” for more details!

　　Domestically produced auto parts are primarily used in vehicles bearing independent brands, yet their market share remains low. According to data from the Ministry of Commerce, foreign capital controls the vast majority of the auto parts market, with sales revenue from domestically produced parts accounting for only 20%–25% of the entire industry. More than 75% of the auto parts manufacturers in the industry have foreign investment backgrounds; among these foreign suppliers, wholly foreign-owned enterprises account for 55%, while Sino‑foreign joint ventures make up 45%. Domestic auto parts are mainly used in vehicles with independent brands and enjoy a relatively small market share. In high‑tech fields such as automotive electronics and engine components, the market share held by foreign investors reaches as high as 90%. Specifically, in the production of core components like electronic fuel injection systems, engine management systems, ABS and airbags, as well as automatic transmissions, foreign‑owned enterprises account for 100%, 100%, 91%, and 69% of output, respectively.

　　The trend of automotive parts manufacturers separating from complete vehicle manufacturers and forming specialized parts groups is rapidly gaining momentum as a global phenomenon. Internationally renowned automakers and parts suppliers have almost all established joint ventures or wholly owned subsidiaries in China, with the number of technology‑intensive joint ventures exceeding 1,000. A growing number of domestic automotive and parts enterprises—characterized by high technological content, strong profitability, and large scale—are steadily emerging. As the global automotive industry begins to adopt a “global procurement” strategy for components and as international multinational automakers pursue localization strategies, the domestic market will face a substantial shortage of auto parts and accessories. By 2010, the domestic output value of China’s automotive parts industry is expected to reach approximately 700 billion yuan.

　　Although the global economy has experienced an overall downturn over a certain period, based on actual procurement practices over the past four to five years, the results of Chinese procurement have not been as optimistic as many companies had predicted—nearly 80% or more of companies have failed to meet their targeted procurement volumes and cost-reduction goals. With the appreciation of the RMB and the decline in export tax rebate rates, China’s procurement sector is facing even greater pressure, and international buyers are increasingly turning their attention to other countries and regions, such as Vietnam, India, Thailand, and Australia. From the above, it is clear that China’s automotive components industry will continue to accelerate its growth amid the current financial crisis.