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2021

The Development Milestones of the Automotive Components Industry

　　Corporate Restructuring

　　Major automakers around the world are rapidly reforming their supply systems, adopting global production and global procurement—shifting from sourcing from multiple auto parts manufacturers to procuring from a small number of system suppliers; moving from purchasing individual auto parts to modular procurement; and transitioning from domestic sourcing to global sourcing. The transformation of OEM procurement systems requires auto parts manufacturers to continuously adapt to these changes. This not only calls for auto parts producers to strengthen their capabilities and enhance their product development expertise, achieving system-level development and system-level supply, but also demands that they shorten development cycles and deliver high‑quality, cost‑effective products. This shift has accelerated the pace of mergers, acquisitions, and restructuring within the global auto parts industry.

　　Chain-based Development

　　Market concentration has risen compared to previous years. Vehicle manufacturers are increasingly adopting modular and system-based procurement approaches, while collaboration among suppliers has grown ever closer. As a result, the global automotive parts supplier ecosystem is gradually evolving into a pagoda‑shaped structure, with Tier 1 suppliers taking full responsibility for managing the entire supply chain—leading to more standardized cooperation across supply chains. Companies that have developed along these lines are at the pinnacle of their respective markets, capturing 80% of the market and dominating the high‑end segment. The CEO of a parts manufacturer remarked: “With the rapid growth in vehicle production and sales, parts companies have encountered an unprecedented opportunity—if they fail to jump on this fast train, they’ll fall behind and be weeded out.”

　　Technological advancement

　　Major automotive parts manufacturers are increasingly applying technologies from aerospace, aviation, and electronics to vehicle components and assemblies. Safety technology, electronic technology, energy‑saving technology, and environmental protection technology have all been widely adopted in automobiles. In particular, new technologies—especially those represented by electronic information technology—are not only extensively used in automotive products but have also expanded into every aspect of development, design, prototyping, production, and management; they are no longer confined to individual auto parts but have been integrated into complete systems and assemblies.

　　When component manufacturers establish R&D centers, they can move “fast” to meet urgent market demands and rapidly develop new products; they can be “precise” by staying closely aligned with the market and achieving “localization”; and they can be “innovative” by incorporating more cutting‑edge technologies into production, ensuring quality while reducing costs. In fact, in some cases, it’s component manufacturers that are actually leading the way for automakers.

　　Globalization

　　To reduce costs and capture market share, many multinational automotive parts companies have been rapidly expanding their global operations. European automotive parts manufacturers are increasingly investing overseas and engaging in international production; North American auto parts makers, meanwhile, are pouring capital into Europe, eager to tap into the Eastern European market as well. Japanese automakers are also continuously establishing their own branch production facilities around the globe. The emerging Asian market has become the focal point of competition among major multinational automotive parts companies, with China proving to be a particularly crucial battleground.