Auto parts industry is facing "big reshuffle" supporting companies bear the brunt

The newly-promulgated State Council revitalization automobile industry plan proposes the goal of industrial restructuring. Through mergers and reorganizations, it forms two to three large-scale enterprise groups with production and sales scale of over 2 million vehicles, and cultivates 4 to 5 automobile companies with production and sales scale of more than 1 million vehicles. In the group, the number of auto companies with production and sales scale of more than 90% of the market share has been reduced from the current 14 to less than 10. Affected by this, the intrinsic supporting systems of all vehicle manufacturers will undergo major adjustments, and this will be an earthquake for the auto parts industry.

In this merger and reorganization that will sweep the automobile industry, the suppliers of those supporting products with a single product and low technological content will bear the risk of being eliminated first. Chen Wenkai, president of Gasgoo.com, the leading e-commerce platform for the automotive industry in China, said that the survival of the fittest in the supporting field is in full swing. Some privately-owned parts and components companies with strong technical and financial resources are expected to enter the supporting system and form a large group of auto parts and components. Some traditional small and medium-sized supporting enterprises urgently need to make adjustments in the market and product structure.

Under the current situation, how can small and medium-sized supporting enterprises achieve effective breakthrough? Chen Wenkai suggested that enterprises try to export on the one hand and expand the aftermarket on the other. The long-term supporting experience allows these companies to accumulate mature manufacturing experience and product quality, which lays the foundation for companies to explore overseas markets and aftermarket. According to research from Gasgoo.com, as many as 86% of international matching buyers tend to choose companies with domestic experience, and after-sales buyers are more interested in supporting suppliers.

The overall international auto market is sluggish. In order to ease cost pressures, European and American autos will inevitably increase their purchasing proportions to low-cost countries. Data show that the current aftermarket is being valued by suppliers and suppliers, and purchases from China tend to increase. In the past three months, most of the world's top ten suppliers have been engaged in procurement activities at Gasgoo. The procurement category is heavily concentrated in the aftermarket.

Compared with the above-mentioned enterprises whose supporting status is in jeopardy, the parts suppliers of new energy vehicles are expected to usher in “spring”, and the industrial planning clearly puts forward the promotion of the rapid industrialization of new energy vehicles and parts. The good news from the policy level will undoubtedly boost The confidence of these parts and components companies, and can actively guide traditional enterprises to focus on new energy technologies, new products, new processes and investment, this emerging power is expected to become a major highlight of China's auto industry in the next few years.

The automobile industry planning also proposes to speed up the construction of auto and auto parts export bases. Chen Wenkai stated that with the introduction of the promotion of automobile and parts export policy, domestic parts and components companies are expected to achieve export recovery in the third and fourth quarters of 2009. Purchasing will also usher in a peak. “The current period is an important adjustment period for the production of enterprises. It is also the period for the psychological adjustment of enterprises. Enterprises should focus on the development of the next year or three years, make major strategic adjustments in R&D, production, and management, and strive to realize products and customers. And the diversification of the market, especially the active development of the international market, enables the company to get through this period of adjustment smoothly,” said Chen Wenkai.

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