China's parts companies are plagued by many factors

Since China's accession to the WTO, China's auto market has developed rapidly, with 18 million units of production and sales ranking firmly in the world's largest auto consumption market. The huge amount of car ownership in China provides a stable market for the survival and development of auto parts companies. A large number of Chinese auto parts enterprises have made great strides with their own efforts or driven by foreign investment and joint ventures.

In 2010, the total sales of auto parts in China increased by approximately 44%, which was higher than the growth rate of 37% of total vehicle sales, reaching 1.644 trillion yuan. It is expected that the total sales in 2011 will reach 2 trillion yuan. The vast market space and high industry profits have attracted a large number of foreign-funded enterprises influx. Most of the top 20 auto parts suppliers in the world have entered the Chinese market. Chinese parts companies are facing challenges from major global parts and components companies. Cruel competition with domestic peers.

In the 10 years of the new century, with the opening up of China’s auto market and the acceleration of global procurement integration, major multinational auto companies have set up R&D centers and global procurement centers in China. The Chinese auto parts market ushered in rare opportunities and challenge.

At present, there are more than 20,000 domestic parts and components companies in China, including nearly 8,000 auto parts enterprises above designated size. However, there are few real scale effects, industries are very fragmented, and industry competitiveness is mainly reflected in cheap labor and resource costs. Locally-owned parts and components companies generally have inde- pendent R&D and production capabilities, low level of operation and management, and relatively low technological content, and products tend to converge. In particular, the core technologies of the main car assembly and key components are lacking. Local parts and components companies account for 80% of the total number of parts and components companies, while sales only have 20%, and 90% are concentrated at the low end. At the same time as the rapid development of the market, we have not established a scientific and comprehensive system of supporting procurement standards. The lack of core technologies, the low level of standardization, and the risks from the price and transfer of automakers have hampered the pace of development of domestic parts and components companies. In particular, the development situation of small and medium-sized parts and components companies is more serious and worrying.

It should be noted that the current pattern of the international auto parts industry is pyramidal. The spire is the system supplier, the tower body is the module supplier, the base is the parts supplier, the corresponding profit distribution is from high to low, and China's auto parts industry as a whole At the bottom of the tower, the profit margin is low and survival is under pressure. The gap between domestic parts and brand brands in terms of production consistency and reliability and foreign companies is very obvious, and industry standards are not perfect. Although our mechanical parts have developed capabilities, they have poor reliability, materials processing, and heat treatment are inferior to foreign brands, and quality management needs to be improved. At the same time, there have been no breakthroughs in the fuel system and brake system technologies. The production level has not reached the vehicle equipment requirements and it has basically been controlled by foreign parties. Even if more than 60 domestic listed component manufacturers have begun to take shape, there is a large gap in manufacturing technology. The industry as a whole still lags behind the international advanced level for at least 10 years. At this stage, the average R&D investment of China's spare parts enterprises accounted for only 1.4% of sales revenue, far below the international average of 6.6%. Therefore, relying solely on the existing technology level, if we really want to step into the multinational global procurement supply chain system, there are still some difficulties.

Second, it is more common for vehicle companies to drive down the price of accessories and transfer market risks to parts suppliers. In automobile zero-setting facilities, automakers have the absolute right to speak. It is particularly serious for companies that have lower technological barriers and lower entry thresholds to want to lower the price of goods. The parts and components companies are faced with rising raw material prices and rising labor costs. They are also under pressure from vehicle manufacturers. Most companies suffer from this “delayed battle” without gun smoke, but they cannot but abandon R&D investment. Struggling to support. This year's slowdown in sales and sales in the domestic automotive market has slowed down, and the trend toward lower prices for parts and accessories has intensified. As for small and medium-sized parts and components companies that have already been facing difficult financing loans, it is even worse. Many of the SMEs' capital chain breakdown pressures are comparable to the 2008 financial crisis, and the prospects are worrying.

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