Domestic auto parts short boards need to be replaced

In the value chain of the global automotive industry, the value of auto parts accounts for 50% of the total value of the entire industrial chain. Therefore, the industry has the following saying: "The parts are strong, the auto industry is strong; the parts and components are weak, and the auto industry is weak." After China jumped to become the world's largest automobile production and sales country, China's fragile auto parts industry has become a hidden danger in the development of the auto industry.

An old car man who has studied the automotive industry for more than 30 years lamented that China’s basic industry is an important reason that causes the level of auto manufacturing to fail. It needs to be improved.

Judging from the current situation, there has been no substantial change in the scattered, chaotic, and miscellaneous fundamentals of local auto parts, and even in some respects, the technical distance has increased.

Fu Yuwu, executive vice chairman and secretary-general of the Chinese Society of Automotive Engineers, believes that the reason is that the country lacks a clear strategy for the development of the parts and components industry.

In the past ten years, due to no stock limit, the number of foreign-funded parts and components companies that entered China solely by means of wholly-owned investment has greatly exceeded that before the accession to the WTO. Not only that, but some domestic-funded auto parts companies that have had higher reputation and certain competitive strength in the industry have also joined the wave of joint ventures, and have disappeared in subsequent developments. Taking automobile air conditioners as an example, at present, Japan Denso and Delphi have taken up most of the market for automotive air conditioners in China, and the relatively well-known auto air conditioning companies in China have long been hard to find.

At present, foreign capital controls most of the market share of auto parts. The sales revenue of domestic auto parts only accounts for 20% to 25% of the whole industry. Auto parts manufacturers with foreign investment background account for more than 75% of the whole industry. Among the suppliers, wholly-owned enterprises accounted for 55% and Sino-foreign joint ventures accounted for 45%.

Foreign-invested vehicle companies almost completely exclude self-owned brand auto parts suppliers. According to the survey, it is difficult for Chinese-funded enterprises to enter the first-tier supplier system of foreign-invested vehicle companies. Among them, 100% of the parts suppliers selected for the US-based model in China are foreign-funded enterprises, while the German, Japanese, and domestic auto brands have reached 88.9%, 89.5%, and 52.8%, respectively.

Therefore, the customers of local parts companies are mainly concentrated in self-owned brand auto companies. However, with the increase in the demand for parts and components for self-branded car companies in the development of mid- to high-end vehicles, the focus of procurement is often placed on foreign auto parts companies. The days of local parts companies have not been good enough.

From the perspective of vehicle manufacturers, the manufacturing capabilities of local component suppliers still need to be improved. According to a technology executive at Great Wall Motors, taking the core energy transmission module of new energy vehicles as an example, key components such as motors and electronic control systems are monopolized by international giants. Although domestic companies are researching and developing, it is difficult to meet the requirements of vehicle manufacturers.

Ren Yong, deputy general manager of Chongqing Changan Automobile Group New Energy Automobile Company, told reporters that at present domestic auto parts companies need to improve their product reliability and consistency, mainly battery consistency.

The country’s insufficient investment in the auto parts industry has become one of the factors restricting the enhancement of R&D capabilities of local parts and components companies. According to the "China Automotive Industry Yearbook" statistics, from 1986 to 2009, China's auto industry total investment 759 billion yuan, of which 509.3 billion yuan investment in vehicles, and spare parts investment is only more than 200 billion yuan. In developed countries, the investment in parts and components is usually larger than the investment in complete vehicles. The investment ratio of complete vehicles and parts and components should be 1:1.3 to 1:2, but at present China is only 1:0.3.