At present, China’s automobile and parts industry revenue scale ratio of about 1:1, and the automobile powerhouse 1:1.7 ratio still exists gap, parts industry is large but not strong, the industrial chain upstream and downstream there are many shortcomings and breakpoints. The essence of the global automotive industry competition is the supporting system, that is, the industrial chain, the value chain competition. Therefore, optimize the layout of the upstream and downstream of the industry, accelerate the integration and innovation of the supply chain, build an independent, safe and controllable industrial chain, and enhance China’s position in the global industrial chain, is the endogenous impetus and practical requirements to achieve high-quality development of automotive exports.
Parts and components exports are generally stable
1. 2020 China’s parts and components exports decline at a higher rate than that of complete vehicles
Since 2015, China’s auto parts (including key auto parts, spare parts, glass, tires, the same below) export fluctuations are not large. In addition to the 2018 exports exceeded $ 60 billion, the other years are floating up and down $ 55 billion, similar to the annual export trend of the whole car. 2020, China’s total exports of automotive products over $ 71 billion, parts accounted for 78.0%. Among them, the whole vehicle exports of $15.735 billion, down 3.6% year-on-year; parts exports of $55.397 billion, down 5.9% year-on-year, the rate of decline than the whole vehicle. Compared with 2019, the monthly difference in the export of parts and components in 2020 is obvious. Affected by the epidemic, exports fell to the bottom in February, but in March that recovered to the level of the same period last year; due to the weak demand in overseas markets, the following four months continued to go down, to August stabilized and rebounded, September to December exports continued to run at a high level. Compared with the vehicle export trend, parts and components than the vehicle 1 month earlier than the same period last year back to the level, it can be seen that the parts and components of the market sensitivity is stronger.
2. Auto parts exports to key parts and accessories
In 2020, China’s automotive exports of key parts 23.021 billion U.S. dollars, down 4.7% year-on-year, accounting for 41.6%; zero accessories exports 19.654 billion U.S. dollars, down 3.9% year-on-year, accounting for 35.5%; automotive glass exports 1.087 billion U.S. dollars, down 5.2%; automotive tires exports 11.635 billion U.S. dollars, down 11.2%. Auto glass is mainly exported to the United States, Japan, Germany, South Korea and other traditional automobile manufacturing countries, auto tires are mainly exported to the United States, Mexico, Saudi Arabia, the United Kingdom and other major export markets.
Specifically, the main categories of key parts exports are frame and brake system, exports were 5.041 billion and 4.943 billion U.S. dollars, mainly exported to the United States, Japan, Mexico, Germany. In terms of spare parts, body coverings and wheels are the main export categories in 2020, with export value of 6.435 billion and 4.865 billion U.S. dollars respectively, of which wheels are mainly exported to the United States, Japan, Mexico, Thailand.
3. Export markets are concentrated in Asia, North America and Europe
Asia (this article refers to other parts of Asia excluding China, the same below), North America and Europe is the main export market for Chinese parts. 2020, China’s key parts exports the largest market is Asia, exports of $ 7.494 billion, accounting for 32.6%; followed by North America, exports of $ 6.076 billion, accounting for 26.4%; exports to Europe 5.902 billion, accounting for 25.6 %. In terms of zero accessories, exports to Asia accounted for 42.9 percent; exports to North America 5.065 billion U.S. dollars, accounting for 25.8 percent; exports to Europe 3.371 billion U.S. dollars, accounting for 17.2 percent.
Although there is trade friction between China and the United States, China’s exports of parts and components to the United States in 2020 has declined, but whether it is key parts or zero accessories, the United States is still China’s largest exporter, both exports to the United States accounted for about 24% of the total exports of more than 10 billion U.S. dollars. Among them, the key parts of the main export products for the brake system, suspension system and steering system, zero accessories of the main exports of aluminum wheels, body and electrical lighting devices. Other countries with high exports of key parts and accessories include Japan, South Korea and Mexico.
4. RCEP regional automotive industry chain export relevance
In 2020, Japan, South Korea and Thailand are the top three countries in the RCEP (Regional Comprehensive Economic Partnership Agreement) region in terms of exports of key parts and accessories for Chinese automobiles. The export products to Japan are mainly aluminum alloy wheels, body, ignition wiring group, brake system, airbag, etc.; the export products to South Korea are mainly ignition wiring group, body, steering system, airbag, etc.; the export products to Thailand are mainly body, aluminum alloy wheels, steering system, brake system, etc.
There are fluctuations in parts import in recent years
1. slight increase in China’s parts imports in 2020
From 2015 to 2018, China’s auto parts imports showed an upward trend year by year; in 2019, there was a large drop, with imports falling by 12.4% year on year; in 2020, although affected by the epidemic, imports amounted to US$32.113 billion, a slight increase of 0.4% over the previous year, due to the strong pull of domestic demand.
From the monthly trend, the import of parts and components in 2020 showed a low trend before and after the high trend. The annual low point was in April to May, mainly due to the lack of supply caused by the spread of the epidemic overseas. Since the stabilization in June, domestic vehicle enterprises to ensure supply chain stability, intentionally increase spare parts inventory, parts imports in the second half of the year is always running at a high level.
2. Key parts account for nearly 70% of imports
In 2020, China’s automotive key parts imports 21.642 billion U.S. dollars, down 2.5% year-on-year, accounting for 67.4%; zero accessories imports 9.42 billion U.S. dollars, up 7.0% year-on-year, accounting for 29.3%; automotive glass imports 4.232 billion U.S. dollars, up 20.3% year-on-year; automotive tires imports 6.24 billion U.S. dollars, down 2.0% year-on-year.
From the key parts, transmission imports accounted for half of the total. 2020, China imported $10.439 billion in transmissions, down slightly by 0.6% year-on-year, accounting for 48% of the total, with the main import sources being Japan, Germany, the United States and South Korea. This is followed by frames and gasoline/natural gas engines. The main importers of frames are Germany, the United States, Japan and Austria, and gasoline/natural gas engines are mainly imported from Japan, Sweden, the United States and Germany.
In terms of imports of zero accessories, body coverings accounted for 55% of the total imports of $5.157 billion, an increase of 11.4% year-on-year, the main importing countries are Germany, Portugal, the United States and Japan. Vehicle lighting device imports of $1.929 billion, up 12.5% year-on-year, accounting for 20%, mainly from Mexico, the Czech Republic, Germany and Slovakia and other countries. It is worth mentioning that, with the accelerated advancement of domestic intelligent cockpit technology and supporting, the import of related zero accessories is narrowing year by year.
3. Europe is the main import market for parts
In 2020, Europe and Asia are the main import markets for China’s automotive key parts. Imports from Europe amounted to $9.767 billion, a slight increase of 0.1% year-on-year, accounting for 45.1%; imports from Asia amounted to $9.126 billion, down 10.8% year-on-year, accounting for 42.2%. Similarly, the largest import market for zero accessories is also Europe, with imports of $5.992 billion, up 5.4% year-on-year, accounting for 63.6%; followed by Asia, with imports of $1.860 billion, down 10.0% year-on-year, accounting for 19.7%.
In 2020, China’s main importers of key automotive parts are Japan, Germany and the United States. Among them, imports from the United States grew significantly, with a year-on-year increase of 48.5%, and the main imported products are transmissions, clutches and steering systems. Parts and accessories imports from countries mainly Germany, Mexico and Japan. Imports from Germany 2.399 billion U.S. dollars, an increase of 1.5%, accounting for 25.5%.
4. In the RCEP agreement region, China has a high dependence on Japanese products
In 2020, Japan, South Korea, Thailand ranked the top three countries of China’s imports of key auto parts and accessories from the RCEP region, with the main imports of transmissions and parts, engines and bodies for 1~3L displacement vehicles, and a high dependence on Japanese products. In the RCEP agreement region, from the import value, 79% of the transmission and small car automatic transmission imports from Japan, 99% of the car engine from Japan, 85% of the body from Japan.
Parts development is closely related to the whole vehicle market
1. Parts and components enterprises should walk in front of the whole car
From the policy system, the domestic automotive industry policy mainly around the vehicle to develop, parts and components enterprises only play a “supporting role”; from the export point of view, the independent brand car wheels, glass and rubber tires in the international market to occupy a place, while the high value-added, high profitability of the core components development lags behind. As a basic industry, auto parts involve a wide range of industrial chain is long, no industry endogenous drive and collaborative development, it is difficult to make a breakthrough in core technology. It is worth reflecting that in the past, the mainframe plant exists simply to pursue the one-sided understanding of the market dividend, and upstream suppliers only maintain a simple supply and demand relationship, did not play a role in driving the front-end industry chain.
From the global layout of the parts industry, the major OEMs as the core radiation around the world has formed three major industry chain clusters: the United States as the core, by the U.S.-Mexico-Canada agreement to maintain the North American industry chain cluster; Germany, France as the core, the European industry chain cluster of radiation in Central and Eastern Europe; China, Japan, South Korea as the core of the Asian industry chain cluster. To win the differentiation advantage in the international market, the autonomous brand car enterprises need to make good use of the industry chain cluster effect, pay attention to the synergy of the upstream supply chain, increase the front-end design, research and development and integration efforts, and encourage strong independent parts enterprises to go to sea together, even before the whole car.
2. Autonomous head suppliers usher in a period of development opportunities
The epidemic has short-term and long-term impact on global auto parts supply, which will benefit domestic head enterprises with global production capacity layout. In the short term, the epidemic repeatedly drags down the production of overseas suppliers, while domestic enterprises are the first to resume work and production, and some orders that cannot be supplied in time may be forced to switch suppliers, providing a window period for domestic parts companies to expand their overseas business. In the long run, in order to reduce the risk of overseas supply cuts, more OEMs will be independent suppliers into the supporting system, domestic core parts import substitution process is expected to accelerate. The automotive industry both cycle and growth of the dual attributes, in the context of limited market growth, the industry structural opportunities can be expected.
3. “New four” will reshape the pattern of the automotive industry chain
At present, four macro factors, including policy guidance, economic foundation, social motivation and technology drive, have accelerated the breeding and promoted the “new four” of the auto industry chain – power diversification, network connectivity, intelligence and sharing. Host manufacturers will produce customized models according to different mobile travel needs; platform-based production will rapidly iterate vehicle appearance and interior; and flexible production will help maximize production line efficiency. The maturity of electrification technology, 5G industry integration, and the gradual realization of highly intelligent shared driving scenarios will deeply reshape the pattern of the future automotive industry chain. The three electric systems (battery, motor and electric control) driven by the rise of electrification will replace the traditional internal combustion engine and become the absolute core; the main carrier of intelligence – automotive chip, ADAS and AI support will become the new point of contention; as an important component of the network connection, C-V2X, high precision map, autonomous driving technology and policy synergy Four major driving factors are missing.
After-market potential provides development opportunities for parts companies
According to OICA (World Organization of Automobile), the global car ownership will be 1.491 billion in 2020. Growing ownership provides a strong business channel for the automotive aftermarket, meaning there will be more demand for after-sales service and repair in the future, and Chinese parts companies need to seize this opportunity tightly.
In the U.S., for example, as of the end of 2019, there were about 280 million vehicles in the U.S.; the total vehicle mileage in the U.S. in 2019 was 3.27 trillion miles (about 5.26 trillion kilometers), with an average vehicle age of 11.8 years. The growth in vehicle miles driven and the increase in average vehicle age is driving the growth in aftermarket parts and repair and maintenance spending. According to the American Automotive Aftermarket Suppliers Association (AASA), the U.S. automotive aftermarket is estimated to reach $308 billion in 2019. The increased market demand will benefit most from companies focusing on automotive aftermarket services, including parts dealers, repair and maintenance service providers, used car dealers, etc., which is good for China’s auto parts exports.
Likewise, the European aftermarket has great potential. According to the European Automobile Manufacturers Association (ACEA) data, the average age of European vehicles is 10.5 years. The current market share of the German OEM system is basically equal to that of independent third-party channels. In the market of repair and replacement services for tires, maintenance, beauty and wear and tear parts, the independent channel system accounts for at least 50% of the market; while in the two businesses of mechanical and electrical repair and sheet metal spraying, the OEM system occupies more than half of the market. At present, German imports of auto parts mainly from the Czech Republic, Poland and other Central and Eastern European OEM suppliers, imports from China to the main products such as tires, brake friction pads. In the future, Chinese parts companies can increase the expansion of the European market.
The auto industry is experiencing a century of development of the largest window period, as the industry chain upstream and downstream auto parts industry moved with it, in the integration, restructuring, the dynamic process of competition, the need to grasp the opportunity to strengthen themselves and make up for the shortcomings. Adhere to the independent development, take the road of internationalization, is the inevitable choice of China’s auto industry chain upgrading.
Post time: Nov-25-2022