Auto parts industry supply and demand, profit movement reasons and development drivers, market size
Auto parts industry supply and demand, profit movement reasons and development drivers, market size.
1、Industry characteristics
Auto parts industry and the vehicle manufacturing industry has a close relationship, its industry boom degree and the auto industry basically remain consistent, the vehicle industry and the national economic development cycle is closely related to the economic cycle is highly sensitive, so the auto parts industry by the downstream vehicle industry, the national economic cycle fluctuations and has a certain degree of cyclicality. When the macro-economic growth phase, the level of consumption of the population, automotive production and sales growth, driving the auto parts industry production and sales; conversely, with the macroeconomic decline, automotive consumption is suppressed, which in turn affects the auto parts industry production and sales situation.
Auto parts industry is an important part of the automotive industry, is an important basis for the development of the automotive industry. Auto parts manufacturing enterprises are generally built around the vehicle manufacturers, so it can form a large-scale industrial base. At present, China has gradually formed six major industrial clusters - the Yangtze River Delta industry cluster, the southwest industry cluster, the Pearl River Delta industry cluster, the northeast industry cluster, the central industry cluster, the Bohai Sea industrial cluster. Industrial scale, clustering characteristics are increasingly prominent. Therefore, the auto parts industry has regional characteristics.
Auto parts industry does not have obvious seasonal characteristics. However, the production and sales of auto parts industry is influenced by the production and sales of the downstream vehicle industry. Domestic and foreign OEMs usually increase production plans in the fourth quarter of each year to respond to the demand of the Spring Festival or Christmas holiday auto sales market, resulting in higher production in the fourth quarter of auto parts enterprises relative to other quarters.
Car ownership in China from 2016-2022
Source: Phua Youzhi
2、The market supply and demand situation and reasons for change
Market demand, with the international division of labor in the automotive industry chain, China's auto parts industry has gradually become an important production base for the international auto parts industry, and the domestic vehicle supporting demand and foreign vehicle supporting demand together constitute the market demand for China's auto parts industry.
Affected by a variety of factors, the global automotive industry in 2018 there is negative growth. China has successively introduced relevant policies to support the development of the auto industry, and the auto industry has gradually recovered in general. From the perspective of data such as the number of car ownership per 1,000 people and disposable income of residents, there is still a large space for the development of China's auto market and auto parts market.
Market supply, China's auto parts suppliers to basically meet the domestic vehicle supporting and after-sales market demand, based on the annual export of a considerable scale of parts and components products. With the promotion of product upgrading and technological innovation, the role of China's auto parts industry in the global division of labor has become increasingly important, and the share in the global market will also be improved.
3、Favorable factors
(1) China's industrial policy to support the development of automobile manufacturing and related industries
In recent years, the country has introduced a series of industrial policies to build a good policy environment for the development of automobile manufacturing and related industries.
China has promulgated the "Medium and Long-term Planning for the Automotive Industry", "Regulations on Investment Management in the Automotive Industry", "Implementation Plan for Further Optimizing Supply to Promote Steady Growth of Consumption and Promote the Formation of a Strong Domestic Market (2019)", "Guidance Catalogue for Industrial Structure Adjustment (2019)", "Development Plan for New Energy Vehicle Industry (2021-2035)" and other policies to encourage the high-quality development of the automotive industry, consolidate Parts and components supporting system, improve and consolidate the advantages of the domestic industry chain, promote the flow of automobile transactions, meet the demand of residents for automobile consumption, promote the transformation and upgrading of China's automobile industry, increase the discourse of China's automobile industry, and develop towards a world automobile power.
(2) China's auto parts market competition pattern adjustment
With the increase in domestic automobile penetration, automobile production and sales show a downward trend, the stock market competition is fierce, resulting in the survival of small and medium-sized parts enterprises in the auto parts industry is facing greater challenges, the industry is facing a reshuffle of the situation. Technology, quality leading enterprises will survive and grow in the predicament, some small-scale, lack of leading products, low production efficiency, lack of competitiveness of enterprises will face elimination.
(3) after the epidemic era China's auto parts industry chain to further enhance the status
In recent years, as the European and American automotive industry has entered a mature period, the market tends to saturate, the growth rate is relatively slow, international OEMs based on the development of emerging markets, optimize the industrial chain, control production costs, together with the original auto parts supply manufacturers to invest in the Asia-Pacific region to build plants; at the same time, China, Japan and South Korea to the automotive industry as a pillar industry, cultivating a large number of local parts enterprises. At present, the Asia-Pacific region has become the global auto parts production center.
In the past three years, in the global pandemic of New Guan Pneumonia, China has achieved a major strategic result that has caught the world's attention, successfully controlling the epidemic and taking the lead in the world to resume work and production. The rapid recovery of China's auto parts industry chain has consolidated and enhanced the position of China's auto parts industry in the global auto industry and strengthened the confidence of international partners in Chinese companies. In the post-epidemic era, the position of China's auto parts industry in the global auto industry has been enhanced, providing more development opportunities for domestic auto parts enterprises.
4、Industry profit level and reasons for change
The trend of changes in the profit level of the auto parts industry is mainly affected by the dominant position of vehicle manufacturers in the industry chain, downstream vehicle market price changes, upstream raw material price fluctuations and the management level of parts enterprises. In general, the vehicle manufacturers are in a dominant position in the industry chain and have a strong ability to pass on costs to upstream supporting manufacturers, which determines the profit level of upstream supporting parts enterprises to a large extent.
The new car market at the beginning of the profit margin is larger, for its supporting parts can also reach a higher level of profitability. As new models continue to be launched, the role of the original model replacement gradually increased, thus forcing the original model to reduce prices, supporting the price of parts and components down accordingly, making the profitability of auto parts manufacturers by the stage of squeeze. Auto parts industry on the lack of control over upstream raw material prices, raw material price fluctuations on the parts production enterprises cost control and operational risk control ability also put a certain degree of test.
With the concept of lean production is widely adopted by vehicle manufacturers, vehicle manufacturers tend to use zero inventory procurement management strategy to reduce inventory on the occupation of funds, while requiring supporting parts enterprises to achieve timely delivery, so that supporting parts enterprises face greater pressure on production management and capital operations, thus affecting the efficiency of capital use and profit levels.
5, adverse factors
(1) fuel car production and sales decline
The decline in domestic automobile production and sales from 2018 to 2020 is mainly caused by the decline in the production and sales of fuel vehicles. Fuel car parts can be divided into internal combustion engine related parts and non-internal combustion engine related parts according to whether they are used in fuel car engines and closely matched systems. In the fuel car production and sales decline, internal combustion engine-related parts will be directly and adversely affected, because the fuel car still occupies the majority of automobile production and sales, together with other parts of the internal combustion engine for non-related parts of the car is also affected to some extent. Fuel car production and sales decline, making the auto parts inventory market competition more intense. When the pressure brought by the decline in vehicle production and sales is transmitted to the upstream parts supply system, the parts enterprises with weaker technology and innovation ability will face greater challenges.
(2) Rising labor cost
In recent years, the structural contradiction of labor supply and demand and the accelerated aging of population have led to the rise of labor cost in China, and the labor cost is accelerating. According to the data from the National Bureau of Statistics, the annual average wage of manufacturing workers in China has continued to rise, from 59,470 yuan/year in 2016 to 92,459 yuan/year in 2021.
The production of automotive forging parts still requires more operating workers, and labor costs and expenses account for a higher percentage. The labor costs continue to rise, which is not conducive to the industry to maintain its cost advantage.
(3) Difficulty in recruiting operation workers
According to the Ministry of Human Resources and Social Security, the current employment structure contradiction in China is highlighted by the coexistence of difficulty in employment and difficulty in recruitment. There is a general shortage of skilled workers in China, and the employment multiplier for skilled workers has remained above 2 for a long time. The degree of automation in enterprises is generally not high, and more manual operations are still needed, and workers need to master certain operating skills. The difficulty in recruiting workers is especially manifested in the difficulty in recruiting enough young operators, which leads to the general age of skilled workers in enterprises and is not conducive to the transfer of operational skills.