Research and Analysis of China's Auto Parts Supporting System

At present, the production technology of China's parts and components enterprises on certain small parts and components is relatively advanced and highly competitive. Although it is difficult to be a first-class supporting supplier, it is entirely possible to be a second- and third-tier supporting supplier.

International buyers' preference for Chinese auto parts, the national "Eleventh Five-Year Plan" positioning for comprehensively enhancing the competitiveness of the auto parts industry has brought great opportunities for the development of auto parts in China, and China's auto parts industry is at the forefront. In the new round of development.

However, rising raw material prices have increased cost pressures, and the strong competition of multinational giants has made many domestic parts and components companies difficult to survive. The strict quality certification system, strict product supporting system, and high product technology threshold of international automobile manufacturers have brought a severe test to local parts and components companies.

At present, the domestic auto parts supporting system mainly has the following characteristics:

1. Supporting system for indigenous parts and components companies

At present, the world’s automotive multinational corporations have established joint venture companies in China, and their supporting parts and components companies have also entered China in succession. Some multinational parts and components companies, such as Delphi, Visteon, Bosch, and Denso, have established nearly 500 parts and components companies in China through joint ventures, holdings, and wholly-owned operations.

Due to the advanced management, leading technologies and high product quality of multinational parts companies in Europe, America, Japan and Korea, the Chinese side of the joint venture vehicle company lacks the right to speak because it does not possess core technology. In the procurement of parts and components, it is often controlled by the foreign party. Therefore, the products of foreign-controlled and wholly-owned parts and components enterprises are often the first choice, especially in the field of high value-added, high-tech parts and components.

At present, the domestic parts supply system is divided into three types: Japanese and Korean models, European and American models, and local models. The Japanese-Korea model is characterized by a relatively strong closure, and vehicle companies and parts companies are closely integrated. The degree of openness of European and American companies is much higher, but the procurement of key components will still be biased toward Bosch and other European and American companies.

The tightness of the supporting system of multinational companies has its own objective reasons. Many vehicle companies have developed synchronously with supporting manufacturers when they first designed models. Long-term technical cooperation, mutual trust and connected culture make their relationship increasingly closer, and it is not easy for outsiders to break this barrier. .

Therefore, compared with international predators, in addition to its own scale, capital, technology and foreign capital compared to the disadvantage, the local manufacturers are still facing the system integrity, high barriers to the dilemma.

According to report, in the field of commercial vehicles and passenger cars, parts and components for complete vehicle companies are mainly based on local enterprises, while in the field of cars, especially in the middle and high class cars, although the localization rate of some models has reached 80%, Even more than 90%, but mainly based on the product mix of joint ventures and wholly-owned enterprises in China; In the areas of automotive electronics and engine parts and components, foreign-funded enterprise parts and components have accounted for more than 95%.

In addition, due to the short development time of China's auto industry and the growth of parts and components companies, vehicle manufacturers are uncertain about their product quality, availability, prices, and services. Coupled with the government or higher-level units designated to purchase, protect the interests of internal control parts companies, and lower the cost of procurement, the vehicle manufacturers will generally use the same kind of parts and components to take A, B, C several levels of matching orders.

General A-level suppliers may allocate 60% to 70% of the supply; Class B suppliers may allocate 20% to 30% of the supply; Class C suppliers may allocate 10% of the supply. A-level suppliers of the same product are generally 5% higher than suppliers of Class B.

Because the same kind of parts and components are divided into several purchases, this makes the choices of suppliers such as trade-offs, changes in purchasing amount, purchase prices, and rebates completely controlled by the vehicle manufacturers. The interests of parts and components companies cannot be guaranteed. This phenomenon is more common and serious in the fields of agricultural vehicles, light passengers, trucks, mini-offers, trucks and mini-cars.

Some vehicle manufacturers only have tens of thousands of vehicles or even a few thousand vehicles. The same kind of parts and components have to be distributed to several suppliers, making the parts and components companies more difficult.

2. Chinese companies have opportunities at the second and third levels

Despite the difficulties, after joining the WTO, the domestic auto parts industry has not only been washed away, but has made progress. The proportion of the parts and components industry in the automotive industry has increased year by year, and some local companies have been able to independently develop and supply systems.

On the other hand, the state insists on the management of the characteristics of vehicle parts and components also brings business opportunities to local parts and components companies. Under the supervision of policies, joint ventures such as Mercedes-Benz and BMW are busy with the task of completing the localization of 40% of parts. Local parts and components companies should seize the opportunity to use the opportunities for supporting parts and components for joint ventures, increase their technological capabilities, and narrow the gap with world-class parts suppliers such as Bosch and Dentsu.

As the current domestic vehicle market has many brands and models, it has brought great difficulties to Chinese auto parts suppliers in terms of standardization, generalization, serialization, specialization, and scale of parts and components, and due to fierce market competition, autos With fast changeover and short life cycle, suppliers cannot generally risk ventures, develop new products, and perform process improvements without ensuring that their products can be supplied stably within a few years. As a result, the ability to adapt to new models will decline and the risk of elimination will be greater.

From this we can see that in the global supply system of all vehicle companies, the biggest opportunity for Chinese auto parts companies lies in the second and third-tier facilities, which is to provide support for the first-tier suppliers.

In order to reduce production costs, including equipment costs and labor costs, the first-tier suppliers, except for a few key and patented technology components, will seek out cooperative manufacturers for production, which provides opportunities for domestic parts and components companies.

Senior experts in the automotive industry believe that at present, China's parts and components companies do have some difficulties in becoming a first-class supporting supplier, but it is entirely possible to make second- and third-tier supporting suppliers. The production process of Chinese parts and components companies on certain small parts is relatively advanced and highly competitive.

As OEMs divested and outsourced a large number of non-core businesses, more and more component manufacturing and assembly responsibilities were pushed to suppliers. System suppliers took on important tasks in the entire industry supply chain, and therefore lacked experience and technology development. The ability of small parts and components companies to directly cooperate with vehicle manufacturers is difficult.

From this point of view, China's spare parts enterprises should pay attention to the standardization, serialization, and generalization of products, invest the corresponding research and development expenses to enhance their own development capabilities, and develop high-tech products that meet market needs, so that sustainable development can be achieved. Possible. China's spare parts enterprises should also actively face the global environment of purchasing and procurement, and be freed from the narrow matching relationship of the group, local, and department as soon as possible, break the door to the door, face the vast market, and actively seek more opportunities.

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