In recent years, with the prosperity of the auto vehicle industry, domestic auto parts companies have mushroomed rapidly. At the same time, with the comparative advantage in the international market, domestic auto parts companies have gradually entered the procurement system of international auto giants and entered the international market.
However, when the industry entered the upward trend of prosperity, auto parts companies are also facing the decline in the price of downstream vehicle products, as well as the upward pressure on the prices of upstream raw materials for steel, aluminum, rubber and other auto parts. Therefore, in this round of rising industry prosperity, the leading Chinese auto parts production companies will emerge, the status quo for many small and medium-sized enterprises will be improved, and the degree of market concentration will certainly increase.
Vehicle boom boosts auto parts development
In recent years, the continuous prosperity of the downstream vehicle industry and the increase in auto parts exports have driven the rapid growth of the auto parts industry. In 2007, the nationwide automobile sales exceeded 8.6 million, an increase of 22% year-on-year, and total profits exceeded 100 billion yuan, a record high in five years. At the same time, China's auto parts exports in 2007 reached 14.5 billion yuan.
According to the China Association of Automobile Manufacturers, domestic demand for automobiles in 2008 was 10.35 million, an increase of 17% year-on-year, a slight decrease from the previous year. However, with the increasing vehicle ownership, it is possible to maintain this growth rate, which is still a great advantage for the upstream parts industry. The auto parts industry is expected to enter a boom period driven by the vehicle. Galaxy Securities researcher Li Dan believes that based on the assumption that the vehicle sales rate will remain at 99% and the automobile price index will remain at the 2007 level, it is estimated that in 2008, the auto parts industry's revenue growth in the domestic market can reach 30%.
It is estimated that the domestic output value of China's auto parts will reach 800 billion yuan in 2010. According to incomplete statistics, at present, there are about 1000 industrial parks with auto parts and components in China, of which about 100 are key cluster areas or zones.
Since 2005, the State issued the “Regulations for the Verification of Imported Auto Parts and Components Characteristics of Complete Vehicles†policy, and some imported models have been localized. In particular, the assembly of imported parts was significantly reduced in 2006, and the proportion of auto production has dropped to 4.6%. The proportion of chemical transformation has increased significantly. With the increase of domestic manufacturing, the proportion of imported parts will continue to decline. This undoubtedly created new development opportunities for domestic parts manufacturers.
At the same time, foreign auto parts companies have not yet entered the Chinese market on a large scale due to profit considerations. Most of the parts and components of the joint-venture brand vehicles and most of the parts of domestic brands have been purchased from domestically-owned parts and components companies, which has given domestic auto parts companies a chance. Sufficient growth space and time allow it to have a certain scale in a short time. Moreover, due to the declining profits caused by the fierce competition in the vehicle market in recent years, domestic joint ventures have begun to purchase domestically-manufactured parts for large-scale purchases in consideration of cost reduction. This has enabled domestic auto parts companies with low-cost and technical advantages to enter the vast country. Joint venture auto market.
GF Securities Auto Parts Industry analyst Li Weiqing told reporters that in the Chinese auto industry, the scale of autos and auto parts is 1:0.66, and this ratio is 1:1.7 in foreign auto-developed countries. China's auto parts industry is facing a broad space for development. Mainly in the following three aspects: First, the new complete vehicle support will form a linear pull relationship with the auto parts industry, that is, the parts and components industry will grow in tandem with the auto manufacturing industry. Second, at the end of 2007, the number of civilian vehicles in China was 56.97 million, an increase of 14.3% over the end of the previous year. Excluding 14.68 million three-wheel vehicles and low-speed trucks, the number of civilian vehicles was 42.29 million, an increase of 26.7%. The demand for repair and replacement of auto parts brought about by the surge in car ownership will also be accelerated. Third, the export drive. It is expected that the growth rate of the spare parts industry will maintain at a level higher than the average growth rate of the industry in the next three years.
Upstream and downstream attack
Can not be ignored is that, while the industry is doing well, due to the rising raw material prices in the auto parts industry, coupled with the declining trend of vehicle prices, the auto parts industry sandwiched between the two will be greatly affected.
The upstream raw materials involved in the accessories industry can basically be divided into metal raw materials and rubber and plastic raw materials. Steel accounts for nearly 64% of the entire industry's raw materials, while aluminum alloys account for 8.3%. Besides, PU, ​​PVC, PB, and other rubber and plastic materials also occupy a certain proportion. On the whole, the prices of raw materials in the upstream market are on a rising trend and will form a lasting pressure on the gross profit margin of the accessories companies.
Taking the largest proportion of steel in automotive products, its price changes will have a significant impact on the gross margin of the accessories industry. According to the latest monitoring, the average domestic steel price in March was 5,775 yuan/ton, which was 9.6% higher than that in January. Li Dan said: “The industry gross profit margin is greatly affected by the steel price changes, and this effect has great differences due to the strength of price transmission ability. When the steel price rises, it has the ability to establish a price linkage mechanism with downstream companies. The advantages are reflected and the level of gross profit decline is much lower than that of companies with weak price transmission capability."
From the perspective of car prices, domestic auto prices fell by 0.89% in December 2007, a year-on-year decrease of 4.86%, and the average monthly rate of decline expanded from 0.14% in the previous year to 0.41%; the prices in June were unchanged from the previous month except June. In the rest of the month, prices have declined in varying degrees. According to industry analysts, in 2008, the auto market will be affected by factors such as supply exceeding demand and intensified competition. The price will continue to show a steady downward trend. The annual decline will remain at about 4%.
Li Weiqing told reporters, “Most parts and accessories companies do not have bargaining power over the entire vehicle. This pattern is extremely unfavorable to the accessories industry. Vehicle companies can rely on their dominant position in the industry chain to shift the decline in vehicle prices to upstream parts production. Enterprises, which will certainly reduce the gross margin of the auto parts industry."
[next]
Merger and integration trend
Therefore, Li Weiqing believes that the integration of mergers and acquisitions in the auto parts industry will be unavoidable in the face of ups and downs. Reducing costs through mergers and acquisitions, producing large leading companies in auto parts, and strengthening internal management of enterprises will be the trend of future auto parts industry development.
At present, the world already has more than a dozen giant automotive multinational companies with annual sales income of more than US$10 billion represented by German Bosch. In the world's top 100 auto parts enterprises, the sales revenue of the top 30 companies accounts for nearly 70% of the total of the top 100 companies.
However, among the tens of thousands of auto parts companies in China, only 130 have sales of more than 100 million yuan. The number of domestic parts manufacturers is large, the scale is small, and the industry concentration is low. The average single-plant sales in the domestic auto parts industry are only 2%-3% of the total vehicle companies, and the industry concentration is far lower than that of the entire vehicle industry. The strength of the two companies is very different.
Li Dan pointed out that the continued acquisition of the supporting rights for new models will be the key to maintaining high gross margins for accessories companies. From the current situation of the new car market, the supporting rights of new models are basically obtained by the leading companies in the market segment. This is mainly due to the increasing demand from the OEMs for the simultaneous R&D capabilities of the supporting suppliers. The OEMs often look for integrated R&D supporting companies by dividing the modules into modules.
She believes that "assembly and modular supply have gradually become a major development trend in the auto parts industry and will inevitably intensify the differentiation of parts and accessories companies. Vehicle companies gradually shift from purchasing from multiple auto parts manufacturers to supplying few system module suppliers. The procurement of more accessories companies can only be located in the lower end of the pagoda-type parts supply chain, through the supply of higher-level parts and components companies in order to survive and develop.â€
Key Auto Parts Company Reviews
Fuyao Glass
Fuyao Glass's main business includes automotive glass and float glass, of which sales revenue of automotive glass has remained at over 60% in the past three years, and gross margin contributed over 65%, which dominates the market. Float glass business, to a large extent, provides good support for automotive glass production and is an additional business that increases company profitability.
In 2007, the company produced 6 million sets of automotive glass, which accounted for about 10% of the global market. Among them, the domestic OEM market and aftermarket market share about 55% and 40%, respectively, and the international market share is about 4%.
After the Beijing Automotive Glass Project, the Guangzhou Automobile Glass Project, and the Hainan Automotive Glass Float Project were completed in 2007, the company’s total auto glass production capacity reached 10 million units, and its total float glass production capacity reached 1.5 million tons; the Hubei project and technological upgrading and production expansion , will make the company's automotive glass production capacity exceeds 20 million sets. It is expected that the company's future automotive glass business will maintain a growth rate of more than 30%.
At present, the company has been certified by the world's top eight automakers, and has become a qualified supplier of German Audi, German Volkswagen, Hyundai, Toyota of Japan, etc. In 2007, it was even signed by Bentley, the world's leading vehicle. Fuyao Automotive Glass's international OEM market has grown rapidly, with an increase of 130% in 2007. The international market is the strategic focus of the company in the future. The company plans to increase the international market share to more than 10% in the next few years and the proportion of foreign income in total revenue to 50%.
In order to better expand the international market, the company has adopted a series of measures, mainly investing in the construction of automotive glass research institutes. The institute is currently the only national-level automotive glass research center in China. The establishment of the institute will provide sufficient intellectual support for the company in R&D, design, and technology. In addition, the company will promote mergers and acquisitions overseas in due course.
Due to the high degree of concentration of upstream industries involved and the strong ability of price transmission, the production cost of automobile glass has risen with the increase of raw material prices. The strength of cost control capability has become the key to the success of auto glass production enterprises. Fuyao Glass achieved an obvious cost advantage over similar companies through upstream and downstream integration, oil-to-gas conversion, and capacity expansion. The company's integrated industrial chain achieved significant results.
Due to the company's relatively large capacity expansion and capital expenditures in recent years, the company's asset-liability ratio at the end of 2007 reached 62.7%; the cancellation of the public offering plan made it difficult for the company to improve its financial structure. In addition, the company's high-speed expansion of production capacity, the digestion of products face certain market risks.
[next]
Ningbo Huaxiang
Ningbo Huaxiang is mainly engaged in rubber and plastic auto parts products, including dashboards, door panels, peach wood interior parts, central passages, intake manifolds, various brake fluid tanks, rearview mirror systems, etc. Decoration, engine attachment system, chassis attachment system, air conditioning system. After reorganizing the Changchun Muffler Plant, the company has also opened up its metal parts business. In addition, the company successfully entered the field of military modified vehicles by continuously increasing its stake in Liaoning Luping Machine Co., Ltd.
As the only company in the country that can develop natural walnut trims, it is expected that this part of the business will achieve more than 40% growth with the sales of mid- to high-end cars. The Gongzhuling project will further enhance the company's sales of interior products in the Northeast region.
The contribution of the metal parts business to the growth of the company’s performance has continued to increase. In 2007, the revenue from metal fittings business increased by 130% year-on-year. The company is committed to increasing the proportion of this part of the business and the profit is expected to increase further. Lu Ping's machine is a fixed-point development and production enterprise of national military refitted vehicles. It is the total post-stage supplier with a market share of about 60%. With the acceleration of the modernization of national defense equipment, the business is facing greater opportunities for development.
The company is also actively entering the international market. The company recently announced its intention to acquire a German auto parts company. The company mainly produces automotive interior parts and complements Ningbo Huaxiang in technology and market. In 2007, the company had sales of approximately 250 million euros and a profit of approximately 25 billion euros.
The company is in a period of high-speed expansion. Its international strategic layout requires strong cash flow support, and the company has greater financial cost pressures. In addition, the company's large number of subsidiaries, its international strategic layout will increase the number of overseas subsidiaries, the company's management capabilities and integration capabilities are tested.
Wanfeng Aowei
Wanfeng Aowei is one of the largest automotive aluminum alloy wheel manufacturers in China. The company's export business accounted for nearly 60% of the total, the main customers are Ultra, Panther, Topy; domestic major supporting customers are Hainan Mazda, Shenlong Auto, Beijing Automotive, Zhengzhou Nissan; the company has now entered the global procurement of GM, PSA, Toyota, Hyundai, etc. The internet.
The company ranks among the top three in terms of sales volume, export volume and sales revenue in the domestic industry. At present, there are 21 domestic manufacturers providing wheel assemblies. In 2006, Wanfeng's output accounted for 31% of the industry's total output, which was 1.6 times that of the third-place after DeKalb.
In view of the company's bargaining power in the domestic and foreign markets and the deteriorating trading environment, the company has expanded its domestic market since the first half of 2007, and its domestic market operating revenue has increased by 55% year-on-year, reflecting the company's strong market adaptability. From the OEM market and the AM market, the OEM market customers are relatively stable, the price changes are stable, the absolute demand is greater than the AM market, and the company is focusing on the future development. In the first half of 2007, the OEM market achieved high-speed growth of over 100%.
In the first quarter of this year, the company achieved a net profit of 18 million yuan, an increase of 81% over the same period of last year, with a gross profit margin of 15.5%, and a 4.5% year-on-year increase. The company actively withdrew from the sub-sectors that did not have business value. The product sales area shifted from the original European and American markets to the development of the Japanese and European markets. This year, the European market is expected to achieve a breakthrough.
At the same time, the company reduced the adverse effects of RMB appreciation by means of forward foreign exchange contracts, comprehensive foreign exchange settlements, and floating foreign exchange settlement.
The aluminum wheel industry has a huge market space, with 36 million domestic demands and 200 million international market capacity, providing a broad market space for the company's future development. With the rationalization of the company's market and product structure, the gross profit margin will stabilize and the company's performance will grow rapidly.
Drilling Rig,Trailer Mounted Drilling Rigs,Horizontal Oil Well Drilling Rigs,Trailer-Mounted Oil Well Drilling Rigs
Sinotai Petroleum Equipment Co.,Ltd , https://www.sinotaigroup.com