(1) Basic situation of the automotive parts industry
The automobile industry is a pillar industry of China's national economy, characterized by great market potential, high correlation, strong consumption pull, significant economies of scale, and intensive capital and technology. The automotive parts industry is the foundation of the development of the automotive industry, an important condition for supporting the sustained and steady development of the automotive industry, and an important link in the automotive industry chain. Automotive components include various parts of motor vehicles and their bodies, and a car typically consists of tens of thousands of components.
According to system types, automotive components can be classified into engine systems, transmission systems, braking systems, suspension systems, steering systems, electrical systems, etc.
According to different raw materials, automotive parts can be divided into metal parts, plastic parts, etc. In recent years, with the trend of lightweighting and energy conservation in automobiles, aluminum alloy components have been increasingly widely used in the automotive industry.
(2) Development Status of Global Automotive Parts Industry
After hundreds of years of development and evolution, the automotive industry has now entered a mature stage and become one of the pillar industries of the national economy in major industrialized countries. According to data from the World Organization of Automobile Manufacturers (OICA), from 2021 to 2023, global automobile production increased from 80.1459 million to 93.5466 million, and sales increased from 83.6384 million to 92.7247 million.
Since 2021, with the explosive growth of new energy vehicles, the global automotive industry has rebounded, with both production and sales showing an upward trend. According to EVTank data, global sales of new energy vehicles reached 14.653 million units in 2023, a year-on-year increase of 35.4%.
EV Tank expects global sales of new energy vehicles to reach 25.422 million and 52.12 million units in 2025 and 2030, respectively. The penetration rate of new energy vehicles will continue to increase and exceed 50% by 2030. From a regional distribution perspective, global automobile production bases are mainly concentrated in the Asia Pacific, Europe, and the Americas, presenting a multipolar distribution pattern. With the rapid economic growth and consumption structure upgrading of developing countries such as China, India, and Brazil, the global automobile production base is shifting from traditional markets represented by Europe, America, Japan, and South Korea to emerging markets.
According to OICA statistics, in 2023, the automobile production in the Asia Pacific region will reach 55.1158 million units, accounting for 58.91% of the global total automobile production and making it the world's largest automobile production base. The automotive parts industry, as a supporting industry of the automotive industry, is a prerequisite for supporting the sustained and steady development of the automotive industry. The upstream industries are mainly non-ferrous metals, steel, petrochemicals, rubber, textiles, and other materials industries, while the downstream industries are mainly the vehicle assembly industry.
In recent years, with the steady growth of the global automotive industry, the overall development of the global automotive parts market has been good, showing a sustained and steady growth trend. At the same time, with the further refinement of the global value chain, the automotive parts industry, as an important link in production, builds supporting factories according to the needs of vehicle manufacturers. In the process of vehicle development and production, it closely cooperates and relies on each other to jointly develop new products with vehicle manufacturers. The supporting supply relationship formed between vehicle manufacturers and parts enterprises based on the market gradually matures, giving birth to more specialized and larger scale automotive parts enterprises, greatly promoting the development of the parts industry.
According to research by GIR (Global Info Research), global automotive parts revenue is expected to reach approximately $2.39 trillion in 2022 and $3.07 trillion in 2029, with a compound annual growth rate (CAGR) of 3.6% from 2022 to 2029. At present, internationally renowned automotive parts companies are still mainly distributed in traditional automotive industry powerhouses represented by North America, Europe, and Japan. These companies have large sales scale, strong technical strength, and sufficient capital strength, leading the development direction of the global parts industry.
In terms of segmented fields, different giants have formed differentiated competition, such as ZF, Aisin Seiki, and JATCO in the transmission field, Benteler in the automotive chassis field, Bosch and Continental in the automotive brake system field, and Lear and Faurecia (brands under the Faurecia Group) in the automotive seat field, all of which occupy monopoly positions in their respective professional fields.
From a regional distribution perspective, the top 100 automotive parts companies in the world come from 16 countries, with 22 companies from Japan, 18 from the United States, 15 from Germany, and 13 from China being shortlisted. In recent years, the number of Chinese automotive parts companies on the list has gradually increased. By 2023, the number of Chinese companies on the list has successfully squeezed into the second tier, ranking second only to Japan, the United States, and Germany.
(3) The Development Status of China's Automotive Parts Industry
1) The market size of China's automotive parts industry
After decades of rapid development, China's automobile industry has formed a relatively complete industrial system and become an important pillar industry of the national economy. It plays an important role in driving China's economic growth, employment, and fiscal revenue. According to statistics from the China Association of Automobile Manufacturers, the production and sales volume of automobiles in China will reach 30.16 million and 30.09 million respectively in 2023, with a year-on-year increase of 12%, and both production and sales volume will reach historical highs.
After China chose low-carbon economy as one of the main development paths, the new energy vehicle industry emerged with the support of policies. The frequent introduction of industrial policies has cultivated the layout of the entire new energy vehicle industry chain, and a variety of new energy vehicle products are increasingly favored by consumers.
According to data from the China Association of Automobile Manufacturers, the domestic production and sales of new energy vehicles have increased from 8000 and 8000 units in 2011 to 9.59 million and 9.5 million units in 2023, respectively. In 2023, China's production and sales of new energy vehicles will account for over 60% of the global total, ranking first in the world for nine consecutive years. The export of new energy vehicles will reach 1.2 million units, a year-on-year increase of 77%, both of which have reached a historic high.
In recent years, thanks to multiple favorable factors such as steady growth of the domestic economy, support from national industrial policies, rapid development of the entire vehicle market, and increased global procurement of parts, China's automotive parts industry has been able to develop rapidly. These factors not only encourage domestic automotive parts companies to continuously increase investment and carry out technological upgrades, but also attract multinational component suppliers to establish joint ventures or wholly-owned companies in China, driving the rapid development of China's automotive parts industry as a whole.
According to data from the National Bureau of Statistics, from 2011 to 2017, the scale of China's automotive parts industry grew rapidly. The main business income of the automotive parts industry increased from 1977.891 billion yuan in 2011 to 388.039 billion yuan in 2017, with an average annual compound growth rate of 11.89%.
In 2018, due to factors such as the slowdown of domestic macroeconomic growth, the escalation of the China US trade war friction, the switch of environmental protection standards, and the reduction of new energy subsidies, China's automobile industry faced significant downward pressure, which also led to a decline in the main business income of large-scale automobile parts enterprises in China in 2018.
Since 2019, with the completion of the transition from the National V standard to the National VI standard, and benefiting from the rigid demand for automobiles in China, the automotive market has gradually recovered, and the main business revenue and profit level of the automotive parts industry have both achieved a growth trend.
In 2021, the main business revenue of China's automotive parts industry reached 4066.8 billion yuan, a year-on-year increase of 12.0%, setting a new historical high. The proportion of parts in the main business revenue of automotive manufacturing further increased to 46.9%, reaching the highest point in the past decade. In the long run, the capacity of China's automobile market is far from saturated, and the overall scale of the automobile industry market is still promising. At the same time, the trend towards lightweighting and electrification of automobiles will drive rapid growth of related components, and there is still significant room for development in lightweight material components such as aluminum alloys.
Under the wave of global parts procurement, the international competitiveness of China's automotive parts industry continues to grow. Local Chinese automotive parts enterprises have successfully integrated into the world parts procurement system, and the industry's export volume is also on the rise. From 2013 to 2023, China's automobile parts exports increased from 45.3 billion US dollars to 87.7 billion US dollars, with an average annual compound growth rate of 6.83%.
2) The current development status of China's automotive parts industry
① National long-term key support for the development of the automotive parts industry
As the foundation of the development of the automotive industry, automotive parts are a long-term key industry supported by the country. In recent years, the Chinese government has introduced a series of policy measures to encourage the development of automotive parts. The "Development Plan for New Energy Vehicle Industry (2021-2035)" points out that by 2025, the competitiveness of China's new energy vehicle market will be significantly enhanced, with major breakthroughs in key technologies such as power batteries, drive motors, and vehicle operating systems, and a comprehensive improvement in safety levels.
The "Medium - and Long Term Development Plan for the Automotive Industry" points out that breakthroughs should be made in advanced automotive electronics such as automotive sensors and onboard chips, as well as in lightweight new materials and high-end manufacturing equipment, to cultivate internationally competitive component suppliers and form a complete industrial system from components to vehicles. With the strong support of national industrial policies, China's automotive parts industry has been able to steadily develop upwards.
② The automotive industry chain is gradually shifting towards Asia, especially China
In developed countries and regions such as the United States, Japan, and Europe, the production and consumption of automobiles have reached a saturation point, entering a stage of quality improvement and premium automobile consumption. In contrast, the demand for automobiles in emerging markets such as China, India, and Mexico is increasing day by day. Against the backdrop of increasing demand for automobiles and sufficient labor supply in emerging markets, the global automotive industry chain is gradually shifting towards Asia, especially China. From 2012 to 2023, China's share of global automobile production increased from 22.90% to 32.24%, gradually occupying a more important position in the global automobile industry chain.
③ Cluster based industrial layout, systematic development, modular manufacturing, and integrated supply are gradually becoming mainstream
For the purpose of reducing transportation costs, shortening supply cycles, and improving collaboration capabilities, domestic automotive parts companies generally choose to establish production bases near the vehicle factory area. Therefore, the trend of industrial layout clustering is becoming increasingly evident, forming a development model centered on the vehicle factory and building supporting industrial clusters in a certain area.
In addition, most vehicle manufacturing enterprises are gradually shifting from traditional vertical operations and pursuing large and comprehensive production models to specialized production models that streamline institutions and focus on vehicle development and assembly. The demand for automotive parts is increasingly dependent on external independent component suppliers, and automotive component suppliers are gradually becoming independent of vehicle manufacturing enterprises, forming independent and complete enterprise organizations. In terms of regional layout, China has gradually built six major automobile industry clusters: the Yangtze River Delta industrial cluster represented by Shanghai, the Pearl River Delta industrial cluster represented by Guangdong, the Southwest industrial cluster represented by Chongqing, the Central industrial cluster represented by Wuhan, the Bohai Rim industrial cluster represented by Beijing and Tianjin, and the Northeast industrial cluster represented by Changchun.
The clustering of the automotive parts industry has improved the efficiency of vertical extension and horizontal cooperation of the industrial chain, and the synergistic effect of the industrial chain has initially emerged. The competitive advantage has been greatly enhanced, and the scale and effect of the cluster continue to be prominent.
(4) Future Development Trends of the Automotive Parts Industry
1) Global resource allocation and component procurement
With the increasing maturity of the global resource allocation model in the automotive industry and the intensification of competition in the industry, international automobile manufacturers have gradually focused on the research and development of new vehicle models and the launch of new models in the market, reducing the rate of self production of automotive parts. Instead, they have allocated resources globally, established factories and laid out in emerging automotive markets such as China, India, and Mexico, and purchased locally competitive automotive parts products. Global procurement has become an important development trend in the automotive industry.
In this trend, local component manufacturers have gradually entered the component matching system of international vehicle manufacturers with cost advantages and service responsiveness. Major international component giants have also gradually extended their production and research and development bases to various corners of the world's major automotive markets. With the technological progress and experience accumulation of automotive parts enterprises in emerging market countries, the global procurement trend of automobile manufacturers will be further strengthened.
2) Production and procurement tend towards modularization
In recent years, major vehicle manufacturers around the world have reformed their procurement and supply models, shifting from scattered procurement from multiple automotive parts suppliers to modular procurement from a few suppliers. In this mode, component companies integrate components of the same functional system or region into a modular component for standardized design and production through new designs and processes, and provide component matching for the vehicle manufacturer on a modular basis. This facilitates the assembly of different vehicle models by the vehicle manufacturer, which is conducive to shortening the production cycle of automobiles, improving the universality of components and the efficiency of vehicle assembly, reducing weight and fuel consumption.
With the transformation of the procurement side of vehicle manufacturers, component suppliers need to continuously enhance their technological innovation capabilities, cultivate leading product design and development capabilities, and realize a part of the product development and component assembly work originally undertaken by vehicle manufacturers, and participate more deeply and earlier in the new car development process of vehicle manufacturers. Modular supply enables component manufacturers to no longer rely on individual vehicle manufacturers, and to have closer and more stable cooperative relationships with vehicle manufacturers. Automotive component companies are moving towards an independent and large-scale development path.
3) New energy, lightweighting, and intelligence bring new opportunities for industry development
Driven by the transition to a low-carbon economy, the new energy vehicle industry is showing a vigorous development trend, and the demand for core components is also entering a period of rapid growth. The rapid growth of the new energy vehicle industry will significantly drive the development of the automotive parts industry, with a large market increment space. With the rapid development of new energy vehicles and the demand for extended range, lightweighting has become one of the mainstream directions for the development of the automotive industry.
The use of lightweight aluminum alloy materials or high-strength steel materials has become the development direction of production processes for various automotive parts suppliers. At present, the application trend of lightweight components is obvious, and lightweight products such as aluminum automotive parts have a large market space and a good market development trend. Related industries will benefit significantly from the trend of automotive lightweighting. In addition, to meet the increasing demand for automotive safety, operational convenience, and entertainment, the automotive and automotive parts industry is showing a growing trend towards electronic and intelligent development.
Automotive electronic technology is widely used in the power system, chassis system, body control, fault diagnosis, audio, communication, navigation, autonomous driving, and other aspects of automobiles, ensuring the safety performance of the entire vehicle while enhancing the entertainment value of driving. In the future, new energy, lightweighting, and intelligence will bring new technological breakthroughs and business development opportunities to the automotive and automotive parts industry, with enormous market potential.