At a time when the mergers and acquisitions of vehicle companies are surging, Chinese auto parts companies are also facing a process of reshuffling. Among them, domestic component companies will go out of two different paths: some parts and components companies that are closely integrated with the OEM will grow with the acquisition and merger of the OEMs, while others will grow into independent suppliers of system-level components. .
Integration and reorganization are imperative
The composition of the auto parts market mainly consists of three major components: complete vehicle support, after-sales and export, of which the proportion of complete vehicle support is the highest. In the past five years, the rapid development of the vehicle market has driven the high growth of component companies.
After rapid development, China's auto parts industry has many characteristics such as large number of manufacturers, fierce market competition, high degree of internationalization and complex technology sources. According to statistics, the market share of the top 100 companies in the domestic parts industry only accounts for 50% of the entire industry, far lower than the concentration of other countries (regions). Although the overall revenue of the parts industry reached 837 billion yuan last year, 80% of the above-scale enterprises have sales of less than 100 million yuan. Only 43% of the parts and components in the industry have patents, and less than 20% have invention patents.
It is worth noting that in recent years, overseas auto parts giants have entered China by joint venture. Delphi, Wescast, Cummins and many other foreign auto parts manufacturers have already built dozens of production bases and branches in China. Up to now, foreign auto parts have already owned 3/4 of China's market share, and some core components even reach more than 90%.
The intensified price war in the vehicle market is also eroding the profit margin of the parts industry. As the research report released by global automotive industry consultant Alixpartners pointed out, China's auto parts industry is facing cost increases and profit shocks caused by external competition. As a scale-advantaged industry, although the scale of output value of China's auto parts industry is large but it does not play a scale effect, the integration and restructuring of the auto parts industry is imperative.
Both roads lead to "Rome"
The end result of industry consolidation is the reduction in the number of companies and the rise of industry leaders. The vehicle industry is about to enter the era of mergers and acquisitions, which will be transmitted to parts suppliers. Moreover, from the inside, the excessive number of parts and components entrepreneurs is not conducive to the scale effect, and it is difficult to resolve the cost pressure caused by the decline in vehicle prices.
Wang Qun, a researcher at Fortune Securities, believes that the ecosystem of auto parts is divided into three levels. The system supplier is the closest to the whole vehicle, followed by the car assembly/module supplier, and the most peripheral is the auto parts/components. The supplier, the corresponding profit distribution from high to low. It can be seen from the top 4 auto parts giants in the world that there are two main growth modes, one is to rely on the OEM to do the matching, such as Delphi to GM, the advantage is that it can be rapidly developed and developed with the help of the OEM, the same disadvantage. It is also very difficult to survive when the OEM is in a downturn; the other is a stand-alone system supplier, represented by the German Bosch Group.
At present, the auto parts enterprises listed on the A-share market can also be divided into two camps according to this. The former is represented by Dongfeng Technology (600081), FAW Fuwei (600742) and Qiming Information (002232), respectively, attached to Dongfeng and FAW Group; the latter is Wanxiang Qianchao (000559), Ningbo Huaxiang (002048), æ½Chai Power (000338) and Fuyao Glass (600660) are representative.
The above division does not mean that the latter type of company is completely decoupled from the OEM. In fact, in the rise of emerging markets, the parts and components companies that depend on the OEM are developing faster. Ningbo Huaxiang entered the FAW Group's parts and components supporting system through the shareholding enterprise. Weichai Power directly controlled the Shaanxi Automobile Group by absorbing and integrating the Hunan Torch. However, the latter type of enterprises are more competitive in the market and more in line with the country's automotive strategy development direction.
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