In 2023, China's automotive industry will move forward in ups and downs, and many memorable events have occurred in the field of parts and components, allowing people to touch the pulse of the powerful beating under the new situation of industrial transformation. It was not an easy year for auto parts companies, and they needed to work hard to maintain their existing business and cash flow in the context of a weak global economy. At the same time, in the face of the rapid change of the automobile industry, in order not to fall behind in the fierce competition and future competition, parts companies should take the initiative to promote the transformation.
2023 is under pressure, transformation and survival
China's auto parts are currently in the transition stage, the main strategy of the enterprise is invariably focused on the localization of core components, around the automotive electronic system, automotive semiconductor chips and engine units of the R & D investment continues to expand, the amount of investment in the core parts manufacturers has also increased in the past two years.
However, a decline in the weight of the internal combustion engine business means fewer jobs. The automotive industry is transitioning to electric vehicles, and automakers continue to reduce R&D projects related to internal combustion engine vehicles, resulting in overcapacity of internal combustion engine-related products. Schaeffler announced early plans to lay off 1,300 people. Continental has also cut some jobs in its automotive division, laying off thousands of jobs to save money. Freya also closed a seating factory and laid off more than 500 employees. Goodyear cut 1,200 jobs in Europe, the Middle East and Africa. Earlier, ZF also announced that it will close its Gelsenkirchen plant in Germany by the end of 2024, and about 200 production jobs at the plant will disappear in the future. Bosch also confirmed that it plans to lay off 1,500 employees to adapt to the changing technology and needs of the automotive industry.
From Schaeffler to Continental, from Bosch to ZF, a number of traditional auto parts giants will survive the winter in 2023. Although a number of international parts manufacturers have deep pockets, they also have a sense of crisis, and they hope to recalibrate the course through drastic adjustment and reorganization, and move forward in the direction that they think is correct and have a "money" prospect.
In fact, this year's auto market war has swept the whole year, and the war has not only brought about a reduction in product prices, but also the pressure of cost reduction in the entire automotive industry chain. In the case of the intensification of the auto market war, it is not uncommon for automakers to lay off employees, cut salaries and even go bankrupt. **Layoffs, transformations, and shutdowns of chain enterprises also occur from time to time. In the extreme involution, "the sales data is very hot, and the market feels very cold" has become a unique phenomenon in the auto market this year, and the cold air is transmitted from the market to the vehicle manufacturers and then to the first-chain enterprises.
While reducing costs through layoffs, international auto parts giants are also actively adjusting their business structures and looking for new profit growth points. Japan's auto industry, which has formed small fixed collectives through cross-shareholding for decades, is seeking to loosen its grip. Toyota Motor, Toyota Industries, and Aisin have finalized their respective shares in Denso; Denso has its shares in Hino Motors, Toyoda Gosei, Aichi Steel, Tokai Rika, and Toyota Industries and Aisin. By reducing cross-shareholdings, it is possible to give manufacturers greater operational independence and raise funds for the electrification and intelligent transformation of vehicles.
Run in 2024 and grasp new energy
The auto parts industry is the premise and foundation to support the development of the automobile industry, and it is also an important part of the automobile industry chain. The trend of the auto parts industry in 2024 is directly linked to the automotive industry.
Now the country is looking for ways to boost consumption, and automobile consumption is the top priority. In accordance with the requirements of the first place, some places have recently introduced policies to encourage automobile consumption and adjust and optimize the environment for automobile use. New energy vehicles are naturally the focus of encouragement. The total sales of new energy vehicles in 2024 are expected to be between 12 million and 13 million units, and although the growth rate is lower than that in 2023, the market share will rise to about 40%. The market share of Chinese brand cars is also expected to reach 60% in 2024, setting a new record high.
The new energy vehicle industry is showing a vigorous development trend, and the demand for core components is also ushering in a period of rapid development. The rapid growth of the new energy vehicle industry will greatly drive the development of the auto parts industry, and the market increment space is large. In the future, the use of lightweight aluminum alloy materials or high-strength steel materials has become the development direction of the production process of various auto parts manufacturers. At present, the application trend of lightweight parts is obvious, and lightweight products such as aluminum auto parts have a large market space and a good market development trend, and related industries will benefit significantly from the trend of automobile lightweight.
In order to meet people's increasing demand for automobile safety, operation convenience and entertainment, the development trend of the automobile and auto parts industry in the direction of electronics and intelligence is becoming more and more significant. Automotive electronics technology is also being widely used in the power system, chassis system, body control and fault diagnosis, as well as audio, communication, navigation, automatic driving, etc., to ensure the safety performance of the vehicle and enhance the entertainment of car driving. In the future, new energy, lightweight and intelligent will bring new technological breakthrough windows and business development opportunities to the automobile and auto parts industry, and the market potential is huge.
In fact, the market capacity of China's auto parts industry is huge, and the number of enterprises in the industry is large, and the scale is generally small compared with the leading international parts enterprises, showing a small and scattered market pattern. At present, the number of auto parts enterprises in the country is conservatively estimated at more than 100,000. However, the concentration of these enterprises is relatively low, and the output value of the top 30 parts group enterprises accounts for only 20% of the whole industry, and no monopolistic competition pattern has been formed. But now China's auto parts industry restructuring and reshaping, the development is gradually maturing, the industry concentration is gradually improving, the future parts of the leading business will also show a group, centralized development trend.
Now that China has become the world's largest market for new energy vehicles, international auto parts giants are also increasing their exposure to the Chinese market, and they are taking a series of measures to strengthen localization to better adapt to new needs. Taking ZF as an example, it is actively investing in the construction of production bases and R&D centers in China to strive for large orders for electric drives, and ZF announced an additional investment of 1EUR 500 million to build an automotive airbag production base and R&D center in Wuhan. ZF intends to expand its sales in China and hopes to increase its revenue in China to around 30 percent of its total revenue by 2030.
Other international auto parts giants have also stepped up investment in new projects in China, including building new factories, expanding production lines, and setting up R&D centers. For example, Bosch has invested about 1 billion euros in Suzhou to build a R&D and manufacturing base for core components of new energy vehicles and autonomous driving, mainly serving the Chinese market. Continental's Intelligent Manufacturing Innovation Center in China has also landed in Changsha, the Changzhou plant has launched the third phase of the expansion project, and the Qufu plant has launched the second phase of the project.
Most international auto parts giants attach unprecedented importance to the Chinese market, and at the same time, they are also interested in benefiting from the rapid transformation of the Chinese market to vehicle electrification and intelligence, and seek new growth opportunities.
The people evaluate the car
As the automotive market shifts toward electrification, parts manufacturers and OEMs need to find a balance between cutting-edge electrification investments and existing internal combustion engine businesses, and find a way to stabilize their business and survive in the face of various headwinds such as high interest rates, geopolitical uncertainty, and the global economic downturn.
However, in the parts industry, overseas companies still occupy the mainstream position in the market. The supply of China's auto parts market is still highly dependent on Europe, America, Japan and other countries or regions, which also reflects that domestic parts companies still have a lot of room for improvement. Only the continuous improvement of the product research and development and technological breakthrough level of the domestic auto parts industry, domestic auto parts can gradually replace imported parts, and everyone is expected to be more affordable in the future.
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