China’s strength is growing for foreign parts brands

A financial turmoil swept and no one in the global auto industry was able to evade the impact of its power. Even Japan’s Toyota Corporation, known as the “lean manufacturing” division, had its first loss in nearly 40 years. As a supplier at the front end of the industry chain, what is the status of the parts and components companies and what are the roles of Chinese and foreign companies in the Chinese market? Let us review some of the segments of the auto parts industry in 2008.

The dawn of the crisis is still present

At the end of last year, it seems that we are reviewing our achievements. But at the end of 2008, it was a group of such news that entered our eyes:

- As banks are reluctant to borrow and corporate borrowing costs increase, Bosch has taken steps to adjust its industrial structure: the sale of its Blaupunkt brand car audio, navigation, and antenna business to accommodate the economic downturn may give its overall business The adverse effects.

——Due to the rapid deceleration in the development of the global automotive market, Denso has significantly lowered its 2008 fiscal year performance forecast. The parent company's financial position has been adjusted to a loss of 49 billion yen from the original profit of 36 billion yen. It is reported that this is the second time since the establishment of Denso 1950 that the parent company report has suffered a loss.

- Magna recently announced two decisions, including the closure of two parts factories in the Greater Toronto Area of ​​Canada, the reduction of 850 jobs, and the spin-off of its Magna Entertainment company.

- Bridgestone announced that despite the increase in the sale of super-large tires for high-profit mines, it could not make up for the decline in sales of new cars and spare tires. Due to the global economic slowdown and the sharp decline in auto sales, the net profit of the company in 2008 is expected to be only 12 billion yen, a sharp drop of 91% from the previous year.

- Cummins announced that it had laid off 500 employees by the end of 2008, which accounted for 3.5% of its total workforce, due to the sudden drop in demand for medium-sized and heavy trucks and building products.

- In Europe, there are about 500 automotive parts suppliers in danger of bankruptcy.

......

There are many bad news. Most of the above-mentioned companies are world-class parts and components companies. In the face of the financial crisis, they are still incapable of self-reliance, and the difficulties faced by some small and medium-sized component companies can be imagined.

However, even in the precarious situation, many people have seen some light, and some parts and components have made a big deal in the Chinese market in the context of the sharp decline in the North American market. Goodyear recently acquired Dalian Goodyear Tire Co., Ltd., making it a wholly-owned subsidiary in China. Prior to this, Goodyear had already started nearly 500 million U.S. dollars in funds and carried out large-scale relocation and reconstruction of the factory. Bosch has opened a winter automobile testing center with a total area of ​​nearly 2 million square meters in China, despite the unfavorable business situation in Europe and the United States. Another Johnson Controls listed by Wall Street Credit Rating Company as the object of review, recently signed an agreement with Guangzhou Automobile Group Co., Ltd., a subsidiary of GAC Group, to establish Guangzhou Johnson Controls Automotive Interior Systems Co., Ltd., which will become the GAC Group. Main dashboards, sub-dashboards and Other automotive interior product suppliers. In addition, Bridgestone, which also saw a sharp drop in profits, also opened the 300th Bridgestone Truck Tire Station in China.

There are also many parts and components manufacturers that have recently invested in China, such as the launch of a new Perkins 400 series engine in Wuxi's newly completed factory; a joint venture established by the German Getrag Group in Jiangxi - The project of the annual output of 200,000 sets (sets) of automotive gears at the Getrak (Jiangxi) Transmission Co., Ltd. is officially in operation; the joint venture between Wacker Chemie AG, which manufactures automotive silicone products, and Dow Corning, Inc., in Zhangjiagang, USA The organosilicon plant was formally put into production... These all reflect that China has become an indispensable force supporting the global automotive industry.

Even the General Motors Corporation, which was hit hardest by the financial crisis, announced recently that it wants to build India into an automobile power system manufacturing center in the Asia Pacific region. Just in August 2008, GM's second plant in India was just started. GM India not only decided to invest 200 million U.S. dollars to build an engine plant, but also added 500 employees in the first half of 2009. Even if there is no money, the investment will still have to vote. This is the consistent style of world-class companies. From this example, it can also be reflected that “water flows to the lower places and the money runs toward 'high' place. Even under very difficult conditions, the company’s practice must still conform to the laws of economic operation itself.

Multinational companies have moved to China for more independent brand products

Although China’s labor costs have been lower than those in neighbouring countries such as Vietnam, some of the core products and technologies of multinational companies have also accelerated their transfer to China in recent years.

Since 2008, the actions of multinational component companies in China have been remarkable. What is not the same as in previous years is that most of the companies that entered China in the same fashion as host companies had already rushed to “eat” directly with local independent brand suppliers. We found from the Chery A3 on the market less than half a year ago that many of its components and overall performance have been created by a number of foreign companies: TRW's ABS and ESC safety and braking systems products, Sino-German joint ventures The shock absorber of Shanghai Sachs, the NVH adjustment of MIRA (UK), and the development and design of Pininfarina of Italy. Of course, Chery's design team and engineers participated in a lot from the development and design to the tuning of the entire vehicle. However, A3's integration of international technology still allows us to feel that China's own brand cars have already emitted a strong international atmosphere. In fact, these overseas genes can be seen everywhere in other recently-developed domestic brand new cars.

Taking tire products as an example, 70% of China's passenger car tire market has been occupied by foreign brands. Take the 40 or so passenger cars that have been listed for nearly six months, the tyres they configure form an international tire camp - Michelin, Bridgestone, Goodyear, Malay, Pirelli, Dunlop, Hankook, Kumho, Giti pass ... ... but the lack of mainland China's own brand! Even more worrying is that even from a few new brands of new cars it is difficult to find the shadow of self-owned brand tires - Shanghai Volkswagen LAVIDA Long Yi and FAW - Volkswagen The new Bora is equipped with the Michelin brand. The SAIC Roewe 550 and the Chery A3 are equipped with the Goodyear brand. The Brilliance FRG and the Great Wall are equipped with the Kumho brand. The hippocampus is equipped with the Hankook brand, BYD F0. And JAC Wyatt is equipped with Jiatong brand... and so on. From joint ventures to sole proprietorships, from the supply of joint-venture vehicle manufacturers to the seizure of their own branded vehicles, foreign brand suppliers are sloppy in the Chinese auto OEM market.

In 2008, the veteran foreign giants accelerated the pace of expansion in the Chinese market: in March, Cummins and Beiqi Foton formally established a light-duty diesel engine company, Delphi Packard Electric Wuhan base officially put into operation; in June, the Bosch undercarriage system Dalian new factory was officially launched; In October, Visteon and Jiangling jointly established a car air-conditioning plant. Even the entire vehicle manufacturer has withdrawn from China’s Fiat Group. Its FPT Fiat Power Technology not only formally put into use in the China R&D center in Jiading, Shanghai in November 2008, but also signed a sole proprietorship with the Chongqing Municipal Government. The letter of intent is intended to provide a base for its OEM customers and diesel export markets, and its intention to take root in China for more domestic customers is clear. Another European company, China Continental Group, which is not active in China, also held a groundbreaking ceremony for its Asian headquarters and R&D center in Shanghai in January 2008. The R&D center with an investment of 60 million euros integrates the three major businesses from its automotive systems, Continental brand tires and ContiTech rubber. More and more multinational giants have moved their Asia regional headquarters and even the global headquarters of a certain business to China, highlighting that the Chinese market has become an increasingly important strategic weight for multinational component suppliers.

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New energy vehicles bring new opportunities to the parts and components industry

At the end of 2007, with the introduction of the “Regulations on the Management of New Energy Vehicle Production Access” and the 2008 Beijing Olympic Clean Energy Vehicle Demonstration Project, the launch of all kinds of new energy vehicles opened the eyes for domestic companies to develop new products. The “Ten Thousand Thousand Cars” project proposed by the Ministry of Science and Technology provides a good opportunity for large-scale demonstration of hybrid vehicles, pure electric vehicles, fuel cell vehicles, and energy supply infrastructure in large and medium-sized cities in China. The component industry has opened up new market space.

For the technical changes and upgrading brought by new energy vehicles, especially electric vehicles, to the entire industry, the reporter once interviewed Professor Yin Chengliang, director of the Automotive Energy Technology Institute of Shanghai Jiaotong University. He said that electric energy will be the most direct and most economical ideal energy source in the future. Electric vehicle accessory systems brought by electric vehicle technology, such as electric steering, electric air conditioning, electric vacuum pump, electric air compressor, electric oil pump, electric Pumps, controllable electric fans, start-up integrated motors and other automotive electrical parts and components products will be greatly developed. Calculating the current market price, selling 120,000 units of integrated motors will be able to top the market value of 400,000 units of traditional motors of Shanghai Valeo Automotive, which is much higher than traditional products.

With the birth of the BYD F3DM dual-mode electric vehicle at the end of 2008, domestic auto makers should see a clear direction: If the traditional form of the car competes with foreign brands, then the final price is comparable; but If you have mastered the core technologies of electric vehicles - including "iron batteries", intelligent centralized battery management systems, permanent magnet synchronous motors, and permanent magnet synchronous motor controllers, these key components will have an international brand Competing strength.

We can already hear more from independent companies

Although domestic automakers are still subject to a few foreign brands in parts such as engine electronic control injection systems, automatic transmissions, automotive electronics, active safety systems, etc., domestic independent brand suppliers have grown up on key components since 2008. Still let us see hope. Chengdu Weite's electronically controlled single unit pump, Liaoning Xinfeng's common rail fuel injection system and Hunan Hengyang Nanyue's single pump system have been successfully fitted to Guangxi Yuchai, FAW Dachai, FAW Xichai, and Dongfeng Commercial Vehicle Engines. , Dongfeng Cummins, Dongfeng Chaochai, Beiqi Futian, Yangdong, Anhui Quanchai, etc. more than 10 domestic diesel engine manufacturers on the country's three engines. The AMT heavy-duty automatic transmission products developed by vehicle companies such as FAW Group and China National Heavy Duty Truck Group have also played a catalytic role in accelerating the export of vehicles. Domestic companies headed by FAW Group also contributed to the establishment of self-developed automotive electronic platforms. During the interview with the FAW Group Technology Center, the reporter learned that FAW has mastered core technologies in the field of powertrain control systems and is planning to expand its application space.

In terms of automotive safety and energy-saving products, Zhengzhou Yutong's engine thermal management system, Suzhou Jinlong's comprehensive safety system, Yuchai's lightweight four-valve engine design technology, and Weichai's WEVB technology and multi-function fuel-saving switches all contribute to the China's own-brand auto products have opened up the core technological strengths of both domestic and international markets.

As early as September 2008, after the outbreak of the US financial crisis, Weichai Group selected a research team to visit the market in the Americas and Southeast Asia, and held various strategic seminars in Hong Kong, Beijing and Shanghai. A set of corporate operations response measures. “The economic recession period is also a good opportunity for enterprises to make good technical reserves.” Tan Xuguang, Chairman and CEO of Weichai Power Co., Ltd. has repeatedly stressed that: for powerful companies, every industry adjustment is an industry wash. Cards and re-establish corporate opportunities.

“The financial crisis is also a rare opportunity for Fast, and it is now the best time for rejuvenation.” Coincidentally, Tan Xuguang, who has already prepared for 2009, is one person, Shaanxi Fast Automobile Transmission Group. Li Dakai, chairman and general manager of the company, told reporters in an interview that he is confident that 2009 will be the most difficult year and that Fast has prepared well in all aspects. He believes that a large number of major projects such as highways, high-speed railways, and airport construction started by the country cannot be separated from heavy trucks, and heavy-duty truck spare parts are the strengths of Fast.

In this unprecedented financial turmoil, people have reason to expect the rapid rise and growth of Chinese power.

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