Plastics Tank Market Opportunities Large Local Companies Expect Breakthroughs

"Plastic fuel tanks will be popular in the future car tank market." Experts from the Pan Asia Automotive Technology Center told this reporter. Relevant data show that at present, automobile plastic fuel tanks have occupied 90% of the US automobile fuel tank market, and Ford's US use of plastic fuel tanks has even reached 100%. In China, the usage rate has also reached 70%. "The plasticization of fuel tanks is a trend in the manufacture of modern automobile fuel tanks. With the gradual increase in the number of vehicle ownership in China, the market for plastic fuel tanks will be further expanded."

Market gestation opportunities

As we all know, the added value of automotive products is slowly shifting to module components. At present, China's parts and components industry is developing rapidly and basically forms the six major industrial clusters of Northeast China, Beijing-Tianjin, Central China, Southwest China, Yangtze River Delta and Pearl River Delta. Fuel tanks are the core components of automobiles, and more and more companies have seen the profits that scale production tanks can obtain. The three major international tank giants have rushed around in China, and Chinese domestic fuel tank companies such as Wuhu Shunrong, Hubei Tongda, Yangzhou Yapu, Yangzhou Changyun, and Chengdu Lingchuan have also sang the banner. However, due to limited capital and technology, only a small number of local auto fuel tank companies are on the scale, and local companies that focus on the development of auto plastic fuel tanks are even rarer.

On March 28, Yangzhou Yapu Auto Plastics Co., Ltd. officially changed its name to Yapu Auto Parts Co., Ltd. (abbreviated as Yapp Corporation). The research and development center for automobile fuel tank systems with a total investment of 120 million yuan was also started at the Yangzhou headquarters on the same day. “Experimental verification and design simulation through purchase and cooperation. In the next five years, YAPP will invest a total of 400 million yuan in R&D, which does not include investment in overseas markets and new products.” Yap Director Long Huang Yan Xun said.

It is understood that YAPP was established in 1988 and was jointly established by the National Development and Investment Corporation (SDIC) and Shanghai Automotive Industry Corporation (SAIC). It is the largest manufacturer of automotive fuel systems in China and the birth of China's first passenger car plastic fuel tank. here. YAPP currently has 8 branch factories across the country, forming five production bases in Yangzhou, Shanghai, Wuhan, Changchun, and Chongqing. It has an annual production capacity of 1.5 million auto plastic fuel tanks and 600,000 refueling pipes. In 2006, Yapu tank production is expected to reach 1.3 million, and sales revenue will be 900 million yuan. In 2010, the output will exceed 2.2 million, and sales revenue will exceed 2 billion yuan, ranking among the top five in the world.

“At present, among the cars in the country, 30% use steel tanks and 70% use plastic fuel tanks. It is expected that in the next five years, the share of plastic fuel tanks in the national market will increase to 85%.” Huang Yanxun is optimistic about the market potential of plastic fuel tanks.

A plastic industry expert told reporters that plastic has a light weight, excellent performance, corrosion resistance, easy forming and other characteristics. From the point of view of energy saving and environmental protection, the weight of a plastic fuel tank is generally only one-half that of a metal fuel tank, which can directly reduce the weight of the entire vehicle, thereby reducing the energy consumption of the entire vehicle. In addition, the reutilization rate of the plastic fuel tank can reach more than 90%.

"Plastic fuel tanks have a better degree of freedom in design. With the constant progress in the automotive design process, the space left for fuel tanks at the bottom of the car is getting smaller and smaller. Plastic fuel tanks can be designed and shaped in other parts of the car, and they can be molded with good plastics. Performance, make full use of the given remaining space, build the largest possible fuel tank.” Peng Ning, deputy general manager of Yapp Corporation, said.

Innovation is a double-edged sword

Wan Guanqiu, chairman of Wanxiang Group’s Board of Directors, believes that domestic parts and components companies have the disadvantages of small scale, high cost, low technological content, and lack of R&D capabilities. Therefore, there are people in the industry who call China's auto parts industry the biggest weakness in China's development of national auto brands. Survival of the fittest is an inevitable trend.

Some experts pointed out that there are three roads for the domestic complete vehicle supporting enterprises: independent development, technology introduction or seeking joint ventures. If you want to stand alone in the strong market, you can only take the path of a first-tier supplier and have the ability to supply modules. "If you are strong, you can only compete with your opponent. Otherwise, you will only talk about it. The main objective is to fight with powerful foreign companies and find their own way of development in the process of localization," Huang Yanxun told reporters.

At present, the core technology of plastic fuel tanks is controlled by three foreign oil tank giants. Sun Yan, general manager of YAPP, stated that on the premise that there is a gap with the world's top three, Yap averages 7 to 8 new products each year and develops a new fuel tank. The cycle is less than one year. Fang Yan said that YAPP's major customers include Volkswagen, Audi, General Motors, Ford, Peugeot-Citroen, Toyota, Dai-Ke, Hyundai-Kia and other companies, and are "A" grade suppliers for Volkswagen, General Motors, Ford and other companies. The market share of car plastic fuel tanks remained at around 50%. In 2005, Yap continuously obtained the supporting rights for 11 new products, including Cadillac, Rover, Volvo and other high-end car fuel tank new products.

Chen Yinda, vice president of SAIC Group, said in an interview with reporters that in the global competition landscape of the auto industry, we must make full use of domestic and foreign resources and strive to build our own brands in order to stabilize ourselves on the road to international competition. The key is to accelerate the introduction of foreign fuel tank systems to develop core talent while accelerating hardware development, gradually establish a core team with independent research and development, possess a number of intellectual property rights, and use synchronous development as a breakthrough to focus on enhancing core competitiveness. "Shangqi has made solemn promises to the country and society to develop its own-brand sedan, and Yap will develop the first self-owned sedan fuel tank for SAIC Motor."

At present, the opening of the entire vehicle and parts market and the reform of the industrial division of labor require the parts and components companies to continuously improve their technological level and product quality, paying more attention to the simultaneous development of the entire vehicle. To participate in international competition, it must have completely independent development capabilities.
Innovation and self-development also mean greater investment, which is a challenge for capital reserves. On the other hand, in the face of rising prices of raw materials, lower prices from automakers and competition from international auto parts giants, auto industry profits fell by 50% in 2005. Almost all OEMs will directly pass the pressure of falling profits. To the supporting manufacturers. It is understood that in order to maximize the Group's profits, the OEMs require that the price of parts and components be reduced by 8% to 10% each year in actual procurement.

“The two major shareholders are strong and funds are not a problem. At the same time, we will consider financing through other capital operations. There are certainly cost pressures, but local companies are lower than multinational companies in terms of development costs and management costs. In the project, Yapp development costs accounted for only 20% of multinational companies." Huang Yanxun said that in addition, it will also reduce costs, increase output, and achieve economies of scale through various means.

Evolution from domestic to international

The first step for multinational auto giants to enter the Chinese market is to transfer technology from product exports to foreign countries. This model has been used by certain Chinese vehicle companies and parts and components companies for reference.

At the end of 2003, Yap began exporting fuel tanks for Ford Motor Co., Ltd. to Taiwan, Malaysia, the Philippines, and South Africa. In 2005, Yapu Tanks exported 53,000 products, an increase of 719.12% over the same period in 2004. In 2006, YAPP will achieve a breakthrough of 120,000 fuel tank exports.

In March of this year, YAPP Corporation, on behalf of the Chinese fuel tank manufacturing company, obtained the simultaneous research, development, and supporting qualification of the fuel tank of the GM China market in the global bidding held by the US General Motors Corporation. According to reports, companies involved in fuel tank R&D and bidding, including multinational companies such as Iinergy of France, Ti of the UK, and Viston of the United States, have obtained 4 R&D platforms and supporting qualifications for the Chinese market, accounting for 1/4 of the total tender volume. It is reported that the global synchronous R&D project will be completed in 2008 and will form an annual output of 240,000 batches. By then, Yap will supply 600,000 fuel tanks for General Motors, accounting for 30% of General Motors' China market fuel tanks. /4 or so.

According to reports, YAPP will change the model of producing fuel tanks in accordance with the drawings of multinational companies in the past and conduct self-designed development, production of prototypes and tests. This is the first time that Chinese fuel tank companies have participated in the research and development of multinational companies' products.

Yap took two years to realize the transition from the introduction of technology to the sale of technology. In September 2005, the Indian company ZAAPL took the initiative to throw in Hydrangea and purchased the YAPP fuel tank to develop manufacturing technology. According to the agreement, before 2008, Yapp helped ZAAPL develop plastic fuel tanks used in India for its domestic automobile industry. This made Yapp Corporation the only company in the country that exported fuel tanks in bulk at the time and was the only independent brand enterprise that exported its technology abroad.

“India is very similar to the Chinese market in previous years, with a large number of small-scale multinational OEM (abbreviated as 'OEM') factories. The most critical thing is that so far, India does not have a plastic fuel tank company. The demand for all plastic fuel tanks depends entirely on imports, and India's current automotive industry is growing faster than China. This is undoubtedly a good opportunity.” Fang Yan has thoroughly inspected the Indian and Thai markets.

According to the plan, in 2007, YAPP will start building a factory in India and it is expected to start production in 2008. It will become the first plastic tank factory in India. “The progress of plant construction is based on the current project situation and starts with technical support. A special group has been set up to do preliminary research including investment environment, policies, etc. Substantial progress will be made by the end of this year. We will pass the way of holding. Strengthen the management of enterprises in overseas markets." Fang Yan said that in 2008, Yapp will also set up factories in Thailand.

Huang Yanxun hopes that YAPP can build a fuel system supplier with international competitiveness and create a world-class automotive parts and components company in China's land. However, judging from the status quo, it will take time to achieve the wish.

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