The huge capacity and continuous growth of the Chinese auto market have excited the parts and components companies around the world. Since 2013, foreign-funded parts and components have developed rapidly in the Chinese market and have accelerated the process of localization. Visteon, Delphi , Valeo, Eaton , Foglia and many other multinational auto parts giants are optimistic that China's business will double in the future.
It is worth noting that expanding to the low-end market and supporting high-end self-owned brands to drive business growth have become new measures for the development of foreign-funded parts and components in the Chinese market in the near future. This has put pressure on local parts and components traders who have already lost their high-end key parts and components markets. . Under the circumstances of "strong powers," how do domestic auto parts companies develop?
Rapid expansion of foreign-owned component suppliers
Recently, the automotive parts company German Hella Group announced its investment plan in China before 2020: China will establish three new lighting factories and expand several R&D centers. Hella hopes to complete local production based on German design and will serve FAW, BAIC and SAIC and more Chinese domestic brands in the future.
Coincidentally, Japanese auto parts manufacturers have recently settled in Changsha. The new plant of Changsha Pacific Semi Valley Auto Parts Co., Ltd., which was jointly invested by Japan Pacific Industrial Co., Ltd., and Bangu Manufacturing Co., Ltd. and Meidawang Co., Ltd., was established in Xingsha. After this project is completed, it can produce 300,000 sets of auto parts annually.
It is understood that the international auto parts giants, including Bosch, Valeo, TRW, and ZF, have achieved double-digit growth in the growth rate of their business in China in 2012. At present, foreign auto parts manufacturers are making intensive efforts to accelerate the planning and implementation of investment and capital increase projects in China.
At the Shanghai International Auto Show held in April, Valeo Group, the French auto parts giant, announced at the show that it will expand its investment in China. By 2015, Valeo's sales in China are expected to double, and China will become Valeo’s largest overseas market. It is understood that in 2012 Valeo China sales exceeded 10 billion yuan, accounting for 10% of Valeo's sales.
Eton Vehicle Group, a US auto parts company, also announced at the Shanghai International Auto Show that it wants to expand its production capacity in China. Eaton Vehicle Group's Shandong Jining Manufacturing Plant will expand its production capacity by two times to meet the growing demand for valve and valve actuation mechanism products and technologies in the Chinese market.
In addition, Bosch plans to continue to increase investment in the Chinese market, and plans to increase investment by about 3 billion yuan in auto technologies, aftermarkets, etc. only in 2013. In 2013, TRW plans to invest over US$200 million in the Chinese market, which exceeds TRW’s investment in any country in the world. ZF plans to re-launch two production sites in China in 2013.
At the Shanghai Auto Show, there were as many as 1,541 parts suppliers, both in terms of the number of exhibitors and the scale of booths. The top ten industry giants such as Bosch, Tianhe, China, and Aisin have specifically opened up independent exhibition areas. Not only do they attract foreign brands to joint venture brands in China, they are also more optimistic about the growth in the demand for high-quality components from China's high-end self-owned brands.
In order to boost business growth by supporting high-end self-owned brands, it will become a new measure for the international auto parts giants in 2013. For example, Bosch has developed components specifically for low-end vehicles to cater to the matching requirements of self-owned branded auto companies that are increasingly moving toward high-end vehicles.
According to industry experts, foreign auto parts companies with technological, management, and brand advantages are investing in the Chinese market and are accelerating their investment. While maintaining the existing high-end product market, they are also actively developing low-cost products to the low-end market. The expansion of the market will once again bring a new round of crisis to local components companies with cost as the main advantage.
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