Feast under the feast
Xu Changming pointed out that in the next ten years, parts and components companies will usher in three development opportunities: First, the high growth of the domestic auto market; Second, the acceleration of the pace of the domestic auto industry's internationalization; Third, the rapid development of independent auto companies.
Opportunity 1: High Growth of Domestic Automotive Market
He said: "In the next decade, China's demand for automobiles will remain at an average annual growth rate of 13% to 15%. Compared to the world's automobile powers, China's auto market has a relatively long period of rapid growth. This time is probably from 2009 to 2023, spanning about 15 years, which is a good development opportunity for all domestic parts and components companies."
Looking at the automotive industry’s development process in the auto industry, it will generally experience two rapid development stages. The first stage is a five-person-to-1,000-person vehicle with a thousand persons, which is also the fastest growing period. The duration is about five years, and the average annual sales growth rate is about 30%. For example, from 1960 to 1964, Japan had an average annual growth rate of 35.8%, and South Korea from 1981 to 1985, with an average annual growth rate of 25%. Our country lasted from 2001 to 2008 and lasted for 8 years. The average annual growth rate was 30.4%. If the deducting of the compensatory growth factors caused by China’s accession to the WTO in 2002, the average annual growth rate of China’s auto sales will be around 25%.
The second stage is a thousand people 20 cars to 1,000 people 100 cars. The average annual growth rate of sales during this period was about 20%, which was a drop of 10% from the first period, but it was still high-speed growth with a duration of about 10 years. Japan is 8 years, that is, from 1965 to 1973, the average annual growth rate is 22%, South Korea is 12 years, and the average annual growth rate is 20%. Because our country’s automobile penetration rate is relatively low, we are currently predicting that at this stage, we will have a growth period of about 15 years, which will take a little longer, but compared to the speed of development of the above-mentioned automobile powers during this period, we The speed is lower, and the average annual growth rate is about 13% to 15%.
Xu Changming said that China has its own special national conditions, and our income gap is greater than those of automobile powers. The size of the income gap will play a crucial role in the popularity of durable consumer goods. The smaller the income gap, the shorter the popularity of durable consumer goods, and vice versa.
The relatively large income gap has determined that the popularity of automobiles in our country is also relatively slow. As a result, China’s auto market will maintain a longer period of sustained growth. This has also won a relative advantage for self-owned brand companies that are still relatively weak in competitiveness. Long development time.
Opportunity 2: Speed ​​up the pace of internationalization of the domestic automobile industry
"In the 12th Five-Year Plan period, the country will vigorously promote the internationalization of the auto industry and encourage auto companies to go global. With the internationalization of auto factories, it will also play a good role in driving the auto parts enterprises in China. Xu Changming said.
In 2010, China's auto production reached 18 million vehicles, making it the undisputed world's largest auto market. The rapid growth of the export market has become one of the key factors for high output growth.
“The selling point of our automotive products is highly compatible with the rapidly growing consumer buying points. At present, the fastest growing sales of automotive products in the world are South America, and Asia and Africa outside of Japan and South Korea and the African market. The growth is also very fast, and the people in these countries are more focused on low-priced automotive products,†said Xu Changming.
Our products have always been competitive with low cost and low prices. We can also see from the top ten exporters of automotive products in 2010 (Algeria, Syria, Vietnam, Russia, Chile, Egypt, Brazil, Bangladesh). Mainly in developing countries and emerging market countries, these countries account for 60% of China’s exports. This fully shows that at present, China's automotive products meet the needs of ordinary people in developing countries and emerging market countries, which also lays a good foundation for China to become a major exporter.
At the same time, as the country actively promotes the internationalization of the automobile industry, China will become a powerful automobile country in the near future. Under such a backdrop, parts and components companies will usher in new opportunities for development.
Opportunity 3: Rapid Development of Autonomous Vehicle Firms
Xu Changming believes that “China's auto market is undergoing a new change, that is, the second and third tier markets, especially the third tier market is becoming the main growth point and support point for China’s auto development in the future. And consumers in the third tier market are not Not so sensitive, on the contrary, they value the economic applicability of automobiles more, and at the same time, they are influenced by Chinese traditional thinking and have their own preference for the appearance of cars. For these characteristics, autonomous brand cars have more development advantages in them.â€
According to the survey, the share of car sales in the third-tier market is growing rapidly at a rate of 2% to 3% each year. Ten years after the forecast, the third-tier market will account for about 55% of the national market, and the first-line market will be reduced to about 15%.
Compared with first-tier cities, people in the third-line region are more affected by Chinese traditional culture. On the one hand, people here are not so keen on foreign cars, on the other hand, they are more focused on the appearance of the atmosphere, complete functions, and at the same time Use cars that are relatively low cost. In this case, it is often at the expense of sacrificing performance and technical content, that is, it is impossible to put special high-end technologies on the third line to sell. This will be an opportunity for independent brands. Compared with the first-line market, the competitiveness of independent brands in the third-line market is relatively high.
"In addition, there are three advantages to independent brands. The first is low cost; the second is flexible response and rapid speed; the third is strong government support," Xu Changming pointed out.
With the gradual strengthening of domestic self-owned brand enterprises, it will also spur the rapid development of domestic parts and components companies.
The outlook is still good
Domestic independent brand companies are also facing challenges while meeting opportunities.
Xu Changming believes that one of the challenges is that the cost advantage of auto parts companies is being weakened.
With the rising prices of production factors, the cost of independent parts and components companies has gradually increased. However, due to the continuous expansion of scale and continuous advancement of R&D, the wholly foreign-owned and joint-venture parts and components companies have continuously reduced their costs.
The second is that with the improvement of environmental protection standards and the strengthening of monitoring efforts, dual-pressure on technology and costs has been formed for independent component companies.
Xu Changming expressed that in the future, more attention will be paid to the development of energy-saving products and environmental protection. The state will also increase supervision in this respect. This means that the energy-saving technology of automotive products needs to be continuously improved, and will inevitably give to independent brand enterprises in technology and Cost pressure.
The third challenge comes from the popularization of modular production, which will create greater and greater technical barriers for independent brands.
In response to these challenges, Xu Changming gave the following suggestions:
First, the government gives greater support to independent brands under WTO rules.
The second is to unite domestic parts and components companies to conduct R&D and research on key components and technologies.
The third is from a strategic point of view, first bigger and stronger. It is only after the scale has been established that it will be more capable to conduct research and development of product technologies, as well as to reduce costs through economies of scale.
The fourth is to give full play to the strength of the auto group to drive the development and expansion of the parts and components companies. Many parts and components companies are now affiliated with auto group companies such as FAW, Dongfeng, SAIC, etc. In particular, SAIC has established its own very strong component supplier team.
Fifthly, while the domestic auto group will acquire foreign auto companies, it will also acquire some auto parts companies and become its own wholly-owned company. This will also continue to expand the ranks of domestic auto parts companies.
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