What Opportunities for Automotive Parts in Domestic Market

2019-09-18 09:04:23

Opportunity One: High Growth of Domestic Automobile Market

"In the next ten years, China's demand for automobiles will remain at an average annual growth rate of 13%-15%. Compared with the world's automotive powers, China's automotive market has a relatively long period of rapid growth. This period is probably from 2009 to 2023, spanning about 15 years. This is a period for all domestic spare parts enterprises. Good opportunities for development."

Our country has its own special national conditions, our income gap is bigger than those of the automobile powers. The size of the income gap will play a crucial role in the popularization of durable goods. The smaller the income gap, the shorter the time for durable consumer goods to become common, and vice versa.

Income gap is relatively large, which determines that the popularization of automobiles in China is also relatively slow. Therefore, China's automobile market will maintain a longer period of sustained growth, which also wins a relatively long period of development for self-brand enterprises with weak competitiveness in a certain period of time.

Opportunity 2: Accelerating internationalization of domestic automobile industry

"During the 12th Five-Year Plan period, the country will vigorously promote the internationalization of the automobile industry and encourage automobile enterprises to go out. With the internationalization of the whole car factory, it will also play a very good pulling role for our own parts enterprises, "Xu Changming said.

"Our automotive products are highly compatible with the buying points of fast-growing consumers in a certain period of time. In a certain period of time, the global growth rate of automobile sales is South America, and the Asian and African markets outside Japan and Korea are also growing rapidly. And people in these countries are more focused on low-cost automotive products. At the same time, as the country actively promotes the internationalization of the automotive industry, it will be imminent for China to become a powerful automotive country. Under such a background, spare parts enterprises will also usher in new development opportunities.

Opportunity 3: Rapid Development of Autonomous Vehicle Enterprises

"A new change is taking place in China's automobile market, that is, the second and third-tier markets, especially the third-tier markets, are becoming the main growth points and support points of China's automobile development in the future. Consumers in the third-tier market are not so sensitive to foreign famous cars. On the contrary, they pay more attention to the economic applicability of automobiles. Influenced by traditional Chinese ideas, they have their own preferences for the shape of automobiles. In view of these characteristics, self-owned brand automobiles have more advantages in their development.

With the gradual strength of domestic independent brand enterprises, it will also promote the rapid development of domestic parts enterprises. Domestic independent brand enterprises are facing both opportunities and challenges. One of the challenges is that the cost advantage of the self-owned parts companies is being weakened. With the rising price of factors of production, the cost of independent parts enterprises has gradually increased. However, the cost of wholly foreign-owned and joint-venture parts and components enterprises has been declining because of the continuous expansion of scale and the continuous advancement of R&D.