Four major problems facing China's auto parts industry
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First, the lack of key technologies for key parts and components has limited the development of the industry. There are about 20,000 auto parts companies in China, accounting for more than 80% of the total number of companies, but local company sales account for only 20% of total sales, and 90% are low-end products. Foreign-owned companies control high-end technologies and products. Foreign-owned and joint ventures control more than 70% of the market in EMS engine control systems, automatic transmissions, ABS systems, and airbags, and some high-tech products are almost exclusively foreign-invested. monopoly.
Second, buyers are pushing prices and rising costs to pinch profit margins. In terms of price: Under the environment of price cuts in the entire vehicle market, the OEMs passed the pressure of price cuts on parts and components, and the purchase prices of parts and components of entire vehicle companies were generally reduced. The profit margin of spare parts manufacturers was further reduced. In recent years, raw materials such as steel, aluminum, oil, and coal have all experienced substantial growth. Electricity prices and transportation costs have also risen. The rapid increase in raw materials has caused the company's production costs to continue to rise.
Third, the adjustment of export tax rebate policy and multiple instability factors affect the operation of the industry. On June 22 this year, the State Administration of Taxation and the Ministry of Finance issued the "Notice on Canceling Tax Refunds on the Export of Certain Products". On July 15th, the export tax rebates on 406 kinds of goods such as steel and non-ferrous metal building materials were cancelled, which implicated the car zero. The cost of components has risen accordingly; at the same time, forcing the appreciation of the RMB exchange rate internationally will also reduce the competitiveness of China’s auto parts and components in the international trade market; at the same time, the World Bank released a report in June that the world economy is still likely to experience a secondary recession. These factors may affect the export of auto parts in China.
Fourth, foreign frequent trade barriers, China's auto parts exports more difficult. With the rise of global trade protectionism, China is frequently subject to auto dumping anti-dumping investigations. For example, in September of last year, the United States imposed a first-year tax rate of 35% on all light trucks and passenger car tires imported from China, 30% in the second year, and 25% of the punitive tariffs in the third year; afterwards, Argentina imported to China from China in November. The steel automobile wheels implemented anti-dumping for four months; on May 12 this year, the European Trade Commission formally announced a uniform anti-dumping tariff of 20.6% on China's export of aluminum alloy wheels. The continued increase in trade protection measures has put China's auto parts exports under pressure.