The domestic auto parts industry is in a good situation

In the first half of the year, China’s auto parts exports were relatively bleak, but the domestic market was in a good position. This was primarily due to the unexpectedly large increase in domestic car sales. Since the beginning of the year, the year-on-year increase in the retail sales of passenger cars has always been higher than the year-on-year increase in wholesale sales, reflecting the strong domestic demand. Display terminal requirements are still huge, as can be seen from the lower inventory coefficient.

At present, residents in third- and fourth-tier cities have high enthusiasm for car purchases, and car consumption has become a “just-needed”, so there is a wider space for cars. With the implementation of the newly introduced "Three Guarantees Law" for automobiles, the threshold for parts and components companies will increase, and there are many opportunities for advantageous parts and components companies to integrate with overseas mergers and acquisitions. These advantages mean that the domestic auto parts companies have a good situation.

The "Three Guarantees Law" for cars that has been planned for seven years will be officially implemented on October 1 this year. Among them, there are clear and inflexible provisions for parts and components. Obviously, strict regulations on parts and components must have a profound effect on the industry.

This is a big challenge for companies with a technical level and quality control ability that is somewhat different from the original ones. Therefore, to obtain a market, it must comply with relevant standards. This will inevitably enable related companies to improve their internal management, product technology, and quality. Some companies that are incapable or who are mainly fake and shoddy will be eliminated to optimize the industry. Integration, the formation of a healthy and orderly market.