From a certain period, the development of China's auto parts industry shows four major trends.


Published time:

2025-07-01

  Within a certain period, China's auto parts industry has been facing challenges such as currency wars and inflation. Addressing these issues requires not only improving technological capabilities to increase product value-added and withstand currency fluctuations and inflation, but also a long-term vision focused on future trends in the auto parts sector to make informed decisions. From a certain perspective, the development of China's auto parts industry shows four major trends:
  1. Accelerated international industrial transfer and active mergers and acquisitions.
  Within a certain period, most domestic auto parts companies have had relatively low sales, significantly smaller than multinational giants with sales reaching tens of billions of dollars. China's manufacturing exports have always been known for their low prices. To effectively reduce production costs and tap into emerging markets, large multinational companies are not only transferring production and manufacturing to low-cost countries and regions on a large scale, but also gradually extending this transfer to R&D, design, procurement, sales, and after-sales service, with the scale and level of transfer increasing.
  In 2010, many multinational auto parts companies established factories in China through joint ventures and other means.
  For domestic auto parts companies to secure a place in future international market competition, the quickest route is through mergers and acquisitions to form large-scale auto parts groups. Mergers and acquisitions in the auto parts sector are more urgent than in the complete vehicle sector. Without the emergence of large auto parts companies, costs cannot be reduced, quality cannot be improved, and the development of the entire industry will be extremely difficult. Given the small scale, weak strength, and insufficient R&D capabilities of domestic auto parts companies, the auto parts industry must accelerate mergers and acquisitions to achieve economies of scale if it wants to develop rapidly.
  2. Auto parts companies are actively implementing systematic development, modular manufacturing, and integrated supply, with the cluster development of the auto parts industry becoming increasingly apparent.
  From the development process of the auto parts industry in major automobile-producing countries, the cluster development of the auto parts industry is as important as the development of the automobile industry. To become larger and stronger, it must develop into an industrial cluster; this is a strategic choice for the auto parts industry. Complete vehicle companies use platform strategies in product development, and systematic development, modular manufacturing, and integrated supply are gradually becoming the development trends of the auto parts industry. At the same time, the cluster development of the auto parts industry is becoming increasingly apparent.
  3. Global procurement of auto parts will become a trend, but China will still be dominated by exports and internationalization for some time to come.
  With the changes in the organizational structure of the auto parts industry, more and more complete vehicle manufacturers will implement global procurement of parts. However, China's huge manufacturing industry and its high-quality and low-cost characteristics cannot be changed overnight in the short term, so the auto parts industry will still be dominated by exports and internationalization for some time to come.
  Within a certain period, international buyers have become increasingly rational and practical in their procurement from China, using methods such as selecting and cultivating potential core suppliers; increasing their own logistics integration; strengthening communication with foreign-funded factories in China to increase their enthusiasm for exports; diversifying procurement destinations; and comparing with other emerging markets to determine procurement locations to promote the procurement process in China.
  Analysis suggests that although international buyers are becoming more cautious about procurement from China, exports and internationalization will still be the main theme for domestic auto parts manufacturers in the next ten years. The main reasons are:
  (1) The auto parts industry is a global industry, and it is inevitable that Chinese suppliers will increase their awareness of the pace of international development. Some companies that have initially tasted the fruits of international procurement have sent quite positive signals;
  (2) The competitive environment for Chinese auto parts companies, especially suppliers in the supporting market, is becoming increasingly fierce, and internationalization will be one of the main ways to differentiate themselves;
  (3) After several years of rapid growth, related supporting manufacturers have reached a scale of more than 1 billion yuan, possessing a certain economic strength for international expansion;
  (4) Foreign-funded/joint venture enterprises will also increase their export efforts, making China a true manufacturing center and thus forming a virtuous cycle.