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Automotive Components Market

Overview

China has become the largest automotive market in the world in terms of the volume of manufacturing and sales in 2010, with 18.3 million vehicles manufactured and 18.06 million sold in the country, representing a 32.4% annual increase from 2009. China imported $58.2 billion worth of automotive components in 2010. Growth in the motorcycle market is still limited by a general prohibition on motorcycles in China’s large cities.

China has about 6,000 automotive-related enterprises in five sectors: motor vehicle manufacturing, vehicle refitting, motorcycle production, auto engine production, and auto parts manufacturing. This includes approximately 100 OEMs, with 40 producing passenger vehicles, and over 4000 registered auto parts/accessories companies. All tiers of the industry are being driven by the booming sales of the OEM sector. Nearly 80% of the revenue for the auto parts and accessories market is through new vehicle sales. However, revenue from the after-market is increasing rapidly.

Shanghai and its surrounding provinces (Zhejiang, Jiangsu, and Anhui) are the centers for component manufacturing, representing around 44% of national production. Shanghai is home to Shanghai General Motors, Delphi, Visteon, and other notable American automotive companies and, as such, provides a good starting point for U.S. automotive component exporters to begin to explore the Chinese market. Other major automotive centers in China include Guangzhou (South China), Chongqing (West China), Changchun (Northeast China), Wuhan (Central China), and Tianjin (North China).

Key indicators for six emerging markets

Region

Population (Million)

GDP (2009, $B)

GDP per capita

($, 2009)

Import value (2009, $M)

% share of total imports

Import CAGR*, 2006–09

Total Motor Vehicle Production (2009, $B)

Changchun

7.6

42.5

5,526

2,622

16%

16%

1,220

Tianjin

12

112

9,136

1,595

9.7%

6%

600

Wuhan

9.1

67

7,362

1,077

6%

  • 0.2%

490

Nanjing

6.3

63

8,252

715

4.3%

17%

400

Chongqing

28.6

97.5

3,420

684

4%

2%

1,190

Shenzhen

9

120

13,581

78

0.5%

3%

450

China

1,335

4,932

3,694

16,516

100%

11%

13,790

Source: TDC trade, US Commercial Service, World Trade Atlas (China Customs) and China Automotive Industry Yearbook.

*CAGR = compound annual growth rate

With 47% of all automotive component imports in 2009, Japan remains the largest exporter of automotive components to China. Germany and South Korea are the second and third exporter of automotive components, accounting for 22% and 11% respectively. The U.S. is the fourth-largest exporter with only 4% of the market. Some of the obstacles that U.S companies encounter are: 1) Good price but lack of the most advanced technology. 2) Difficult to compete with Japanese and Korean suppliers since Japanese and Korean OEMs normal only import from their home-country suppliers.

China total import of parts and accessories (HS8708), $M

HS Code

Description

2006

2007

2008

2009

2010

CAGR ‘06-‘09

870829

M VHCL BODY PTS/ACC

2,459

1,946

2,201

2,322

3,214

87083011

BRAKE, SERVO-BRAKE

780

845

781

805

1,116

1%

870840

GEAR BOXES

2,017

3,274

3,979

4,986

7,304

35.2%

870899

OTHER 8708

2,662

2,582

1,833

1,753

2,120

Total

7,918

8,647

8,794

9,866

13,754

7.6%

Source: JLJ analysis on data from World Trade Atlas

Sub-Sector Best Prospects

  • Engines, especially engines smaller than 1.6 liters, for motor vehicles and motorcycles (made by U.S. companies in China);
  • New energy-related, such as technology and products related to hybrids and electrical cars, especially for buses;
  • Three-way catalytic devices;
  • ABS;
  • Automatic gear boxes;
  • Braking systems;
  • Machinery, tools, testing equipment for OEM products;
  • Auto and motorcycle casting blanks;
  • Key, high-tech automotive parts and components including disc-type braking assemblies, drive axle assemblies, automatic transmission boxes, engine admission superchargers, engine displacement control devices, electric servo steering systems, viscous continuous shaft devices (for four-wheel drive), air shock absorbers, air suspension frames, hydraulic tappets, and compound meters.
  • Auto electronic devices and instruments (including control systems for engines, chassis and vehicle bodies);
  • Fuel cell technology;
  • Battery management systems for “new energy vehicles”;
  • Automotive accessories;
  • After-market products (that meet legislative guidelines for vehicle modifications)

Opportunities

In 2010, 18.06 million vehicles were sold in China. Much of this growth still comes from stimulus policies for this industry, especially a tax rebate for cars of 1.6 liters or less and other subsidies for buyers in the countryside.

The obvious trend is that small cars will be popular due to policy guidance and market demand. The Chinese government has promised to reduce the country’s carbon emissions dramatically, so more and more policies favor small cars. Meanwhile, after more than 10 years of rapid development, first-tier cities like Beijing, Guangzhou and Shanghai have enormous numbers of cars on the road, so people in second-tier cities will represent the largest potential buyer for the next 10 years, but these buyers are more sensitive to price and so small cars will continue to be popular in second-tier cities.

Another new trend is for Chinese auto companies to purchase overseas automotive companies for brands and technology: BeiQi purchased SAAB and Geely Motors purchased Volvo. That happened partly because Chinese auto manufacturers have accumulated enough money to do this, and partly because they have reached a bottleneck in their business expansion and technology improvement. China exports relatively little in the automotive arena, mostly to African and Latin American countries, but Chinese automakers already have their eye on the U.S. and European markets.

The priority goal for Chinese automotive components, parts, and accessory manufacturers is to improve technology, quality and design capability. Currently, a consortium is working on developing a Chinese automatic transmission, a technology that has eluded them so far. Most of the domestic automotive parts manufacturers’ R&D capabilities are limited, due to the small scale of their operations and a shortage of capital to invest in that capability, as compared to international companies. Lately, Chinese companies are dominating the low-end components market and have aggressively sold their parts to U.S. automakers. In the next five years, the Chinese Government will continue to encourage foreign investment in automotive component development and manufacturing, so in the meantime, there is still a market for imports and American products are generally highly regarded by Chinese customers. However, the opportunity to sell components or parts directly from the U.S. is rapidly diminishing. Most foreign companies have found they need to set up operations in China to sell into the Chinese supply chain. Many U.S. companies have integrated successfully and see a bright future as they expand along with the market.

Recently, the Chinese government launched the “National Project for Electric Vehicles,” that encourages the development of environmentally friendly automobiles. U.S. companies possessing clean energy parts and technologies will find more and more opportunities in the Chinese market.

Additionally, as China’s restrictions on trading and distribution have been reduced over the years, American companies are gaining the right to distribute most of their own products, including automobiles and related parts, within China. Car dealerships are also about to embark on the business of buying back and selling used cars, although imported used cars continue to be prohibited.

Major Shows/Exhibitions:

The 7th Guangzhou National Automobile Parts Trade Fair 2011
Location
: Guangzhou
Date
: February 20-22, 2011
Website
: http://chezhan.1131.cc/zhanhui_show/10270.html

China International Auto Accessories Electronics, Tuning & Care Products Expo
Location
: Beijing
Date
: February 25-27, 2011
Website
: http://www.ciaacexpo.com

2012 Beijing International Automotive Exhibition
Location
: Beijing
Date
: April 2012
Website
: http://www.auto-fairs.com

National Automobile Parts Conference and Trade Fair 2011
Location
: Shenyang
Date
: April 23 – 25, 2011
Website
: http://www.chinaqipeihui.com

Shanghai Auto Components & Parts Exhibition
Location
: Shanghai
Date:
June 2012
Website
: http://www.auto-fairs.com

US Commercial Service – The JLJ Group
China Automotive Component Industry

Page 26 of 27
Date
: June 2012
Website
: www.auto-fairs.com

International Exhibition of Automobile Parts and Automobile Accessories 2011
Location
: Beijing
Date
: September 8-10, 2011
Website
: http://www.expo-capa.com

Automotive Testing Expo China 2011
Location
: Shanghai
Date:
September 14 - 16, 2011
Website
: http://www.testing-expo.com/china

Shanghai International Automobile Industry Exhibition
Location
: Shanghai
Date: TBA

Emerging markets:

The 3rd Dongbei (Changchun) Automobile Supplies Exhibition 2011
Location
: Changchun
Date
: March 29 - 31, 2011
Website
: http://www.cnsb.cn/html/exhibitions/71/show_71703.html

The 18th China International Industry Fair Automotive Manufacturing Technology & Material Show 2011
Location
: Chongqing
Date
: April 20 – 22, 2011
Website
: http://www.cnfair.org

The 8th Changchun Automobile Parts Fair 2011
Location
: Changchun
Date
: April 28- 30, 2011
Website
: http://cn.gasgoo.com/Event/activity-detail/83cec284-127d-4a35-bbe7-a5d2e7474920.html

Automotive Electronics South China 2011
Location
: Shenzhen
Date
: August 15, 2011
Website
: http://www.ae-china.com

For other shows, please consult:

http://www.biztradeshows.com/china/china-tradeshows.mp?industry=automotive

Web Resources

China Associations of Automobile Manufacturers

China Automobile Dealers Association

Department of Mechanic, Electronic and Hi- Tech Industry, MOFCOM

Certification and Accreditation Administration (CCC Certification)

Ministry of Information and Technology, Department of Industries

U.S. Commercial Service Contact Information in China

Beijing Office:
Tel: (86-10) 8531-3000
Fax: (86-10) 8531-3701
Gwen Lyle

Qiurong Zhang

Shanghai Office:
Tel: (86-21) 6279-7630
Fax: (86-21) 6279-7639
Keenton Chiang

Wenjuan Zhan

Guangzhou Office:
Tel: (86-20) 8667-4011
Fax: (86-20) 8666-6409
Liu Ying

Chengdu Office:
Tel: (86-28) 8558-3992
Fax: (86-28) 8558-3991
Chen Ling

Shenyang Office:
Tel: (86-24) 2322-1198x8142
Fax: (86-24) 2322-2206
Huang Wei

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