Four trends in the changes of China's auto parts industry

In 2009, with the global procurement of auto parts becoming a trend, the “popularity” of the booming Chinese auto parts industry can be seen. Supporting this "popularity" is the rapid development of China's auto parts industry in recent years. According to statistics, in the last few years, the sales revenue of vehicle manufacturers has increased by an average of 28.75% each year, while the sales revenue of auto parts companies has increased by an average of 36.82% annually, which is higher than the industry average. The rise in aggregate indicators has outlined the continuous expansion of China's spare parts industry. As a support for the development of China's auto industry, the parts and components industry needs not only a rising scale, but also more importantly the upgrading of the industry and the continual development capability. It is gratifying that China's auto parts industry is currently showing four major trends.

Trend Industrial Cluster

At the end of 2009, with Guangxi as the leader, Guilin, Nanning, and Yulin, Guangxi's auto parts industry cluster was formally launched. Taking the development of new and new energy vehicles and engines as breakthroughs, nurturing their own brands and jointly breaking through the technological bottlenecks of industrial development and forming new competitive advantages; plans to build a number of highly innovative vehicles around 100 billion yuan in industrial development in 3-5 years. Specialized alliances with unique features and technological advantages, the introduction and cultivation of high-end talents, and a research and development team that integrates production, research, and research integration to highlight the key projects and development priorities of Guangxi auto parts, and develop new products and key commonalities for auto parts and components. Technical research will form 3-6 key independent brands and 10-20 key independent brand products. New patents, new achievements and new technologies will be added each year.

“In areas where there are industrial clusters, their market competitiveness is generally higher than in areas where there is no clustering; in areas where there is industrial competitiveness, there must be a certain degree of industrial agglomeration.” The relevant person in charge of the Ministry of S & T of the National Development and Reform Commission put forward the zero of China’s automobile industry in recent years. The activeness of the component industrial clusters stems from the improvement of the overall level of the parts and components industry. The rapid rise of industrial clusters, in turn, has stimulated the development and upgrading of the parts and components industry. Such examples are not uncommon in the international automotive industry. Detroit, Japan, Toyota Motor City, Japan, etc., are not typical representatives of large-scale automotive industry clusters.

After the mid-1990s, China's industrial clusters entered a period of rapid development. With the rapid rise of auto parts and industrial bases in Jilin Changchun, Hubei Shiyan, Anhui Wuhu, Guangdong Huadu, Beijing-Tianjin-Hebei Bohai-Rim economic circle, China has basically formed the Northeast, Beijing, Tianjin, Central China, Southwest, and the Yangtze River Delta. Pearl River Delta and other six major parts of the concentrated area.

In addition to the internal support of large-scale automobile groups, the development of domestic spare parts industry clusters mainly takes three forms: the first is to rely on the development of the parts and components industry around the entire automobile plant; the second is to rely on the development zone and the development of automobile cities. The component industry; the third is to rely on the county to develop the component industry. According to incomplete statistics, at present there are about 1000 industrial parks that mainly consist of auto parts, of which about 100 are key cluster areas or zones.

When the industrial clusters take shape and the construction of the localities continues unabated, we must guard against the emergence of the phenomenon of "set rather than group". Experts called for the quality of industrial clusters will directly affect the speed of China's auto parts industry upgrade. The auto parts industry cluster is not a simple accumulation of enterprises, but should be a system cluster. From raw materials, parts and components, equipment manufacturing, and joint processing to the final assembly and ex-factory, adjustments should be made relative to the industrial chain. Part of the work within the cluster should be coordinated to form a regional assembly. Each enterprise in the collection should generally have higher professionalism. The degree and strong production capacity are the only way to lay a good foundation for building a huge industrial cluster. [next]

Tendency to improve

Two years ago, Shaanxi Hande Company exported axle technology to India's AMW Automobile Co., which was the first export of China's automobile assembly technology. The cooperation between the two parties includes the establishment of an axle plant with an annual output of 120,000 axles in India. Hande assists AMW in the design of the plant and process design, and licenses the existing advanced axle technology for the Indian market. Transferred to AMW in India; AMW in India will begin with the assembly of fully assembled bridges, gradually assembling half-bundle parts in India or assembling all parts in Hande axles; Hande will progressively make Hande Axle local in India; Hande will also assist India's AMW company in developing the axles adapted to India.

Han De's attempt shows from one aspect the changes in China's auto parts exports. The export of auto parts is changing from a single product type to a capital export type and a technical one; from the labor-intensive, material-intensive, low-end product exports, to the export of higher value-added electromechanical products; the export market consists of The after-sales market has shifted from entering the global supply chain of multinational companies, and the proportion of auto parts parts and components has been increasing.

In the past few years, a number of innovative parts and components companies have rapidly emerged in China, such as Wanxiang Group, Shaanxi Fast, Fuyao Glass, Xinyi Glass, Guangxi Yuchai, Shenzhen Hangsheng, Zhejiang Yinlun, Nanjing Aotejia. They have been deeply cultivating specialized market segments, and through continuous innovation and exploration, they have mastered the core competitiveness of advanced products. According to statistics, at present, China's auto parts industry has seven state-level high-tech enterprises and nearly one hundred provincial-level high-tech enterprises. The improvement of innovation capabilities, especially the enhancement of key component innovation capabilities, has brought new market positions to auto parts auto parts. The engine is the "heart" of the car and is a true key component. Chinese domestic car makers Chery, Brilliance and SAIC have successively launched engines with independent intellectual property rights in the past two years. As a professional engine manufacturer, Guangxi Yuchai has its own development. The ability to synchronize products with the international advanced level occupies a strategic high ground in the domestic and foreign markets to participate in competition.

Regardless of the method, China's spare parts enterprises, especially the backbone component companies, are constantly expanding their own business areas and building an industrial chain that meets their own advantages. Only by grasping the direction of industrial development can we endure in the market. If Huachen Group and Shanghai Automotive Transmission Co., Ltd. cooperate to produce manual transmissions for cars and dual clutch automatic transmissions (DCT), the first phase of the plan is to produce 500,000 transmissions per year, including 100,000 automatic transmissions. The second phase plans to produce 100 Million transmissions. Experts in the industry believe that vehicle manufacturers and parts companies jointly develop common parts and components, and through the establishment of a common development platform, they can help parts and components companies improve their systematization and modularization capabilities. In recent years, systematic design and modular supply have become the development trend of the international auto parts industry. The formation of this capability requires the parts and components companies to establish long-term strategic partnerships with vehicle companies. Parts companies actively participate in the vehicle companies. Product R & D, and constantly improve their own research and development level. [next]

Tend to overseas mergers and acquisitions

Since 2009, the continuing downturn in the global automotive market has meant more opportunities for China's auto parts industry. The world's auto giants will be better watching the Chinese market. In previous years, multinational auto companies only introduced products in China, but now they have put key components, engines, and research and development centers in China. Parts manufacturers will have more opportunities to go out and overseas acquisitions will usher in good opportunities.

On December 14, 2009, Zhejiang Auto Parts Co., Ltd., Ningbo Yunsheng Co., Ltd. and Japan's Nikko Electric Co., Ltd. signed an equity transfer contract, and Ningbo Yunsheng purchased Nikko Electric Industrial Co., Ltd. for a price of nearly RMB 92 million. 79.13% of the company's shares. The acquisition has not yet been completed. Ningbo Yunsheng has formulated an ambitious development plan. After this acquisition, Yunsheng’s entire automotive motor business will rapidly expand from an annual sales of 200 million yuan to a sales scale of 600 million to 700 million yuan. With the expansion of China's OE (automotive accessories) supporting market, it is hopeful that after two to three years of sales, sales will reach more than one billion yuan.

More than a month ago, Shenglong Group, another auto parts company, acquired SLW Inc., a subsidiary of Borg Warner. Shenglong Group purchased more than 90% of the SLW shares of the world’s top 500 US companies, the BorgWarner Group, for US$ 15.794 million. The acquisition has enabled Shenglong Group to obtain SLW's technology and market, and Shenglong’s automotive oil pump market share is also expected to rise from fourth in the world to second place.

On November 2, 2009, China’s largest overseas auto parts merger and acquisition case was finalized in Detroit. Jingxi Heavy Industry and Delphi Corporation formally signed contracts to purchase Delphi-related machinery and equipment and intellectual property at a price not exceeding USD 90 million. Delphi's customer and product supply contracts.

This merger will not only enable Jingxi Heavy Industry to obtain related technologies, but also involve its supply chain. Compared with the development of the entire vehicle industry, the development of China's spare parts industry will lag behind. The Suspension and Braking operations that BJR acquired this time are all urgently needed technologies for the domestic auto industry. The latter's technological advantages are used by me and can achieve rapid development within a short period of time. While acquiring Delphi related business, Jingxi Heavy Industry also inherited Delphi's supply contracts for BMW, GM and other international large-scale automobile companies. This means that the stage of Jingxi Heavy Industry has been a global market from the very beginning.

If the overseas acquisition of parts and components under consideration is taken into account, more than 10 overseas acquisitions by local component companies occurred in the second half of 2009. The global financial crisis has given local component companies the best leap-forward development opportunities. Overall, it is not favorable to Chinese parts and components companies. At present, China's spare parts suppliers are still in the carnival stage of feasting, but local parts and components companies are better prepared to take precautions, use the best time to acquire overseas high-quality assets or technology, to make their own faster growth, to meet the future of large-scale integration Ready.

The plan for the revitalization of the automobile industry announced at the beginning of 2009 stated that it will "autonomize key component technologies". In addition, the central government will invest 10 billion yuan in the next three years as a special fund for technological progress and technological transformation. Driven by the country’s policy of encouraging the “autonomy of core components,” more and more Chinese companies view Bargain-hunting Overseas as the best way to obtain core technologies. [next]

Trending mergers and reorganizations

“The global auto parts industry is far more integrated than the entire vehicle company. China's auto parts industry, especially the OE (automotive accessories) supporting market, will eventually also usher in a huge wave of consolidation.” An industry expert said.

In recent years, overseas auto parts giants have landed in China through joint ventures and cooperation. Delphi, Wescast, Cummins and many other foreign auto parts manufacturers have already built dozens of production bases and branch offices in China. Nowadays foreign ownership of auto parts is as high as 70% to 80%. In particular, the supply chain of Japanese manufacturers and Korean manufacturers is almost not open to Chinese domestic suppliers. This has caused local suppliers to lose opportunities for common development with vehicle companies. According to statistics, the market share of the top 100 companies in the domestic spare parts industry accounts for only 50% of the entire industry, far lower than the concentration of other countries (regions). Although the overall income of the parts and components industry reached 837 billion yuan in 2008, 80% of the above-scale enterprises have sales revenue of less than 100 million yuan. Only 43% of the parts and components companies in the industry have patents, and less than 20% of the enterprises have patents for inventions. In the era of national mergers and reorganizations to encourage the entire vehicle industry, domestic parts supply companies are the first to be shaken. Now that integration and restructuring are in vogue, it is imperative.

At present, the top four auto parts giants in the world are either supported by OEMs, such as Delphi or GM. The advantage is that they can grow rapidly with the help of OEMs. The same disadvantage is that the survival of OEMs will be very difficult. Or is an independent system supplier, represented by the German Bosch Group. At present, among the auto parts companies that are listed on the A-share market in China, the former are represented by Dongfeng Technology, FAW Fuwei, and Qiming Information, which are attached to Dongfeng and FAW Group respectively; with Wanxiang Qianchao, Ningbo Huaxiang, Weichai Power, Fuyao Glass is represented by the latter.

It is understood that China's auto parts industry is more fragmented than the entire vehicle industry, with more than 5,000 parts manufacturers, and the survival status of autonomous zero-step enterprises is worrying. Foreign investment has accounted for more than 60% of the market share in China's auto parts market, accounting for more than 80% of the auto parts industry. At present, sales of most parts and components companies in China are relatively low. Compared with multinational giants with sales of up to 10 billion US dollars, the scale of China's spare parts companies is obviously small. In order for domestic parts and components companies to have a place in the future international market competition, the quickest way is through mergers and reorganizations to form large-scale component enterprise groups.

Many in the industry believe that the merger and reorganization of parts and components companies is more urgent than the entire vehicle. If there are no large parts and components companies, the cost will not come and the quality won't go. The development of the entire industry will be extremely difficult.

The domestic parts and components companies are small in scale, weak in strength, and lack of R&D capabilities. Under such circumstances, if the parts and components industry wants to develop rapidly, it must speed up mergers and reorganizations to form economies of scale. If the relevant state departments can give specific policy support, it will undoubtedly accelerate the process of mergers and reorganizations of parts and components companies. Officials from the National Development and Reform Commission once said that the introduction of policies to encourage the merger and reorganization of the domestic parts and components industry is a very complicated task; whether or not the relevant policies are promulgated and when they are introduced is still unknown.

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