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China Daily Website

Winners, losers to emerge as market cools

Updated: 2013-09-02 07:36
By Xu Xiao ( China Daily)

Parts suppliers

Winners, losers to emerge as market cools

The survey by AlixPartners pointed out that parts and component suppliers continue to outgrow automakers by revenue, but growth rates are slowing down in this sector as well.

Winners, losers to emerge as market cools

Chengdu Motor Show

The survey forecasts 10 percent revenue growth in the years to come.

The study highlighted that the situation for suppliers has been further exacerbated by price competition, with 76.7 percent of respondents citing it in 2013 as the most significant challenge.

In 2011, the proportion was 54.2 percent.

However, these respondents also cite pricing as a key competitive weapon, with 47.6 percent saying they will use it in 2013 from 20.8 percent in 2012.

Compounding their problems, more than 70 percent of domestic suppliers are operating at less than 80 percent capacity utilization, further compressing profitability.

In addition, the "mega platform" strategies introduced by leading global automakers in China will also have a significant impact on the auto parts supply industry.

"Mega platforms are becoming industry game changers, requiring parts suppliers to invest heavily to strengthen ties with global automakers and continue to supply their platforms," said Ivo Naumann, AlixPartners' managing director and head of its Shanghai office. "Chinese automakers and suppliers are running out of time to reach sufficient production scale and cost efficiency, and they run the risk of losing out in their own market," Naumann said.

"Rapid action is needed now to invest and re-tool themselves for a fast-shifting landscape," he added.

 

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