What is exciting is that more and more Chinese auto parts companies have begun to enter the line of sight of multinational auto companies' global procurement, and this trend will become even stronger this year. In 2007, exports of domestic electromechanical automotive parts (excluding tires, automotive glass, etc.) were approximately US$17.5 billion, an increase of 32% from 2006. At the same time, China's parts and components market also has great risks. At the end of January this year, several senior executives of General Motors accepted the "Automotive News" and interviews with domestic media that GM hopes to increase the volume of Chinese-made automobile exports, but it is necessary to limit the models currently used for sourcing parts from China. And Henderson, chief financial officer from General Motors, told the “Detroit Free Press†that GM “may move some of its local components business to domestic factories in the future.†Coincidentally, Ford Motor Co., Ltd. recently announced that it will start assembling the Ford Taurus and Lincoln MKS dashboards at the Chicago plant from the spring of 2008. Prior to this, Ford’s auto parts were outsourced to Mexico, China, etc. Cost country. Even more severe is that according to Nick Riley, president of General Motors Asia Pacific, as China's labor costs increase, and logistics and shipping costs increase, India and Vietnam will have more advantages and lower labor costs. At the same time, GM executives also revealed that they will invest 3-4 billion U.S. dollars in the Asia Pacific region in the next 3-4 years. The company is considering making Indonesia a production base in the Asia Pacific region. In addition, the risk from the domestic can not be underestimated. An up-to-date analysis report from Anbang Group shows that for most domestic parts and components companies, the biggest operating risk in 2008 is the declining profitability caused by the slowdown in vehicle sales in China and the continuous decline in vehicle prices. In this regard, Ampang’s proposal is that domestic suppliers with a strong vision and relatively strong capabilities will use this trend and must develop channels for entering the global procurement system of multinational car companies. Mr. Stefano Aver said that in order to develop and expand as quickly as possible and avoid risks, China's parts and components industry has already seen a trend of mergers and acquisitions. "80% of China's auto parts companies have acquired intentions, 50% of companies have the signs of international mergers and acquisitions. 2008 will be the year of China's parts and components industry mergers and acquisitions."
According to a new survey report of ALIXPARTNER Consulting, the net profit of China's auto parts market in 2007 is expected to reach 675 million yuan, a growth rate of 7.2% compared with the same period of last year. At the same time, after-tax profit margins for auto parts in the US home market were 1.1% and 6.4% in Europe.
Responding to Challenges Concerning the Merger and Acquisition of Auto Parts
In 2007, the capacity of China's auto parts market was second only to Japan and became the second largest market in the world. Mr. Stefano Aver, Executive Director of the United States’s ALIXPARTNER Consulting, believes that China’s auto parts market has three significant characteristics: rapid growth and strong Zhengfu support and increasing proportion of international procurement. He believes that the emerging Asian market is the focus of competition among major auto parts and multinationals, and China is even more of a battleground. Most of the world’s top 20 auto parts companies have set up offices or investment holding companies in Beijing or Shanghai, such as Delphi, TRW, and Bosch. Recently, Delphi has established 15 joint ventures in China, manufacturing and manufacturing more than 100 auto parts and systems, making it the most powerful auto parts group in the Chinese market.