Director Li Lihua of Arrow Group stated that due to factors such as the pressure of transfer cost of auto automakers and low level of capacity utilization, the profit rate of auto parts suppliers is declining and the risk is high in the future.
On August 28, Li Lihua made the above statement at the Arrow Automotive 2013 Outlook Conference. According to the 2013 automobile industry survey data, over 70% of suppliers' production margins are below 80%, and the full release of production capacity is fatal to suppliers. At the same time, automakers are continuing to shift cost pressures in order to make profits in the slowing down of the auto market, and the profit rate of auto parts suppliers is declining. According to the data provided by the annual report of the listed parts suppliers, from 2009 to the first quarter of 2013, the pre-tax profit margin of China auto parts suppliers decreased from 10.4% to 5.8%.
Li Lihua said that the important profit of Chinese auto parts manufacturers comes from the export part. According to the data from the China Association of Automobile Manufacturers, China's auto parts export revenue was 58.7 billion yuan in 2012, and the destination of exports was mainly mature markets such as North America and Western Europe. However, Chinese parts suppliers mainly use price as a competitive weapon instead of technology. Markets such as electronics and engines are still controlled by international suppliers. This is also the direction that China's parts suppliers need to work hard in the future.
Li Lihua also stated that Chinese suppliers need to strengthen their global production distribution and increase investment in engineering and supply support to meet the highly complex global design needs of their OEM customers. At the same time, Chinese suppliers also need overseas acquisitions to avoid being marginalized under global competition. Only in this way can the risk be reduced and it can take a dominant position in the competition.
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