Cost advantage does not decline in auto parts exports

Due to sluggish external demand, trade protection and other reasons, China's auto parts industry has experienced a decline in export transactions. In the short term, the export situation is not optimistic. According to the analysis, competition in the industry will become increasingly fierce in the future, and the industry will shuffle or be difficult to avoid. Enterprises should make more efforts to improve the technical level and product quality so as to avoid being eliminated.

In addition, some companies have reported that the continued appreciation of the renminbi and rising raw material costs have caused prices of auto parts products to rise. Ji Peiwei, sales manager of Wanxiang Imp. & Exp. Co., Ltd., said that the company’s auto parts export prices have increased by 10%-20%.

Yao Wenping, vice president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, also believes that the reshuffle of the domestic auto parts industry is inevitable. She said that simply relying on export tax rebates and other policies to upgrade an industry will not work. The development of enterprises is lagging behind. Nowadays, the competition in the export market of auto parts has become increasingly fierce. In the past, there was still profit in the low end, and now the profit rate of low-end products is very low, and companies are forced to develop high-end products. High-end products are embodied in more independent research and development patents. He suggested that SMEs expand their markets and accumulate funds. On the basis of having a certain amount of financial strength, on the one hand, it has increased its own research and development efforts, and on the other hand obtained overseas advanced production technologies of auto parts and components through overseas mergers and acquisitions.

In the context of rising renminbi and rising labor costs, China's auto parts exports will be full of challenges this year. Most domestic small and medium-sized auto parts companies have gross profit of about 3-5%, and academics estimate that the yuan will appreciate by 5% this year. This means that many companies face zero profit risk.

As countries’ stimulus to auto consumption gradually weakened or withdrawn, the market recovery showed signs of slowing, which will have a certain impact on China’s auto parts exports in the next phase; at the same time, as raw material prices and the RMB exchange rate continue to rise, it directly weakens China’s auto parts and components. The price competitiveness of products and the decline in export price advantages; In addition, foreign trade barriers are increasing, the export environment is deteriorating, and China’s auto parts exports are under greater pressure.

For medium and small auto parts enterprises, increasing the technological research and development strength and increasing the added value of auto parts and components are the methods to attract more auto parts export channels. When the cost advantage is gradually lost, the profits of the auto parts industry can only rely on product innovation to compete in the market.