Parts and components: The next breakthrough to a powerful automobile country

The forthcoming "12th Five-Year Plan" will once again push the auto industry to the cusp of becoming bigger and stronger. On the road leading to the automobile power, parts and components are a hurdle that can't be bypassed. Industry experts say that all the world’s automotive powers are built on the basis of a strong auto parts industry, and China must become a strong automobile company to strengthen zero. Components pay enough attention and parts become the next breakthrough for China to become a powerful automobile country.

The “restructuring of light zero” hollowed out the special historical reasons for the automotive industry's foundation, which made the Chinese auto industry embark on the road to complete the assembly of vehicles. Although it has given birth to a prosperous vehicle market in the short term, it will “congenitally inadequacies”. "China's cars have pushed the road to mishaps."

In fact, both the policy makers and the business operators are well aware of the dangers of technology deficiencies. Why is no company willing to try it? One big reason is that, compared with the whole vehicle, the component investment cycle is longer, the funding threshold is higher, and the operational risk is greater. "If you can make a profit in the vehicle market, who is still willing to do the core technology?" Xu Hengwu, president of Asia's largest diesel powertrain manufacturer, Euro-Ide Power Group, said with emotion.

It is this short-sightedness that allows Chinese auto companies to make up the opportunity of historical debts again and again. The result is that today, the plight of the lack of core technologies for auto parts in China has not greatly improved. According to statistics, in key areas such as automotive electronics, engines, and transmissions, the market share controlled by foreign investment has reached as high as 90%. The vast majority of Chinese auto parts enterprises are concentrated in low-tech areas with low technological content and low profit levels, and prices are almost the same. Become the only competitive means for Chinese companies.

Without the support of spare parts, Chinese cars have become castles in the air, and the dream of becoming a powerful automobile country has also become difficult. This dilemma has become very apparent behind the booming market sales. According to a survey, the profit of bicycles for many Chinese auto companies is below RMB 1,000. In the process of breakthrough in the mid-to-high end market, they were suppressed by foreign brands. The lack of technology and weak branding have caused many brands to fail. What is more serious is that while foreign brands stick to the high-end, they further explore the low-end market, making the original brand's original price advantage no longer exist. "If we do not change the lack of core component technology, the future of Chinese auto companies will be worrisome." There are comments that industry experts are worried about.

Core Breakthrough: First, relying on policies, and secondly relying on the company's current view, changing the issue of spare parts is not an easy task, considering the policy and strategic vision of the company. From a policy point of view, almost all current car incentive policies are aimed at the entire vehicle, and there is little support for the component companies. According to international standards, the proportion of investment in complete vehicles and parts and components should be around 1:3, while the current situation in China is only 1:0.3, and the investment is seriously insufficient. From the perspective of enterprises, the investment in R&D funds for core technologies is equally rare. According to surveys, many OEMs have invested less than 1% in parts and components, and some car companies that started with “shanzhai” have been involved in parts and components. The input is almost zero.

Xu Hengwu believes that the breakthrough of the Chinese auto industry must be supported by policies, but also rely on the breakthrough of the company itself. In terms of Euro-Europe, through cooperation with Italian VM company and German ZF company, Euro-Yide has developed China's first ready-to-use clean diesel engine that meets Euro V emission standards and the first 4/6 that can be used in high-end models. The speed automatic transmission fills two gaps in China's core components and parts, and it also finds a new blue ocean for enterprises.

"Although the former European-Italian invested more than 5 billion yuan in total, these are all very worthwhile," Xu Hengwu said. "The parts and components market will be further expanded during the 12th Five-Year Plan period, which will result in a huge spare part. The market, especially the high-end powertrain, is in greater demand, and the green diesel engine market is expected to reach 7.8 million units."

It is understood that currently, Euro-Europe has already had an annual output of 300,000 engines and 400,000 transmissions. In order to reach the level of one million engines and one million transmissions, it will occupy the leading edge of the decisive parts market. .

From the perspective of the national policy, the future policy will be further shifted to the components and parts area, which will greatly change the past “restructuring light zero” situation. In the forthcoming 12th Five-Year Plan, the country has demonstrated its determination to break through the core bottlenecks. From the corporate level, in addition to the above-mentioned Euro-Italian, Weichai Group also proposed a 100 billion-level green power plan for remanufacturing. Geely and Chery in the vehicle companies have also continuously increased their investment in core technology research and development. The 12th Five-Year Plan, which aims at technological breakthroughs, has become hopeful.