The general increase in cost is unbearable “The continuous increase in raw material prices is the main reason for the increase in operating costs.†The sigh of parts and components companies was corroborated by the data: The price of natural rubber rose from 7,000 to 8,000 yuan per ton at the end of 2015 to nearly 20,000 yuan at present; the domestic spot base oil price rose by 25% from April to December 2016. The base oil price in the first quarter of this year is expected to be higher than that of last year. In the same period will rise about 30%; some non-ferrous metals and other raw materials prices rose an average of about 20%; low-carbon steel and other metal raw material procurement prices rose 70% to 80%; chips and other electronic parts prices rose about 10%; isocyanate, polyether The prices of chemical raw materials (commonly known as white materials and black materials) have doubled... This is just one of them. Increased logistics transportation costs, exchange rate changes, and increased packaging costs are also factors that increase the operating costs of parts and components companies. It is reported that the “External Dimensions, Axle Loads, and Quality Limits for Vehicles, Trailers, and Automobile Trains (GB1589-2016),†implemented at the end of September 2016, has revised the weight limit standard for logistics transportation vehicles so that a single vehicle can be transported. The decrease in cargo tonnage resulted in a rise in freight rates. For companies that have import/export operations or rely on imported materials, the continuous change in exchange rates has caused their operating costs to continue to climb. Conventional hard-breaking can only "swallow" Rising manufacturing costs will inevitably cause product prices to rise, but it is understood that, apart from rising prices in the bearing, tire , and lubricant industries, most of the subdivided parts and components have not experienced price increases. A number of industry insiders pointed out that at present, domestic vehicle manufacturers generally gradually reduce the purchase price of parts and components year by year. The price reduction range is between 5% and 10% each year, and individual items that reach a certain scale will have a greater price reduction. This means that most parts and components companies need to rely on themselves to absorb cost pressures from upstream industries. According to Chen Welfare, Sales Director of Pellezer Automotive Interiors in China, not only Pellezer, but also other foreign interior related companies are facing the current situation of rapid increase in production costs, and in the fierce market competition, many foreign-funded parts companies are involved in the entire process. In the cooperation of car companies, there is not much right to speak. The taste of “sandwich biscuits†between raw material suppliers and vehicle companies or dealers is not good for auto parts companies. The routine is not broken, and the parts and components companies “have hard to tell.†Many parts and components companies hardly have the ability to “bargain†when purchasing raw materials, and they are accustomed to the phenomenon of “paying money first, getting goods laterâ€. “Downstream arrears on upstream payments are a common problem in the industry.†Industry experts pointed out that “when vehicle companies do not make payments to parts suppliers in a timely manner, they are delayed by 6 months or more, but are often for one year or more, causing parts and components companies to operate. Insufficient funds may not be refinanced to increase operating costs." Looks like scenery, but in reality it is not. Tires, bearings, lubricants, and other companies that have increased their prices are also hard to beat. As Qian Ruiqi, director of the Double Money Tire Research Institute, said, the cost of tire raw materials, etc. has risen far more than the increase in product prices. "Actually, the profits of tire companies are also being compressed." Faced with the “up†trend, Dong Shengshun, chairman of Hunan Asia Pacific Industrial Co., Ltd., frankly stated: “Although our operating scale continues to expand, but this year's net profit may be flat or even decline.†Dong Shengshun also pointed out that the real difficulties encountered are the domestic small and medium-sized For parts and components companies, due to the serious product homogeneity and low technical content, the profits of these companies will be severely reduced after the price advantage is lost. In addition, some companies with good production conditions and a certain market share are also under heavy pressure. A brake industry expert is even more outspoken: 2017 is the “bump†of small and medium-sized brake companies. Brake Enterprise Group can increase investment in new products to maintain profitability and competitiveness, and dozens of brake companies can see each other. In the export or post-market areas, they will temporarily maintain their livelihoods. On the contrary, some brake companies with a scale of 100 to 200 people will face the dilemma of “keeping the status quo at a loss and diversifying funds for developmentâ€. The expert also pointed out that, in the past, some enterprises ranked top in the field of commercial vehicle brakes have experienced a serious decline in market share, and several brake companies in Shaanxi and Zhejiang have also been trapped in the "diet." In this situation this year, these companies either survived or survived bankruptcy and reorganization. Insights to take the lead It is advisable to take a rainy day and try to dig a well. This is especially true for auto parts companies that are undergoing industrial restructuring. Correctly considering the cyclical changes in the economy such as rising costs, and formulating response measures in advance are important propositions for component companies to become stronger and bigger. The changes in the prices of upstream raw materials are the result of the industrial restructuring of the country and are the result of the development of the market economy. Related parties should be treated rationally from the perspective of industrial progress and development, and forward-looking auto parts enterprises should be more foreseen and prepared in advance. “We believe that this round of rising costs is an important stage in the supply-side structural reforms and manufacturing transformation and upgrading.†Dong Shengshun said that from a broader perspective, the establishment of financial policy support and financial order is to support the growth of small and medium auto parts enterprises. key. Stress and opportunity coexist. Guo Yan, director of the China Automotive Strategic Development Research Center at Tianjin University, believes that under the inevitable trend of electric development in the automotive industry, auto parts companies must do more "transition", not just "upgrading." Under the rapid growth of vehicle development, although some small and medium-sized component enterprises are not able to achieve large-scale operations, the market is still in demand and the living space is still there; while the average growth rate in the entire vehicle industry is slowing down, and the With the trend of development, these traditional auto parts companies will have a major impact. "The shift from traditional components to products that can be used for electric vehicles and energy-saving vehicles is a future development strategy for many parts and components companies." Guo Yan emphasized that in the process of transition, we must also pay attention to thinking, learn from successful people, and emphasize the importance of users. Internet business learning. “Parts and components companies should pay attention to user characteristics rather than purely specialization features, focus on user needs, synchronize with the vehicle or advance development,†she said. In addition, it has to be emphasized that the environment of China's auto parts industry needs to be clarified and the supervision needs to be strengthened. Chen Qisheng sighed: "The rising costs, we can digest through the promotion of production efficiency, push new products, etc., in order to ensure the company's operating profit and development needs, but over the years the industry has long-term, unruly and disorderly competition is the phenomenon of China It is difficult for parts and components companies to accumulate profits, increase R&D, and produce quality products." 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Rising rubber prices lead to higher tire prices 
Lubricant price increase
Rising non-stop auto parts companies face cost problems
In 2017, there was a lot of upswing. In the auto parts industry, due to the increase in operating costs caused by various reasons, companies faced unprecedented pressure. This pressure became faster and more fierce in 2017. The external environment is sluggish, corporate profits are more difficult, R&D encounters capital bottlenecks, and adjustments and restructuring are unclear, leaving parts and components companies in distress. At the moment of survival, how to kill a life path and get out of this “life-and-death puzzle†has become a proposition that parts and components companies have to think about.