China's auto industry, especially the parts and components industry, has entered a new stage of “deep domestic substitutionâ€, whereby the former joint vehicle model, the basic components of internal and external trims, and core parts have transitioned to the deep localization of high-barrier core components (domestic independent manufacturers have replaced Foreign or joint venture companies). Prior to this, the country has basically realized assembly of complete vehicles. The areas of basic components such as internal and external parts and stampings in the spare parts area have already had their own supporting capabilities. However, in the core component fields, especially the industrial barriers are relatively high, and they have the requirements for vehicle dynamics and safety. The parts are still dominated by international manufacturers (including their factories and joint ventures in China), but this situation is gradually being broken.
Multiple positive factors, alternative trends continue to strengthen <br> <br> segments of the breakthrough companies, mostly private nature of the auto parts listed companies, had already achieved a leading position in the traditional core business, through product upgrade (high-end products, Commercial vehicle transit vehicles and outreach and acquisition (especially overseas high-quality assets) achieve product support capabilities. Cost advantages and customer preferences of self-owned brands constitute the main factors that break the monopoly or dominant position of international manufacturers. In addition, some international manufacturers may take the initiative to withdraw from their strategies based on industrial transformation and the shrinking of their competitive advantages. This will also provide space for the development of domestic independent manufacturers. From this, we judge that the trend of “deep domestic substitution†will continue to strengthen in the future, resulting in more success stories similar to Fuyao Glass, which have grown from industrial catchers to global supply giants.
Parts division has its own achievements
Based on the dimensions of bicycle values, industry barriers, market space, and other considerations, the transmissions, seat assemblies, tires, lamp assemblies, automotive wiring harnesses, airbags, steering and brake booster systems in the component segmentation sector have achieved supporting breakthroughs. And is expected to achieve "deep domestic alternative." The major breakthrough in the field of transmission is that the domestic brands of automatic transmissions (AT, DCT, and CVT) are gradually supporting their own brand passenger cars; the passenger seat assembly with high barriers and large market space also has major breakthroughs by domestic independent manufacturers. In addition, independent substitution trends in subdivided areas such as tires, lights, wiring harnesses, steering and brake boosting have emerged and will continue to increase. Through the strategy of parallel extension and self-determination, domestic manufacturers are also expected to gradually gain market dominance in the field of airbags and their core components.
Leading Independent Parts Manufacturers to Share Industry Development Bonuses
China's passenger vehicle industry will enter a steady growth stage in the next five years, and the compound growth rate of production and sales of complete vehicles is expected to be in the single-digit range. However, due to the existence of “deep domestic alternatives†in the component subdivision areas, there will be high Even several times as much as the overall growth rate of the industry. The domestic self-sufficient parts manufacturers that have achieved breakthroughs in the sector will share the high growth rate and high profit margin development dividends that will follow, among which high-quality listed companies are expected to fully capitalize on the favorable factors in the current domestic capital market, through investment projects, The injection of high-quality assets strengthens the competitive advantages in the segmented areas and lays a solid foundation for the creation of international component giants in the next phase.
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