Since 2009, China's auto parts manufacturers have been enjoying great profits; however, even though the growth of the auto market in 2010 is still maintained, component manufacturers have to face more variables and greater challenges.
In the first quarter of 2010, profit margins double the profits of parts and components companies worldwide
With the release of the performance reports of listed companies in the first quarter of 2010, the operating performance of listed component companies has gradually surfaced. From the information disclosed in the quarterly report, we found that the average net interest rate of 55 Chinese auto parts listed companies listed in Shanghai, Shenzhen, and Hong Kong reached 6.96%, which was an increase of 3.25% from 3.71% in the same period of 2009, and was nearly doubled. .
According to statistics, in the first quarter of 2010, of the 55 listed companies mentioned above, only ST Songliao’s bankruptcy-related companies suffered losses, and the remaining companies all made profits. Companies with a net interest rate of more than 10% have reached 10, and two companies have a net interest rate of more than 20%. They are Fuyao Glass (23.77%) and Terjia (20.95%).
In the same period of last year (the first quarter of 2009), 11 of the 55 listed parts and components listed companies had negative net profits attributable to shareholders of listed companies, while only 6 companies had net margins exceeding 10%. The highest interest rate company, Zhongding, has a net interest rate of only 16.23%, which is far lower than the profit level for the same period this year.
The strong growth of the parts and components market in the first quarter of this year was a continuation of last year’s growth. With the recovery of the Chinese auto market in the second half of last year, the products of auto parts companies are always in short supply. Although the prices of steel, copper, and rubber products are all at historical highs, they are just offset by the low price of human resources in China, making the profit rate of parts and components companies generally maintained at 8% to 10%. This level is global. Twice the average level.
List of Listed Listed Companies in the Top Ten in the First Quarter of 2010
Rankings of listed companies' net profit rate compared to the same period last year
1 Fuyao Glass 23.77%↑14.00%
2 Telga 20.95%↑9.50%
3 large wheel shares 17.89% ↑ 6.47%
4 Fuxing shares 16.14%↑11.06%
5 Zhongding shares 14.27%↓1.96%
6 days Run crankshaft 14.06% ↑ 2.03%
7 Ningbo Huaxiang 12.35% ↑ 11.19%
8 Sanhua shares 11.97%↑2.99%
9 Weichai Power 10.67%↑4.81%
10 Guangdong Happiness 10.25%↑8.14%
Source: First Quarterly Report of Listed Companies in 2010
Increased uncertainties in the second half of 2010
However, it is worth our attention that in the second half of 2010, the sales of parts and components companies, especially profit growth, will continue to be strong.
In fact, since the beginning of 2010, the rise in raw material prices has caused concern for Chinese auto parts companies. Recently, the long-term price of steel has become a quarterly price, and the price of iron ore has increased by 80% so far. While the prices of other bulk raw materials are rising, the price of copper has risen to an all-time high of US$8,000/ton, and the price of plastics has continued to rise. The high cost of these raw materials will affect the profitability of parts and components companies.
From the perspective of the global parts and components industry, Chinese auto parts makers are more affected by rising raw materials. Because China's spare parts companies generally have poor R&D capabilities and are in the downstream of the industrial chain, most of them are second- and third-tier suppliers, not first-tier manufacturers, which determines their limited pricing power.
And the more serious challenge is that if China's auto market slows down in 2010, the profitability of China's component manufacturers will decline, and because of the above reasons, their ability to pass risks will be weaker.
Overall, the major challenges that Chinese auto parts makers will face in 2010 will be increased raw material prices. In addition, price pressure from OEMs and price competition among suppliers will increase the number of parts manufacturers. Business difficulties.
Industry analysts believe that if the domestic parts and components companies do not seize the opportunity, increase the level of technology based on local market demand, create an independent after-sales service capacity, and improve internal management capabilities, profits will be difficult to maintain this increase.
Component companies need to change their growth mode and increase their efforts to expand overseas markets
At present, some of the larger Chinese auto parts manufacturers have already realized the problem. They use the methods of adjusting the structure and changing the growth model to deal with the adversity they will face. For example, Wanxiang Group has formulated a strategy for developing new energy.
At the same time, insisting on the strategic direction of overseas exports will also increase the vitality of domestic parts and components companies, and this is a more realistic choice.
First, the support of policies laid the foundation for the export of parts and components. As early as the end of November 2009, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the General Administration of Customs, and the General Administration of Quality Supervision, Inspection and Quarantine jointly issued the "Opinions on Promoting the Sustainable and Healthy Development of China's Automobile Products Exports," and proposed "Automobiles." The export of components and components will strive to achieve an average annual growth of 10% from 2009 to 2011; by 2015, the export of automobiles and components will reach 85 billion U.S. dollars, with an average annual growth of 20%; and by 2020, China’s auto and component exports will be realized. The strategic target of 10% of the total world trade in automotive products."
Second, the gradual recovery of the international auto market has also provided an opportunity for the export of parts and components companies. Taking the American automobile market as an example, in April of the second quarter of 2010, the car sales volume showed strong growth, which rose 20% year-on-year to 982,300 units.
In addition, frequent overseas acquisitions in addition to exports and parts also provide opportunities for Chinese parts and components companies to expand overseas markets.
In fact, in 2009 there has been a wave of mergers and acquisitions of domestic parts and components companies. For example, Weichai Power acquired Bovin, a French engine manufacturer, and Wanxiang Group acquired the United States Global Control Systems Corporation. There are also government-led acquisitions, such as Jingxi Heavy Industries' acquisition of Delphi's brakes and suspension business.
Compared with the overseas acquisition of vehicle companies, the overseas acquisition of parts and components companies can achieve greater benefits. Industry analysts believe that even though Delphi has fallen into bankruptcy protection for various reasons, its R&D capability, quality, and brand have been recognized by the outside world. Jingxi Heavy Industries has bought the Delphi brake and suspension system, and has also gained access to overseas markets. The sales channels are very important for Chinese spare parts companies that lack technology, lack brands, and lack channels. One of the success precedents was Wanxiang Group's acquisition of overseas auto parts companies and successful expansion of overseas markets.
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