In recent years, with the annual growth of automobile production and sales, the revenue and profit scale of China's automobile manufacturing and parts industry have further increased. However, due to intense industry competition and other factors, the overall industry profit margin has declined, and the competitive landscape within the industry has become differentiated. Some highly competitive vehicle and parts manufacturers have still maintained good profit margins.
Facing increasingly fierce competition, what favorable factors in the automotive parts market contribute to the healthy development of the industry?
Favorable Factors
(1) Support from national guidelines and industrial policies
In recent years, the country has successively introduced industrial policies such as the "Automobile Industry Development Policy," "Several Opinions of the State Council on Accelerating the Revitalization of the Equipment Manufacturing Industry," "Automobile Industry Adjustment and Revitalization Plan," and "Opinions on Promoting the Sustainable and Healthy Development of China's Automobile Product Exports." These policies propose vigorously promoting structural adjustment and industrial upgrading of the automotive parts industry; enhancing international competitiveness; promoting the sustainable, healthy, and stable development of China's automobile and parts exports; supporting key automotive parts enterprises to expand scale through mergers and acquisitions and increase their market share in domestic and foreign automotive supply markets; promoting automobile consumption; and encouraging passenger cars to enter households. The introduction of these supportive policies provides a favorable macro policy environment for China's automotive parts industry and will strongly promote the industry's sustainable and healthy development.
(2) Steady growth in automobile and passenger car market demand
The continuous growth of demand in China's automobile market has strongly driven the stable development of the automotive parts industry. From 2009 to 2016, China's automobile sales had a compound annual growth rate of 12.75%. The proportion of China's automobile sales in global automobile sales rapidly increased from 20.86% in 2009 to 27.43% in 2015. Among these, the passenger car market, which is the main part of China's automobile market, grew even faster than the overall automobile market, with an average annual sales growth rate of 15.38%. It is expected that before 2020, China will still be in a phase of accelerated industrialization and urbanization development, with the national economy continuing to develop steadily, and automobile consumption will further upgrade.
