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Auto parts prices are now rising, but difficulty appearing price war short-term

2020-05-28

The epidemic of New Coronary Pneumonia has spread worldwide, and auto parts companies have also been hit. Affected by factors such as extensive factory shutdowns and tight capital chains, some products in the auto parts supply chain have already gone up in price.


"The price increase of auto parts and components is phased. There may be short-term local fluctuations of individual models at certain times or in individual regions, but in the medium and long term, especially when the China domestic epidemic situation is basically controlled, the price trend is stable "It's down." Li Bin, executive vice president of the All-Car Supply Chain Branch and general manager of CLP Tiangong Group.


Public data shows that there are currently more than 100,000 auto parts companies in China, and 80% of auto parts are related to Chinese manufacturing. After the outbreak, some organizations analyzed that there is a high possibility that the price of auto parts will increase, but many industry insiders, including Li Bin, believe that the price of auto parts may not continue to follow the trend and require "specific analysis."


The rising price of auto parts and components has not yet taken shape


After the epidemic spread globally, the overseas automotive industry chain suffered subsequent effects from the “butterfly effect”. The forced interruption of the supply chain, the forced suppression of demand, and the maintenance of brands have all become real problems facing the automotive industry.


From March to April this year, prices of some auto parts and components rose. Taking the most common car tires as an example, Michelin raised prices by 7% in the US market and 5% in the Canadian market as early as March; Goodyear raised its sales price by 5% in the North American market since April; Pirelli also Increased tire prices for cars and light trucks by 5%.


Compared with tires, the price increase of automotive electronic components is more obvious. It is understood that the core manufacturers of automotive electronic components are mainly from Japan and South Korea. After the outbreak, the difficulty of exporting and manufacturing of related products increased significantly, resulting in a price increase of more than 30% for MCU, MICC, resistors, silicon chips, panels and LEDs The price of chips, etc. has doubled directly.


"After the epidemic spread overseas, the short board of high-end auto parts manufacturing has become more prominent in China and has become a key issue that needs to be resolved." Sun Gang, chairman of the National Federation of Industry and Commerce Automobile Dealers Association and chairman of Shunbaohang Investment Management Company, said .


Li Bin believes, "From the perspective of loading the main engine, whether it is the first wave of domestic outbreaks or the second wave of overseas outbreaks, the demand for the entire vehicle has been suppressed. Due to restrictions on travel and economic life at home and abroad, The demand side of after-installation has been suppressed in stages. From the supply side, the domestic industrial chain has experienced a periodic shortage, and it has basically returned to normal, while the foreign industrial chain is recovering. The epidemic situation has a greater impact on the demand side. "


It is worth noting that although the auto parts industry is facing difficulties, this does not mean that the rising price of auto parts and components is a foregone conclusion. "Despite the impact of the epidemic, companies will face rising costs in terms of human resources, office environment, store rents, etc., but there is regional overcapacity in China's auto parts and components industry, and the price that can currently be countered is the price." Han Zhusong, director of the assembly (China) Parts Department, believes that the rising price of auto parts may not necessarily be formed, and some auto parts may increase prices. However, due to the lack of demand in the downstream of the automotive industry chain and the excess capacity, the overall auto parts will still be a price reduction trend , Price competition will be more intense in a certain period of time.


Intensified domestic auto parts competition


In fact, the epidemic has begun to have a more profound impact on the automotive aftermarket. According to an analysis report released by McKinsey, affected by the epidemic, the global car market sales may decline by 20% to 25%, and people ’s behavior and habits of using cars have also changed: on the one hand, the epidemic has driven consumers to buy private cars to reduce infection Threatened confidence; on the other hand, due to economic pressures forcing consumers to postpone the purchase of new cars, the average car age may increase, which in turn may increase the demand for maintenance of old-fashioned vehicles.


"The aftermarket for light-duty vehicles is usually the most recession-resistant part of the automotive industry. Its market is mainly determined by the number of cars owned, not the sales of new cars. When economic pressures cause consumers to delay the purchase of new cars, their existing (and (Older) vehicle maintenance becomes particularly important. "McKinsey analysis said.


In this regard, Kan Youbo, the president of the Anlai Automobile Technology Research Institute, also believes that "the automotive aftermarket is a long-term service market, and the epidemic indirectly affects consumers' service buying habits."


Analysis believes that as the epidemic spreads overseas, automobile exports will be affected, and production capacity will be more crowded into the domestic market. In this case, since the product brands of local auto parts and components will not be established in a short period of time, the most likely situation is price scramble.


"The trend of competition in the automotive industry will become more and more intense. What companies need to do is to increase the added value of the products, fine-tune the operation, develop products with added value that can be accepted by customers, and eliminate products without added value; The second is to be aware of the crisis and sound the alarm at all times. Enterprises that can do both well can respond well during the epidemic. "Han Zhusong believes that companies should put profit first and the crisis comes Only have reserve funds.


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