Analysis of current auto parts competition environment Re-differentiation of the industrial chain under anti-globalization

Analysis of current auto parts competition environment

Re-differentiation of the industrial chain under anti-globalization

In the context of globalization, domestic and foreign auto parts technology competition is becoming increasingly fierce. Under the influence of the epidemic, the differentiation of the competition pattern has been exacerbated, the supply relationship is multi-level, and localization is looking for a turnaround in adversity.

1. International competitive landscape

According to Puhua Youce's "2021-2026 Auto Parts Industry Market Survey and Prospect Forecast Report", in the context of global economic integration, in the face of increasingly fierce competition, vehicle manufacturers or first-tier parts suppliers are gradually allocating resources on a global scale in order to reduce production costs as much as possible and enhance international competitiveness. Global procurement has become an important development trend.

From the perspective of competition in the global auto parts industry, the traditional auto industry powerhouses dominated by the United States, Europe, and Japan occupy the first-mover advantage, and also have competitive advantages in technical standards, system standards, and global supply chains.

Compared with traditional auto industry powerhouses, there is a certain gap in the manufacturing level of the domestic auto parts industry. However, in recent years, the domestic auto industry has developed rapidly, and the manufacturing level has made great progress, which is gradually being recognized by global manufacturers.

2. Multi-level supplier system

Under the background of focusing on specialized and refined production, the auto parts industry has gradually formed a multi-level division of labor among OEMs, first-tier parts suppliers, and second-tier parts suppliers. The division of labor forms a pyramid-like industrial chain structure. OEMs are at the top of the industry chain, and Tier 1 suppliers usually supply integrated, modularized, and systematic assembly products to OEMs. Due to product safety and other considerations, OEMs have a long assessment cycle for first-tier component suppliers and high replacement risks. After the two parties establish a cooperative relationship, OEMs will not easily replace suppliers.

In the context of industrial division of labor, secondary component suppliers supply auto parts to OEMs through primary component suppliers. The second-tier suppliers then purchase from the lower-tier suppliers step by step, thus forming a supply chain of auto parts. As the supply level gradually descends, the number of suppliers in this level continues to increase, the lower the industry concentration, the higher the degree of competition.

From the analysis of the market share of each department, we can also predict the market trend of each brand. Under the market environment of stock competition, brand differentiation is more obvious. From the perspective of the industry structure, the concentration of the market is constantly increasing, and weak brands are facing elimination.

3. Re-differentiation of the industrial chain under anti-globalization

The globalization of the economy determines that the automobile market must also be globalized, and it is increasingly showing the characteristics of both prosperity and loss.

Since 2020, emergencies such as the spread of the epidemic, trade protectionism, and geopolitics have seriously affected international trade and investment activities, disrupting the normal operation of the current global industrial chain, including the auto parts manufacturing industry. At the beginning of the outbreak, the supply chain of auto parts, which is dominated by the "trade triangle" of China, Japan, and South Korea, was hit to a certain extent; after March, the tense epidemic situation in Europe led to a greater impact on high-end auto parts and vehicle assembly, and the auto industry chain was once at risk of breaking. Subsequent trade protectionism and the rupture of the supply chain caused a "chip shortage" to sweep the entire industry. Most domestic car companies have reduced or stopped production due to the shortage of chips.

At the same time, the lack of mutual trust among major countries in the world during the epidemic has also led countries to further consider improving the security of the industrial chain and national security, and has intensified the tendency of the industrial chain to look inside. Under such circumstances, more and more companies are trying to get rid of the technical barriers and trade discrimination brought by the global auto parts industry chain through the multi-point layout of the supply chain to diversify risks.