At this year's World Cup in South Africa, there was an eight-minute advertisement for China’s Yingli. This is the first time that Chinese companies have entered the World Cup Stadium. From this we can see that Yingli is focusing on building its own brand global influence. However, in the domestic hot car market, many domestic auto parts companies often overlook the role of the brand. In 2009, car sales surged, coupled with raw material prices are low, the domestic auto parts industry gross margin increased significantly. In 2009, spurred by policies such as a halve of purchase tax and automobile to the countryside, domestic automobile production and sales reached 13.791 million vehicles and 13.6448 million vehicles, respectively, an increase of 48.3% and 46.15% year-on-year respectively. In the face of a frantic auto market, numerous auto parts companies have developed a heavy output and light quality in order to capture this golden opportunity. However, the tone of the policy-driven consumption in 2010 has changed little, but based on factors such as the large base number in 2009 and the inability to expand the capacity in the short term, the growth of car sales will slow down. Although the production and sales of vehicles are expected to continue to grow, the growth rate should be less than last year. Therefore, the pulling effect of the auto market on the auto parts industry will be weakened. In 2010, the auto parts industry will face the risk of a drop in gross profit margin.
For auto parts companies that are keen on production and do not pay attention to the brand, 2010 will face a huge test. On the one hand, due to the low level of industry concentration and excess production capacity, auto parts companies can't conduct downstream conduction costs. Compared with auto companies, auto parts companies have weak bargaining power. According to industry sources, auto parts companies are generally more cautious in raising prices because if you mention someone else, they will face the risk of losing the market. The current contradiction is that the more you sell, the more you lose. On the other hand, the production costs of products have risen sharply and the market is in a state of imbalance between supply and demand. Analysts said that this year's auto parts companies will face competitive pressures.
In addition, multinational auto parts companies have increased their investment in China, and have also exacerbated market competition while seizing the domestic auto parts market. This is particularly difficult for domestic auto parts companies. The world's automobile giants have invested and produced in China, and they are still increasing their investment in China. Although China's auto parts production capacity is already very large, foreign brands have an advantage in the competition. Foreign auto parts manufacturers also have the advantage of global deployment of production capacity. For example, after the tire security plan resulted in export obstruction, Sumitomo’s Changshu tire factory originally completed the export orders to the United States and were delivered to factories in Japan and Indonesia.
It can be seen that the days of local auto parts companies without any brand advantage will not be better. Of course, we do not have to be too pessimistic about the auto parts industry. The auto parts industry may accelerate the elimination of backward production capacity and adjust the industrial structure. According to well-informed sources, the country has recently stepped up its focus on the auto parts industry and will promote favorable policies. It is expected that it will promote the transformation and upgrading of the auto parts industry. From this perspective, the auto parts industry is also facing an opportunity to improve its own brand.
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