In the blink of an eye, 2020 is coming to an end, but recalling the dire situation faced by China’s auto parts industry when the domestic COVID-19 epidemic broke out at the beginning of the year, I believe many people in the industry are still vividly aware of the situation, such as the continued delay in resumption of work. As a result, the company's production and delivery cannot proceed normally, performance has declined sharply, salary cuts and layoffs have been frequent, etc. However, it is gratifying that with the joint efforts of all parties, the situation of China's auto parts industry has gradually improved.
The development environment has improved and industry prosperity has increased
As the epidemic is gradually brought under control, my country's automobile sales have been rising month by month, and the "Golden Nine and Silver Ten" momentum has become stronger. According to data from the China Association of Automobile Manufacturers, my country's automobile sales reached 2.565 million units in September this year, a month-on-month increase of 17.4% and a year-on-year increase of 12.8%. The growth trend continued in October, with car sales reaching 2.573 million units, a month-on-month increase of 0.1% and a year-on-year increase of 12.5%. .
From the perspective of cumulative sales, the annual decline in my country's automobile sales is also in a state of continuous narrowing. Data show that the cumulative sales of automobiles from January to October reached 19.699 million units, a year-on-year decrease of 4.7%, and the decline narrowed by 2.2 percentage points compared with January to September. Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, said that judging from the current situation, it is expected that the decline in automobile production and sales in 2020 will be within 5%.
As the upstream of complete vehicles, the prosperity of the auto parts industry is closely related to the sales of downstream complete vehicles. Therefore, against the background of continuous recovery of auto sales, the auto parts industry is also accelerating its recovery. This can be seen very intuitively from the third quarterly reports of independent parts companies. Relevant statistics show that 145 companies in the auto parts sector had total operating income of 199.004 billion yuan in the third quarter of this year, a year-on-year increase of 13.51%, and net profit attributable to parent companies was 10.924 billion yuan, a year-on-year increase of 35.83%.
Of course, the improvement in the situation of China's parts industry is not unrelated to the recovery of the overseas auto market. From the perspective of overseas auto markets, although the epidemic has rebounded repeatedly in some regions, overall, the impact of the epidemic is gradually receding, and the auto market's prosperity has also rebounded. Based on data from automobile associations of various countries, in October this year, new car sales in the United States, Japan, South Korea, and Italy all increased year-on-year, which was an improvement from before. This means that some Chinese auto parts companies with business layout overseas will be less affected and their performance can be restored to a certain extent.
More importantly, the gradual recovery of external demand has boosted the performance of the export sector of Chinese auto parts companies. According to analysis by CITIC Securities, in the third quarter, the overseas epidemic gradually slowed down and overseas car sales began to recover. The European car market's year-on-year sales growth rate in July turned positive, and the North American car market's August sales growth rate turned positive. This has led to a decline in European and North American car production and sales. Supply exceeds demand, and the gap further widened in September, and there is a strong demand for overseas inventory replenishment. At the same time, overseas supply chains are affected by the epidemic, making it difficult to reorganize production in the short term and supply capacity recovery is limited, which increases the demand for imported parts. Under this situation, domestic export-oriented parts companies Benefit.
Looking back on the past, as the international competitiveness of China's auto parts industry continues to grow, China's local auto parts companies have successfully integrated into the world's parts procurement system. Under the influence of the trend of globalization of the auto industry chain, The export volume of my country's auto parts industry is also showing an increasing trend. Relevant data shows that from 2009 to 2019, my country's auto parts exports increased from US$12.959 billion to US$53.03 billion, with an average annual compound growth rate of 16.95%.
Although China's auto parts have been severely hit in the international market after the outbreak and exports have dropped significantly, my country's auto parts exports have improved significantly in recent months based on the gradual recovery of external demand. Data from the General Administration of Customs shows that my country's auto parts exports have maintained double-digit year-on-year growth for three consecutive months (August-October), at 12.2%, 22.7%, and 31.3% respectively, with the growth rate continuing to increase.
There is sufficient momentum for development, and the follow-up situation is promising
In 2020, in order to boost the automobile consumption market, the country and various localities have successively introduced various automobile consumption stimulus policies, covering the purchase of new cars Subsidies, increasing license plate quotas, encouraging trade-in of old vehicles for new ones, and bringing new energy vehicles to rural areas.
Zheshang Securities believes that the further rollout of relevant consumption-stimulating policies across the country is expected to lead to the early arrival of the "update wave" of domestic automobiles.
As far as the fourth quarter of this year is concerned, the Passenger Car Association pointed out that the automobile market is facing many favorable conditions. First, the economy continues to grow well. Secondly, the pace of new product launches this year has been extended to the third quarter, and the actual volume will not increase until the fourth quarter. In addition, local policies continue to come into force and will basically expire in December. As the time approaches, the effect of consumers buying cars to rush for the last train of the policy will become more obvious. The agency believes that the growth rate of the auto market in the fourth quarter will be close to that in the third quarter.
Chen Shihua, deputy secretary-general of the China Automobile Association, said that in the fourth quarter, commercial vehicles will continue to maintain a growth trend driven by policies and investment. In terms of passenger cars, the Beijing International Auto Show that opened in late September has promoted the company's new products. Comprehensive launch, coupled with the continuation of local consumption promotion policies, will have a positive impact on the market.
The growth momentum of the domestic auto market remains strong and is expected to drive the subsequent development of the auto parts industry. A research report from West China Securities shows that the boost in demand has driven a significant improvement in sector performance in the third quarter report, and the industry has returned to the cyclical recovery channel. It is expected that the sales growth rate in the fourth quarter of 2020 will reach 10%, corresponding to the full-year growth rate of -6% in 2020, and the sales volume in 2021 The growth rate is about 10%, and it has led to a rebound in the prosperity of upstream parts and components and downstream dealers.
In addition, analysts from Guotai Junan believe that the recovery of external demand is expected to drive high growth in auto parts performance. Auto parts exports have accelerated in three months, and the subsequent low demand for overseas inventories will recover. The segment has the potential to sustain high growth and exceed market expectations.
China Business Industry Research Institute pointed out that in recent years, the development speed of the market scale of China's auto parts industry has tended to be stable. According to statistics from the China Association of Automobile Manufacturers, in 2018, my country's auto parts manufacturing companies achieved sales revenue of 4 trillion yuan, a year-on-year increase of 7%. Although the industry will slow down due to factors such as the epidemic in 2020, taking into account factors such as national economic growth and new urbanization development, my country will still be the world's largest automobile market for some time in the future, and there will be certain room for growth. China's automobile industry will continue to grow in the long term. The trend towards good development will not change. Against this background, the overall development of the parts market is tending to be good, and it is expected that the sales revenue of China's auto parts industry will reach 5 trillion yuan in 2021.
The agency also pointed out that at present, my country's innovation elements in the field of auto parts have formed a certain accumulation, the innovation environment is gradually improving, relevant financial and industrial policies are continuously optimized, the number of invention patents is steadily increasing, and the industrial chain is constantly improving. Therefore, the long-term positive momentum remains unchanged, and China's automobile industry will also transform from becoming larger in the past to becoming stronger. The proportion of the output value of my country's auto parts industry in the total output value of the automobile industry is still lower than the international average. Therefore, whether looking at the growth space of my country's automobile industry or the rules of industrial structure adjustment and upgrading of my country's auto parts industry, there is still huge room for my country's auto parts industry in the next few years.
Of course, it needs to be pointed out that the situation of China's auto parts industry has improved and the outlook is promising. However, challenges still exist, such as the risk of a rebound in the epidemic, the rise of emerging countries, etc. For example, rising labor and production costs in China are now prompting many companies to look elsewhere. The rest of Asia has joined the competition with more attractive cost advantages to provide cheaper labor and space, and the manufacturing landscape of emerging countries such as Vietnam, India and Thailand has gradually weakened China's position. In this regard, China's auto parts industry still needs to pay enough attention.
This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.