The automotive industry is in transition. The component industry may present six major trends.

"Based on the different considerations of auto parts suppliers in terms of strategic vision, coping strategies, research and development strategies, the future parts industry will present six developments: supplier changes, supplier industry chain integration, new suppliers joining the market, The expansion of business model, supplier industry merger, and opening up overseas markets.” On August 22, Deloitte released the “China Automotive Industry Risk Analysis Report 2019 – Parts Market”.

The report shows that the automotive industry is currently experiencing a complex transition period. China's auto parts companies have begun to extend to the energy revolution, intelligent network, and intelligent manufacturing. The auto parts industry will present the aforementioned six developments.

According to Zhang Xudong, partner of Deloitte China Automotive Industry Risk Consulting Services, China's auto industry is a period of rapid growth from 2005 to 2010, a period of slowdown from 2010 to 2017, and industry transformation from 2017 to 2020. At this stage, it is also the first time that the growth of the automobile industry has experienced negative growth. The sales of fuel vehicles are limited, and the sales of new energy vehicles are still in their infancy. The automakers are transforming into new four, the sales business is cold, and the output is declining. However, Zhang Xudong also pointed out that with the increase in consumer demand for new energy vehicles and the increase in shared travel business, the automotive industry will see a second growth between 2020 and 2025, from 2025 to 2030. As the maturity of smart driving technology matures.

During the transition period of this industry, the gradual realization of highly intelligent and shared driving scenarios will deeply reshape the pattern of the future automobile industry chain, establish a new independent value chain, join new value chain participants, and reconstruct the value chain. Among them, due to the development of driverless technology, a new Tier 1 supplier will be produced; the procurement habits of the OEM will be biased towards the innovative technologies and innovative parts related to the new Sihua; the procurement scope of the OEM will also include emerging technology companies; Under the cost pressure, the OEM will continue to reduce the purchase price.

In this context, according to Deloitte, there will be six major trends in the component supplier industry. Specifically, the existing parts and components suppliers have changed themselves. They will develop new products through new departments and new companies, redistribute resources, and put more investment into future product lines. Suppliers have a better cost advantage; Tier 1 suppliers horizontally acquire Tier 1 suppliers to improve the industry chain; New Tier 1 suppliers join the OEM procurement system; under the new business model, suppliers will find new sources of customers, such as Mobile travel platform; some parts companies will open up overseas markets.

In the context of the transformation of the automotive industry, component suppliers also face many risks in the development process. For example, suppliers focusing on certain traditional power vehicle-specific components will face the challenge of shrinking market demand; some new energy power components supply Poor negotiating ability, demanding payment conditions for upstream suppliers, difficulty in cash flow management, rapid update of downstream customer demand, and risk of bad debts; some smart equipment parts suppliers have the risk of large initial investment and high product iteration requirements. Suppliers have risks such as poor bargaining power.