North American car market downturn aggravates competition for auto parts in China
Due to various economic factors in the United States and the slow sales of new vehicles in the North American market, Japanese companies such as Kosaka Manufacturing Co., Ltd. and Toyota Production Co. have announced plans to adjust their production levels and delay previous expansion initiatives. This shift reflects a growing concern among Japanese automakers and their suppliers about the uncertain economic climate and declining demand in key markets. A year ago, many Japanese auto parts manufacturers were optimistic about expanding their operations in the U.S. For instance, Toyota Motor’s supplier planned to build a new facility in Mississippi in 2010 for interior trim components. Similarly, Stanley Electric, a supplier for Honda, intended to boost its headlamp production in Ohio. However, recent developments show a different trend, with some Japanese suppliers, like Kosaka Factory, halting production lines that previously supplied lighting systems for large SUVs in the U.S. In contrast, several Japanese auto parts companies are now focusing on China as a key growth market. Japan’s largest auto parts manufacturer, Nippon Denso, announced at the start of the year that it would increase its investment in China, aiming to raise sales to 220 billion yen by the end of fiscal 2010—up from 150 billion yen set a year earlier. This strategic shift highlights the growing importance of the Chinese market for Japanese automotive firms. Analysis 1. Faced with a sharp decline in production from major U.S. automakers like GM, Ford, and Chrysler, as well as reduced output from Toyota, Japanese parts suppliers have taken urgent measures to focus on producing small cars that are in higher demand. At the same time, they are reorienting their business strategies. With Japanese carmakers establishing a strong presence in China's key cities, and maintaining long-term stable relationships with local suppliers, the supply chain for Japanese automakers is expected to continue expanding in the region. 2. The domestic auto parts industry is driven by three main areas: the original equipment (OE) market, the aftermarket, and exports. Among these, the OE market remains the most critical. However, due to macroeconomic challenges and slower growth in the auto sector, many parts companies have struggled to meet their targets, especially those supporting their own brands. Additionally, as Japanese suppliers establish a stronger foothold in China, local suppliers are losing out on key contracts. Many suppliers in the Pearl River Delta region have reported similar difficulties, according to feedback from Gasgoo.com. 3. Fluctuating exchange rates and a downturn in the North American auto market have led to a decline in export demand, although markets in Russia, Brazil, and Thailand have shown more resilience. As foreign-invested factories expand in China, the share of exports from foreign component suppliers is increasing. Industry analysts predict that by 2015, foreign-owned parts suppliers could account for up to 40% of the market (currently around 30%), with exports making up roughly 20% of total sales. 4. Despite the challenges, the aftermarket remains a relatively stable segment due to the rising number of vehicles on the road. It is expected that by 2010, China’s auto after-sales service market will reach 190 billion yuan. In the second half of this year, many domestic commercial vehicle support companies have begun shifting their attention to the aftermarket. Likewise, foreign capital is entering the after-sales market, forming partnerships with foreign chains to capture high-end segments. Container Desiccant,Container Powder Desiccant,Container Powder Desiccants,Container Desiccant Wholesale XUYI BOTU ATTAPULGITE CLAY CO.,LTD , https://www.xuyibotu.com