From 2009 until now, Chinese auto parts manufacturers have been enjoying great profit margins; however, even if the auto market continues to grow this year, parts manufacturers have to face more variables and greater challenges.

Last year, the profit rate was twice the global average

On April 14, AlixPartners, a global consulting company, released the latest research report, saying that last year, the profit rate of China's auto parts companies nearly doubled, making it the most profitable company in the global industry.

This report was completed in the first quarter of this year based on a survey of 50 major parts and components companies in China. Although the global auto market was shrinking in 2009, the strong growth in the Chinese market has made the products of auto parts companies

In a situation in short supply. Although the prices of steel, copper, and rubber products are all at historical highs, they are just offset by the low price of human resources in China, making the profit rate of parts and components companies generally maintained at 8% to 10%. This level is global. Twice the average level.

Challenges in 2010

In fact, since the beginning of 2010, the increase in raw material prices has caused concern among Chinese auto parts companies. “The long steel price has become a quarterly price, and the price of iron ore has increased by 80% so far!”

Luo Man, managing director of China, pointed out. Southwest Securities researcher Pang Linlin told reporters that rising resource and raw material prices lead to investment risks. The increase in the prices of natural rubber and iron ore has reduced the profitability of enterprises and increased the company’s operating risks. The enterprises with high production concentration, large scale of production capacity, and strong anti-risk ability have better anti-stress capabilities.

Mr. Roman said that in the context of rising raw materials, Chinese auto parts makers are more affected. "Because they are second- and third-tier suppliers, not first-tier manufacturers, this determines their limited pricing power."

What's more, if China's auto market slows down in 2010, the profitability of China's component manufacturers will decline, and their ability to pass risks will be weaker.

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