Consolidation among China’s myriad automakers will be “unavoidable” as a way to combat the inevitable slowdown in previously extremely strong growth rates, according to suppliers Lear and Dana.
China’s economy and automotive sector is starting to post more modest performance increases after years of being the world’s powerhouse and suppliers will have to cope with a new environment as growth settles to a more traditional rate.
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“Since 2000, China’s automotive sector entered a high growth period; in just ten years OEMs enjoyed 24% growth rate which is really remarkable,” said Lear’s China VP and managing director, Charles Chang, at the Global Automotive Forum (GAF) in Chongqing.
“Our company did some analysis and, in 2030, the growth rate will be 2%. In an era of slow growth, some things cannot be avoided like the price war and overall profit of the sector reduced a lot.
“In China now, there are around 100 OEMs. In the coming years, there will be more mergers and acquisitions; this is unavoidable and this will definitely impact suppliers.
“Recently, due to the reduction of volume, this has heavily impacted suppliers. Some OEMs asked suppliers to greatly reduce their prices.”
Despite the overall slowdown, new electric vehicles (NEVs) are providing a genuine bright spot for suppliers as China grapples with its huge population increasingly moving to urban areas while generating pollution problems as a result.
NEVs opportunities were a parallel theme of the Global Automotive Forum as well as the challenges associated with the growth brake, as outlined by Dana China president, Antonio Valencia.
“After undergoing explosive growth, the industry is turning to electric vehicles and connected vehicles,” said Valencia who also noted the opportunities presented by exports to soak up some of the domestic shortfall.
“We are helping Chinese automakers expand outside China as well,” he added. “We will have to assess where we fit into the industry.
“Suppliers continue to have responsibility to their customer[s] to produce safe, reliable product.”
