Since China's entry into WTO, along with the boom of China's automobile industry, auto parts industry has maintained continuous and fast increase, higher than that of cars, passenger cars and trucks, and ranks the first among the 12 sub-industries of auto industry. This shows the tremendous value of investments in auto parts industry.
In 2005, the output and sales of auto vehicles in China exceed 5.7 million sets. Inventory of auto vehicles has been increasing every year and exceeds 25 million sets. China has become the second largest auto consumption country and tries to become the third largest auto manufacturing country. Being the basis of auto industry, auto parts industry is exposed to such a huge market of accessories and after-sale and getting more and more attention from investors both abroad and at home. This has resulted in a fast growth of auto parts industry.
In 2005, China's auto parts industry has developed rapidly and has reached an output of more than 400 billion RMB. Meanwhile, China's auto export has experienced a turning point in history. Along with the rapid increase of whole-vehicle export, auto parts export increases fast, with an export volume as high as 15.235 billion US dollars, up by 75.11% as compared with the same period of last year. It is known that China will try to maintain an annual increase of over 40% for automobiles and parts exports during the "Eleventh Five-year Plan", and reach 70 billion US dollars in 2010.
Fueled by the accelerated growth in the car market 2006, the Chinese auto-parts industry also saw exceptional performance.
China Customs statistics show that Chinese auto-parts exports jumped 35% to US$8.88 billion in 2006.
In contrast to the sluggish growth of imported auto parts, exports of Chinese auto parts have sped ahead in recent year, approaching US$9 billion in 2006, compared with US$540 million in 1997 and US$5.9 million in 1984, with average growths topping 50% in the last four years, mainly due to the following factors.
1. The Chinese auto-parts industry has been able to meet the needs of the rapidly growing auto-making industry and the aftermarket, offer OE (original equipment) items to commercial vehicles, midrange and low-end passenger cars, and develop parts needed by midrange and high-end cars, thereby displacing the market share of the import parts.
2. Reversing the trend of auto-parts imports exceeding exports prior to 2004, the latter sector began to narrow the gap in 2005, underscoring the enhanced ability of the Chinese auto-parts industry to not only meet domestic demands but also compete globally.
3. China-made auto parts have started to be upgraded from after market to OE (original equipment) caliber and evolve from low value-added to high value-added items, with some local brands beginning to join the international procurement network.
Reassuring performance by the Chinese auto and auto-parts exporters has prompted the authorities to mark the sectors as part of the official agenda. Wei Jianguo, Vice Minister of Commerce, announced that China will boost its auto and auto-parts exports to US$120 billion within 10 years, for a 10% global market share, from the current US$11 billion. Judging from its performance in 2006, the Chinese auto parts and auto suppliers may find the hurdle hard to clear but certainly not over its head.
