China Automotive Engine Electronics Industry Report, 2005-2006(overview)

Compared to the 2004 sluggish situation, the Chinese domestic automotive market grew steadily in 2005. Car sales reached 296,800 units in June, setting a new record. In particular, the sales of intermediate and low-end cars showed a sharp increase in the first half of 2005. There is a cumulated sale of 2,256,511 cars in the first ten months of 2005, a 25.05% increase year-on-year. Sales volume of passenger cars manufacturers in November is climbing with an average increase of 10% compared to the same period last year, now making November the third sales peak after June and September.

As the automotive market is becoming more and more mature, consumers now pay attention to car performances, technology and safety, rather than prices when they purchase cars. And automotive electronics plays an important role in those respects. Besides, the government has implemented new policies for the automobile industry, and is increasingly considering independent development of automotive electronics, especially for engine electronics.

Automotive electronics requires stricter application conditions than general electronics, because of temperature for example. Meanwhile, automakers have different requirements for their automotive electronics, which means auto electronic manufacturers had to invest a lot. In addition, the fragile foundation of automotive electronics on China mainland, to a great extent, prevents a further expansion of the auto electronic market.

Auto electronic products also face problems such as long product life cycles as well as long systematic developments. In a general sense, the development period and life cycle for common consumer products are three months and six months respectively, but for automotive electronics products they are three years and ten years respectively. So, it is difficult for automotive electronics to catch up with technological innovations of the IT industry.

Currently, thousands of Chinese domestic auto electronic enterprises specialized in products with low technical contents such as automotive audio systems, in-car telephones and navigation. However, the core automotive electronics such as engine electronics and chassis electronics are almost monopolized by foreign vendors or joint ventures.

However, the Chinese domestic enterprises still have opportunities thanks to high market demand with political support, enforcement of supplementary measures and perfection of laws, rules & regulations.

Newly implemented development policies for China's automobile industry consists of encouraging independent development, enhancing international competitiveness, developing auto-making rather than auto-assembly, embodying national benefits, and subscribing to the principle that Chinese sides hold at least 50% shares of joint ventures, which undoubtedly gives incentive to independent development of China's automobile industry and engine electronics.

Nowadays, independent development of electric-control fuel injection system can technically meet EuroⅡ emission standards. The development of electric-control engines corresponds to the development of electric-control fuel injection systems. Developing electric-control engines independently requires a good command of electric-control fuel injection technologies. The industrialization of electric-control fuel injection system is inevitable. So, this report suggests that those who leap ahead will enjoy advantages in market competition in the future.