This article mainly talks about the growing history of auto part industry in china since 2002. The annual automobile production volume is rapidly growing from 2002. The industry grows in low wages and heavy local demand. In 2007, China is the second largest auto parts exporter to the U.S..
For 2002 and 2003, China’s total vehicles output has been growing at roughly 36.5%. By 2005, the annual automobile production volume was more than 5.5 million vehicles, while the sales of auto parts was 500 billion, increased by 18.67% compared with that in the year 2004. At the same time, top carmakers such as General Motors and Ford Motor plan to increase buying parts in China for their global production in the next few years to offset rising costs and cut-throat competition.
However, foreign investors in joint-venture automobile producers bring their own auto parts suppliers into China and establish joint-ventures producing auto parts. As a result, China’s auto parts industry becomes highly fragmented. Most manufacturers are small- or medium-sized and economies of scale are almost impossible to achieve.
Besides China’s production of auto parts, auto part exports from China have witnessed a more than six-fold increase in the last five years from 2002 –2006, almost touching $1 billion in April 2007 and arising among the rapidly growing category of Chinese industrial product sold overseas. Over half of these auto parts are exported to US followed by Europe and Japan.
China's auto parts makers are poised to drive away with more of the estimated US$1.2 trillion (HK$9.36 billion) global components market, helped by low wages and heavy local demand.
However, since only 5% of all US auto parts imports (2% of the total US market) in 2004 came from China, the impressive annual growth rate of 58% between 1995 and 2004 started from a very low base. In analyzing the underlying detail of what is imported from China, we find that the rapid increase was overwhelmingly in aftermarket parts (sold to retailers not manufacturers) rather than original equipments. For example, 29% of all imports from China during the first half of 2005 were wheels and tires. China passed Canada as the leading source of wheels in 2002 and has expanded its share of the market since then.
In the first four months of 2007, China exported a total of $3.6 billion worth of auto parts globally, a surge of 34.8% year on year, and imports stood at $3.5 billion, up 25.9%. It replaced Germany in the first quarter of 2007 as the second largest auto parts exporter to the U.S., Chinese state media said June 8. In the first three months of the year, China exported $1.936 billion worth of auto parts to the United States, up 27.4% on year, the Shanghai Securities News reported, citing figures from the U.S.