China's auto parts makers are making "Dunkirk" retreat. According to Alix Partners, a global business information company, more than 40% of Chinese parts suppliers are facing liquidity problems since the financial crisis. In the next year to one and a half years, a considerable number of parts and components companies will face Failure risk.
On the 16th, Alix Partners released a 2009 China auto parts industry research and survey in Shanghai. Director Bao Tianan said in an interview with CBN reporters that 20% of parts suppliers suffered a net loss in 2008 and 50% of suppliers The 2009 net profit margin is expected to be less than 5%, and no supplier would be so pessimistic when surveyed in 2008.
“In the face of difficulties in external financing, Chinese auto parts companies must completely improve their cash management capabilities,†said Roman Loman, Alix Partners’ Managing Director. “The increase in working capital and performance will be the first consideration for 2009 parts and components companies. â€
In 2007, the sales revenue of auto parts in China was 765 billion yuan, a year-on-year increase of 44%. In 2008, the sales revenue of auto parts increased to 928 billion yuan, but only 23% year-on-year, an increase of only half of 2007. There was a sudden brake on the domestic manufacturers.
Behind the slowdown in growth rate, exports are the main reason. Since 23% of the sales of domestic parts and components manufacturers are exported, the dependence on overseas markets is extremely high. In terms of US exports alone, sales of spare parts showed a negative growth of -10% in 2008.
Although China has become the world’s most powerful consumer market for automobiles, Bao Tianan told CBN reporters that from a global perspective, Japanese suppliers’ profit margin was the highest in the fourth quarter of 2008, followed by Europe. China and the United States accounted for -9% and -14%, respectively.
From the perspective of working capital, China is far higher than its international counterparts. In the fourth quarter of last year, the turnover days for working capital of Chinese auto parts suppliers were 74, which was twice that of the lowest Japanese suppliers, and the latter was 37 days. Roman believes that this is because after the outbreak of the financial crisis, the poor capital turnover rate has increased the liquidity pressure of most Chinese companies, while parts suppliers in the United States and Japan have responded to the crisis faster.
In fact, like the international market, since October 2008, the domestic auto market has also experienced an unprecedented winter. If all sales are “outside inwardsâ€, can this narrow market be accommodated?
Roman believes that the automotive aftermarket will be a major opportunity for the industry. It is estimated that the global car ownership will reach 730 million units this year, and the aftermarket parts share will reach 19%. With 52 million vehicles in China and an alarming growth rate, it will surely become a “huge cake†for domestic component manufacturers.
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