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March 17, 2008
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What New at ARA
EMERGING GIANTS
CHINA’S AUTOMOTIVE COMPONENT OUTLOOK |
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Get your arms around China’s
automotive component industry,
your competitors, and your customers.
China’s Automotive Component Outlook delivers.
Cost US$ 7,500 |
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At the heart of this rapid run up in the component sector is a blistering demand for new vehicles. Sales for passenger cars and commercial vehicle in China has risen from 2.8 million units in 2002 to 7.3 million units in 2006, a nearly three-fold (4.5-million unit) increase in a period of just five years.
The second largest vehicle market in the world in 2006, China will approach the scale of the world’s leading vehicle market, the United States, by 2014, when total vehicle demand is expected to top 15 million units. |
China’s Light Vehicle Industry |
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Number of Manufacturers |
Number of
Plants |
Total Capacity |
2000 |
35 |
40 |
4,026,000 |
2001 |
41 |
48 |
4,611,000 |
2002 |
44 |
54 |
5,076,000 |
2003 |
55 |
70 |
7,095,000 |
2004 |
58 |
76 |
7,770,000 |
2005 |
59 |
84 |
8,770,000 |
2006 |
65 |
91 |
10,103,000 |
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| Source: ARA - J.D. Power China Production Forecast |
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| By 2012, China-based revenues of the Top 50 automotive component companies in China will average $1.08 billion per year, a 95 percent increase over 2006. |
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 hina’s automotive component sector is in the midst of a massive transformation, a transformation
that began with the opening of China’s industry to foreign investment in the period from 1985 to 2000, and accelerated with China’s entry into the World Trade Organization in 2002.
According to official government data, the total value of China’s automotive components industry reached $67 billion in 2006, a figure that is more than 2.5 times 2002 figures. Our own estimates are higher, but that’s not the point. The government numbers are illustrative enough. They suggest China’s component industry is now about one-fifth the size of the United States automotive component industry. |
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| Due to protective government policy, nearly all vehicle demand in China is met with locally produced cars. As a result, China has enjoyed massive investment in vehicle production facilities from domestic and overseas automotive manufacturers, more than 60 companies in all. By the end of 2006, vehicle production capacity was estimated at 10 million units up from four million units in the year 2000. |
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Exports are playing a significant role in the development of the China automotive component sector. It is estimated that 30% of the value of the component production in China today is exported.
Overseas aftermarket and global sourcing are boosting the fortunes of China component manufacturers. Low cost production is the key factor supporting the export market for China components, as companies take advantage of China’s very low labor rates.
Spearheading the transformation in China’s automotive component sector is the Powerhouse 50 Component Companies, a group of companies identified by Automotive Resources Asia, a division of J.D. Power and Associates, as the leading component makers in China. |
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Top 10 of the China Powerhouse 50 |
Company |
Plants |
Employees |
Revenues ($ m) * |
SAIC |
40 |
29,000 |
4,650 |
Hyundai Mobis |
6 |
3,900 |
2,281 |
Visteon Corp |
29 |
11,200 |
1,760 |
Johnson Controls |
14 |
8,000 |
1,480 |
Dongfeng Parts & Components |
23 |
21,000 |
1,282 |
Delphi Corp |
13 |
16,000 |
1,040 |
Yazaki Co Ltd |
6 |
14,000 |
910 |
Bosch |
9 |
5,500 |
860 |
Fawer |
35 |
14,000 |
795 |
Denso Corp |
20 |
4,200 |
725 |
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| (* Revenues include those of non-consolidated joint ventures. Some of the data includes ARA – J.D. Power estimates where actual data was not available). Source: ARA - J.D. Power China Automotive Component Outlook Report |
Made up of both local and foreign invested enterprises, China’s Powerhouse 50 is both contributing to and benefiting from China’s automotive industrial transformation.
China and Japan each is home to roughly 25% of the Powerhouse 50 Component Companies, 13 companies each. European companies make up slightly less than 25% with 12 companies in the China Top 50, while the United States with ten companies and South Korea with two companies make up the balance.
In all, China’s Top 50 operate 480 manufacturing plants, of which 160 (33%) have been built since 2004. In addition to the new facilities, China’s Powerhouse 50 have invested heavily expanding existing plants and adding new machinery.
The ranking of China’s Powerhouse 50 Component Companies is based on an estimate of China based automotive revenues. It is a tricky exercise to estimate the revenues from the scarcity of information available on China revenues, but a worthwhile exercise.
Among the China Powerhouse 50, six companies achieved revenues in excess of $1.0 billion in 2006. The largest component company in China by a wide margin is the parts subsidiary of Shanghai Automotive Industry Corporation (SAIC), the Chinese partner of both Volkswagen AG and General Motors. With 2006 revenues estimated at $4.65 billion, SAIC consists of some thirty-two component manufacturing subsidiaries and joint ventures. |
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Each company in the Powerhouse 50 enjoys China based revenue in excess of $145 million. The company at the median revenue earned $310 million in 2006.
The breadth and depth of China’s component industry extends well beyond the Powerhouse 50. The number of automotive component companies registered with the Chinese government tops 5,402 as of December 2006, up from 4,205 companies in 2002. A further 15,000 non-registered automotive component manufacturers are understood to exist in China.
The registered companies employ 1.38 million Chinese.
More than three quarters of the registered component companies in China are small scale enterprises, generating annual revenues of less than $10 million in 2006. There are 245 automotive component companies generating a turnover in excess of $50m in 2006. This compares with just 108 companies in 2003.
The transformation of China’s automotive industry is in its early stages. Look for continued expansion of vehicle demand and rise in exports to accelerate development in China’s component industry in the coming seven years. We can expect consolidation of the industry, but timing is anything but certain. One thing for certain, the rise of China’s emerging giants will impact the structure of the global component industry.
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China’s Automotive
Component Industry
- 5,402 registered automotive component companies as of December 2006 (over 1,000 more than at the end of 2002).
- 15,000 estimated non-registered automotive component companies
- 6 registered companies achieved revenues in excess of US$1 billion in 2006.
- 245 registered companies achieved revenues in excess of US$ 50 million in 2006 (more than double the amount of companies in 2003)
- Over 4,000 registered component companies had revenues under US$ 10 million in 2006.
- 1.38 million Chinese are employed by the registered companies.
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