According to reports, the price of imported iron ore recently soared, and various types of imported iron ore raw materials rose by 71.5% compared with 2004. Based on past experience, as the price of imported iron ore rises, so will the price of various types of steel materials for automobile manufacturing, which will increase by about 8%. In March, Baosteel and Wuhan Iron and Steel and other major steel mills announced that the ex-factory price per ton of steel was increased by 300 yuan to 400 yuan. The sharp rise in steel prices has once again strained the nerves of automakers. Especially for parts and components companies, it is even worse. On the one hand, since the procurement of spare parts and components accounts for an average of 70%-80% of the entire vehicle, the profit loss caused by the auto market price war is actually mostly distributed to the upstream component suppliers. On the other hand, the price of steel and other raw materials continued to rise, and parts companies agonised. "Yesterday, the OEM also asked us to cut the price by 25%. But where is this profit margin? The price we have given him is already the bottom line. If the fixed assets are depreciated, we can only drink the northwest wind." The boss of the car chassis factory reluctantly dumped bitter water to the author.
Under the dual pressure of rising raw material prices and price cuts by automakers, domestic parts and components companies are struggling. One of the magic weapons to reduce the cost of the parts and components industry is to form a large-scale economic scale. However, the fragmented supporting market has caused the parts and components companies to become bigger and stronger. When the vehicle market is profitable, it can still conceal the structural defects of the parts and components industry. However, when the entire vehicle market is in a fiercely competitive period, as it is now, the pressure of squeezed profit moisture is transmitted to the parts and components companies, and the innate structural problems At the beginning of exposure - China's auto parts companies have not yet formed a large-scale cost advantage; coupled with irrational product structure, many spare parts companies serious excess production capacity, a large number of idle assets, increased fixed costs. Or because new product development cannot be developed, or because the development of new products is restricted by capital and technology, China's auto parts companies cannot form mass production capacity.
Of course, there are exceptions. Recently, I heard that there are two or three component factories under the dual pressure of raw material price increases and vehicle manufacturers' price cuts. They are still going against the market and Southeast China Automobile is one of them. Their specific approach is: First, the supply of parts and components of Southeast Automotive is mostly provided by suppliers with international and domestic reputation in Southeast Motor City. Therefore, the small supporting radius provides convenience for reducing inventory and also reduces logistics. Transportation and other related costs maximize the control of unnecessary costs. Recently, Southeast Automotive has taken the lead in introducing quality demonstration lines among component suppliers to urge and encourage suppliers to continue to maintain the excellent quality of their products. 2. The mass production brought by the rapid growth of Southeast Motor’s vehicle sales in recent years will result in the dilution of the production cost of accessories. At the same time, imported accessories will gradually be replaced by domestically-made ones, which will also lead to a decrease in the cost of accessories and create extremely favorable conditions for the further price reduction of accessories. Third, they are soberly aware that: the simultaneous decline in the price of accessories and vehicle prices will become an irreversible trend in the market. Since there is room for price cuts in parts prices, waiting until some time soon, due to the intense competition in the accessories market and being forced to lower the price of parts, it is better to rush ahead to “price†the others in order to gain a competitive advantage and seize more market share.
At the annual meeting of an auto parts industry association held recently, the author heard the words of many entrepreneurs: Although the experience of Southeast Auto is worth learning from, the challenge now is how much can we rely on market competition mechanism? Companies that stand out from the group, Southeast Motor, etc.? What kind of economic means and management techniques does the government use to motivate the healthy development of China's parts and components industry? How can the princely separatist industrial structure and Chinese and foreign "neutron-style" supporting structures break through? How to deal with the KD surge after joining the WTO? It seems that the future of China's parts and components industry depends not only on its own struggle but also on the government's effective macro guidance. It can be inspired by Japan's and South Korea's current development path and the successful experiences of emerging countries and regions.
No one has yet predicted how long steel prices will last. Therefore, whether it is from the domestic or the international raw material market, auto parts companies must be prepared to deal with the cost pressures caused by high raw material prices for a long time.
Although so far, the price of raw materials such as steel has been a long time. What is the meaning of the substantial increase in the cost of accessories in a car market that has been in a downturn? I believe this is a problem that any auto parts manufacturer is not willing to face. Behind the increase in raw material prices, there may be a new adjustment and reshuffle of the domestic auto parts industry.
How to digest the cost pressures of steel materials prices, an unnamed auto parts factory finance director admitted: The only way is to take the "Huashan natural insurance a road." That is, relying on establishing a cost management system, relying on the implementation of supply chain cost management, relying on economies of scale to reduce costs, rely on small profits and more sales to overcome the price of steel materials. This requires companies to do everything possible to absorb costs and strengthen management. It will force companies to change their pressures to become motive force. They will make great efforts to further strengthen management and reduce costs, and vigorously promote the core competitiveness of China's auto parts industry.