90% of Chinese Auto Part Suppliers with Limited Technical Level May Be Eliminated Through Competition

On Dec. 9, at a summit for top 100 Chinese auto part suppliers, chairman of China Machinery Industry Federation (CMIF) Ray Hsian Wang forecasts, “Within the following 5 to 6 years, 90% of Chinese auto part suppliers may be eliminated from the market. There are about 200 thousand auto part suppliers in China and only 13,000 of them are above a certain and large scale. After 2020, there may be only 2,000 suppliers left, as most of them will be eliminated due to competition.”

The common phenomenon demonstrated among the top 100 suppliers this year is the substantial decline of profit margin. The main reason that caused the substantial decline is: the auto part suppliers lacking technology have been gradually abandoned by car manufacturers. It is time to change, especially in products with high technical level and high added value.

Wang added at the summit, “What China is facing once happened in other developed countries like the U.S. The auto part suppliers will be integrated into some large groups that compete with each other.”