Why can the auto market cold car parts and components enterprises be able to "muffle their hair"?

In the first half of this year, Beijing, Jiangsu, Zhejiang, and Fujian saw a year-on-year decline in car sales in major provinces and cities across the country, and even some 4S stores closed in many cities. According to the data released by the China Automobile Association, the domestic automobile production and sales increased by 2.6% and 1.4% in the first half of this year, and the growth rate dropped by 6.96 percentage points and 6.93 percentage points over the same period of the previous year. Unlike most of the OEMs and distributors, the net profit has fallen sharply. As an upstream auto parts company, it has outstanding performance in terms of profit.

The decline in dealer profit is expected to have 4S stores closed
According to data from the China Automobile Association, domestic automobile production and sales increased by 2.6% and 1.4% in the first half of this year, and the growth rate dropped by 6.96 percentage points and 6.93 percentage points over the same period of the previous year. The downturn in the auto market directly led to the ugly performance of the semi-annual report of the car companies, and the first to feel the chill of the market is the car dealer.
In fact, the performance of the auto OEM in the first half of this year is also not ideal. The net profit of listed automakers including FAW Xiali, Brilliance China and Jianghuai Automobile has experienced different declines. Among them, ST Xiali released the first half of the performance forecast, the company's loss will reach 500 million - 5.7 billion, and the performance will drop 27.36%. If the company can't turn losses in the second half of the year, it will face a delisting crisis. How to protect the shell is the primary problem it faces.
Among the net profit decline list is Jianghuai Automobile. The company's first quarter net profit was only 215 million yuan, down 17.39% year-on-year. In the first half of 2015, Dongfeng Motor sold a total of 94,000 vehicles, down 27.28% year-on-year. In addition, Brilliance China, which is listed on the Hong Kong stock market, also issued a profit alert, indicating that its profit for the first half of 2015 was down about 40% from the same period in 2014.
It is worth noting that when the OEMs and dealers are facing the dilemma of falling profits, the downward trend of car prices is intensifying. According to the Wilson report of the research institute, under the influence of the continued weakness of the retail market in the auto market, major manufacturers continued to increase their concessions in July, resulting in the market price continued to fall in July, and the A 0, LU X and M PV market prices fell. In this regard, Cheng Xiaodong, chief automobile analyst of the Price Monitoring Center of the National Development and Reform Commission, predicted that with the release of a large number of new capacity and the listing of more than 20 new vehicles in the third quarter, the dealers will continue to increase their sales during the off-season, thus driving the price to continue to fall. .
According to data released by the National Federation of Industry and Commerce Automobile Dealers Chamber of Commerce recently, about 90% of dealers in the first half of this year are in a loss.
Jia Xinguang, a senior auto industry analyst and executive director of the China Automobile Dealers Association, recently predicted that 4S stores will be closed down in the future.

The auto market in the auto market has risen against the trend
Just as the OEMs and dealers faced the dilemma of falling profits, the upstream auto parts companies performed very well in terms of profits.
More than 70% of the more than 50 parts and components companies that have disclosed the 2015 interim results forecast have seen an increase in net profit. Among them, Century Huatong's net profit increased the most. According to its 2015 interim report, the company's net profit was 144 million yuan, an increase of 174.22%, while Shenhua's net profit is expected to increase by 166% to 172%.
“The continued weakness of the domestic market is a test for automakers, and the days of component manufacturers are much better.” Cui Xiangdong, deputy secretary general of the National Federation of the Federation, said that car companies usually stock up in advance, so this car city is cold winter. The impact on parts companies will be delayed by three months to six months, and their preparation time is sufficient.
As the automotive industry's reliance on new technologies and core components is increasing, the OEMs require core component suppliers to reduce the price of their chips, so it is very difficult to obtain profit margins from suppliers. On non-core parts with low technical threshold and large demand, car companies have consciously begun to transfer a large number of orders to some local parts enterprises that have completed relevant technology and stable quality.
On the other hand, the Internet tide has swept over and brought more space for component manufacturers. On August 26, the Ministry of Communications issued a decision on amending the "Regulations on the Administration of Motor Vehicle Maintenance." The official definition of homogenous accessories was introduced and clearly available. Therefore, upstream auto parts manufacturers can launch their own after-sales private brands, which is obviously good for their market outlook.

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