Global automotive parts manufacturers are increasingly integrating advanced technologies such as aerospace, aviation, electronics, and information into their parts and assemblies. This has led to widespread adoption of safety, energy-saving, and environmental protection technologies. The application of high-tech has continuously enhanced the power, economy, reliability, and comfort of vehicles, accelerating their automation, intelligence, electrification, and informatization. Particularly, high-tech represented by electronic information technology is not only widely used in automotive parts but also extends to development and design, prototyping, production, testing, and after-sales service. Automotive parts can be categorized into two markets based on their timing of integration into the vehicle: the vehicle assembly market, which involves the market for supplying new vehicles with parts before they are manufactured, including all types of automotive components; and the after-sales maintenance market, which is formed by the need to replace worn-out parts during the vehicle's operation.
In the early stages of China's automotive parts industry, localization was minimal. The national automotive industry policy issued in 1994 proposed localization requirements and implemented a policy linking localization rates with preferential differential import tax rates, laying a solid foundation for the localization and development of automotive parts. The localization of the Santana model cultivated a large number of high-level supporting enterprises in Shanghai and other regions across the country, with most new vehicles meeting over 40% domestic parts supply requirements at the start. With the rapid development of China's automotive parts industry and the entry of foreign parts manufacturers into the Chinese market, significant progress has been made in localization. Currently, the domestic parts supply rate for commercial vehicles and mid-to-low-end passenger cars has reached nearly 100% at the time of production.
It's widely known that while there's a fierce competition among car manufacturers in terms of vehicle sales, when it comes to after-market services like soft shaft supply, the major vehicle manufacturers are quite uniform in their approach to selling car parts. For instance, the distribution of original equipment manufacturer (OEM) parts is primarily led by car manufacturers, often sold directly to end customers through 4S shops, thereby generating substantial profits from parts sales. However, with the increasing number of cars on the road and consumers' growing awareness of the after-market, relying solely on the 4S shop monopoly over the after-sales market is no longer sufficient to meet market demands. In addition to 4S shops, auto parts cities also serve as significant distribution channels for car parts in China.
At a critical juncture of China's automotive industry's strategic transformation, the importance of technology has become even more pronounced. The 12th Five-Year Plan Outline for China's Economic and Social Development once again sets clear requirements for the development of the automotive industry: first, to strengthen the capability of vehicle development; second, to achieve localization of key automotive components; third, to adopt more energy-efficient, environmentally friendly, and safe new automotive technologies, while supporting the development of new energy vehicles in the strategic emerging industries. Faced with the new situation and requirements, accelerating structural adjustments and promoting a profound shift from factor-driven to innovation-driven development models has become the opportunity for China's automotive industry to transform and upgrade, to grow stronger, and to cultivate new economic growth points. However, transformation is not a one-time, dramatic event; especially as China's automotive industry enters the era of micro-growth, a down-to-earth approach to progress is needed.
