According to a report from the China Industry Network, according to reports from relevant industry analysts, residents in third- and fourth-tier cities in China are currently very enthusiastic about car purchases, and car consumption has suddenly become a “just-needed†vehicle. Therefore, there is a wider space for cars. With the implementation of the newly introduced "Three Guarantees Law" for automobiles, the threshold for parts and components companies will increase, and there are many opportunities for advantageous parts and components companies to integrate with overseas mergers and acquisitions. These advantages mean that the domestic auto parts companies have a good situation.
The "Three Guarantees Law" for automobiles that will be pursued for seven years will be officially implemented on October 1 this year. Which made clear and inflexible provisions for parts and components. Obviously, strict regulations on parts and components must have a profound effect on the industry. Of course, this is undoubtedly a strong blow for those who take advantage of counterfeiting to gain market access, but it is good for companies with excellent quality, which will help parts and components listed companies to obtain orders and maintain gross profit margins, and achieve strong and consistent.
This is a big challenge for companies with a technical level and quality control ability that is somewhat different from the original ones. Therefore, to obtain a market, it must comply with relevant standards. This will inevitably enable related companies to improve their internal management, product technology, and quality. Some companies that are incapable or who are mainly fake and shoddy will be eliminated to optimize the industry. Integration brings us a healthy and orderly market.
China's parts and components industry is still quite fragmented. How to get rid of homogenous competition, achieve higher quality production, and move toward the top of the value chain is the key to achieving healthy growth in the industry. M&A, including the acquisition of overseas assets, is also one of the shortest ways for the industry to achieve transformation and upgrading in the future.
According to the "2013-2017 China Automotive Casting Industry Earnings and Investment Value Study Report," it is pointed out that since the 2008 economic crisis is not cyclical, the future economic turmoil is unpredictable and the global M&A market is very large due to recent European and American parts and components. The company went bankrupt and part of the market share was withdrawn. China's spare parts company will fill the vacant market share. Through mergers and acquisitions, these parts companies will undoubtedly move into higher profit markets. At present, the prices of raw materials for auto parts, such as rubber and steel, will continue to decline, which will reduce the company’s cost pressures and increase profits. It will also constitute new advantages for auto parts companies. Overall, the integrity of the parts and components market rose.
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