More than 40% of component suppliers will face serious liquidity problems this year

AlixPartners, a global business consulting company, said on April 16 that according to its latest research, more than 40% of the Chinese auto parts suppliers surveyed will face serious liquidity problems this year; in the next 12-18 months, some Parts manufacturers may close unless they try their best to keep cash.

AlixPartners recently conducted in-depth interviews with executives of 40 parts and components companies in China, including private, state-owned and multinational corporations in China. The results of the interview show that, with the financial crisis, a considerable number of parts and components manufacturers are facing problems such as declining sales revenue, lower profit margins, and shrinking export markets. About one-quarter of the manufacturers are facing a lack of funds to survive the liquidity crisis. .

According to the agency’s latest research, Chinese component manufacturers are completely unprepared to respond to the rapid slowdown in domestic and global markets last year, and they are also less responsive. With the rapid decline of the US market, the largest export destination for Chinese parts, domestic manufacturers will turn their attention to the aftermarket in the next stage.

Zhang Hong, Managing Director of AlixPartners Shanghai, said that with the gradual maturity of China's auto market, the continued expansion of the amount of ownership, and the low frequency of domestic consumers' replacement, the aftermarket will be the major growth point for the parts and components industry in the future.

The domestic auto parts industry recorded sales of 928 billion yuan last year, 23% from exports, and a quarter of its export revenue came from the United States. Last year, China’s car ownership reached 65 million, which is expected to increase to 73 million this year.

AlixPartners expects that the share of the aftersales market in the parts and components industry's revenue is expected to increase from 14% last year to 19% in 2013. The share of exports has fallen from 23% to 18%, while the share for the entire vehicle is still at 63%. about.

Bao Tianan, director of AlixPartners Shanghai, pointed out that 40% of parts manufacturers are looking for M&A opportunities in the domestic market, and 25% of suppliers are considering overseas M&A. However, compared with the survey conducted in 2008, the willingness to buy and sell companies has cooled down. At that time, 50% of the companies considered overseas M&A opportunities.

From 2005 to 2007, some mergers and acquisitions cases occurred in China's spare parts industry, such as Weichai Power's acquisition of the Hunan Torch, but this year may be a more active year. There have been several mergers and acquisitions cases since this year, such as the acquisition of Australian Autos in liquidation by Geely. Component Dealer DSI; BWI acquired Delphi's automotive brake and suspension components business.

AlixPartners is a consulting company focused on providing corporate restructuring and financial consulting, with offices in 13 cities around the world.