With the new development trend of the global automotive industry, in order to match the new demands of vehicle manufacturers and respond to the global competition of the industry, domestic auto parts and components are also constantly seeking a transformation. Through the recent developments of some companies, we can roughly summarize the "new posture" of the transformation of local parts suppliers.

Take advantage of big names to increase the scale of traditional business

Relevant statistics predict that 2015 will be a record year for Chinese companies to acquire foreign auto companies. As of October of this year, the Chinese company’s global acquisition costs have reached US$9.3 billion, and last year it was US$845 million. For China's auto parts industry, the acceleration of cross-border mergers and acquisitions is an instinct for local companies to cope with increasing global competition. For Chinese companies that do not have an advantage in technological capabilities, cross-border mergers and acquisitions, on the one hand, can enhance their own technological capabilities, and more importantly, they can bring scale effects to companies.

China International Auto Parts Expo

On the whole, Chinese domestic companies' M&A targets tend to be mainstream and large multinational brands.

On December 2nd, Huayu Automotive announced that it is developing a global automobile according to the company’s wholly-owned subsidiary Yanfeng Automotive Trim Systems Co., Ltd. (abbreviated as “Yanfeng”) and US Johnson Controls Inc. (abbreviated as “Junsen Automation”). Relevant regulations concerning the restructuring of the interior business, the integration of the major production (including R&D) bases of the two companies covering 17 countries or regions into Johnson Controls Automotive Interiors (Shanghai) Co., Ltd. (abbreviated as “New Interior Company”) has been basically completed. The new interior company has changed its name to "Yanfeng Automotive Interior Systems Co., Ltd.". For Hua Yu Automobile, the restructuring of the global automotive interior business will form the world's largest supplier of automotive interior systems.

On the same day, Aerospace Electric announced that the company intends to exercise its preemptive right to pay for cash to purchase Delphi's 50% stake in Shanghai Delphi. After the transaction is completed, the company will hold an 87.5% stake in Shanghai Delphi. The aerospace electromechanical auto parts business will expand accordingly.

Whether it is Huayu Automobile or Aerospace Machinery, the cooperation between the two brands in the traditional sense is related to the business field. Although the Huayu Automotive Parts Business involves many aspects, this large-scale merger and acquisition is mainly in the interior business, and Shanghai Delphi is also primarily engaged in the development and manufacture of automotive air conditioning systems.

Therefore, it can be seen that in the traditional field, domestic companies tend to enhance their competitiveness by means of international cooperation to expand the advantages of scale.

Expanding Territory, Transforming Two New Areas

With the new energy and intelligent trends in the automotive industry, domestic component manufacturers are also trying to find opportunities here.

On December 1st, Zhejiang Asia Pacific Electromechanical Co., Ltd. (abbreviated as “Asia Pacific Electromechanical”) made further explanations on its participation in shares of Elaphe Propulsion Technologies Ltd (“Elahe”), stating that Elaphe company had held a shareholders’ meeting on September 30 to discuss and approve Zhejiang Asia Pacific Electromechanical Co., Ltd. and Elaphe Propulsion Technologies Ltd. Investment Intention Agreement. After this investment, Asia Pacific Electromechanics will hold a 20% stake in Elaphe, and it will hold more than 51% of the joint ventures established in China. Elaphe Corporation is the supplier of wheel and hub motor technology for electric vehicles and other vehicles. It is the world leader in the technical innovation, research and development of wheel hub motor electronic control, production equipment and integrated application of wheel hub motors in electric vehicles.

Of course, in the field of new energy and intelligence, local companies not only target overseas, but also companies that choose local cooperation.

On November 28th, Wanan Technology released the “Announcement of Outbound Investment (1)” and the “Announcement of Outbound Investment (II)”. It intends to increase the amount of capital to expand stocks to the Flying Magnesium (Beijing) Information Service Co., Ltd. (" Speeding Magnesium ") and Soda (Beijing) Transportation Network Technology Co., Ltd. ("Soda Network" for short) invested 20 million yuan and 5.128 million yuan, respectively, to obtain 22% of the shares of Flying Magnesium and soda.

Feifan Magnesium is a company focused on the development and service operation of the platform for pre-loaded vehicles, and is committed to providing full vehicle networking products and solutions for vehicle manufacturers. Soda Network is a technological innovation company focused on smart transportation and new energy vehicle sharing platform. Soda Networks cooperates with many new energy automobile companies, including Italian open-source vehicle OSVehicle, and builds shared smart cars based on its own car networking technology architecture to provide next-generation urban travel plans.

Obviously, this time Wanan Technology invests heavily in flying magnesium and soda network, mainly to use the two companies to enter the field of car networking and expand the development and production of electric vehicle related parts and automotive electronic products, promoting Wanan technology from the car zero The area of ​​component production expands into the field of intelligent traffic operations.

Therefore, following the upgrade of these two new trends in new energy and intelligence, there will be more frequent acquisitions or equity participation in the parts and components industry.

To build a car, open up the industrial chain

Compared with the traditional qualification of traditional automakers, “a ticket is hard to come by”, the change in the new energy manufacturing policy has provided rare opportunities for many auto parts companies to enter the vehicle field. As regards parts and components manufacturers, many reports have been published before this site. From Wanxiang to Duoeduo to Jiangd Motor, companies have basically completed related acquisitions and obtained vehicle manufacturing qualifications. However, here we still have to say that among these companies, major companies still tend to extend their reach into the field of new energy bus manufacturing. If Wanxiang and SAIC set up a joint venture to establish the New Energy Bus Company, Jiangte Motor will participate in the Kowloon Motor Bus.

I think this is because buses are the public sector vehicles and they are the most effective market segments for new energy promotion. On the other hand, the competition in the passenger vehicle manufacturing industry is different from that of the passenger vehicle market. .

However, the new energy passenger vehicle market still has its attractiveness. The most typical one here is universal. In 2014, Karma Motors was acquired by Wanxiang Group. Before this year's visit to the United States by President Xi Jinping, the Wanxiang Passenger Vehicle Builder began to surface slowly.

Karma Automobile Co., Ltd., a subsidiary of Wanxiang Group, has reached an important partnership with BMW. Karma will combine BMW technology resources to launch a series of high-quality, state-of-the-art hybrid and pure electric luxury cars in the future.

Regardless of what vehicles are built, in short, new energy vehicles have opened up parts and components manufacturing companies to open up the industrial chain, from core components to end products, and enhance the competitiveness of enterprises, providing a new way out.

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