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auto parts double the profit margin for the foreign counterparts

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According to consulting firm AlixPartners to a report issued yesterday, last year, parts enterprises in China to double profit margins in the world with the most profitable industry, the report is based on 50 major parts of domestic companies based on the survey form The survey time for this year’s January March.

The report showed that while in 2009 the global automotive market is declining, but strong growth in the Chinese market makes auto parts company’s products always in short supply situation. Including steel, copper, rubber products, prices were at record levels, but low-cost human resources with China to offset the price just to make parts enterprises generally maintain profit margins of 8% to 10%, and the level of the world twice the average.

The profit level compared with the vehicle business, but also higher than 2 percentage points, automobile industry in 2009, the average profit margin of 6% to 8%. Respondents generally felt that, in 2010 and 2011, parts of China will further improve the profitability of enterprises.

In 2009, China’s auto parts industry revenue to reach 1.14 trillion yuan, up 23% compared to 2008, this growth is obviously not kept pace with domestic car sales increased 46% year on year.

However, from an export point of view, the domestic parts companies are still the main market for exports decreased by 7%, to 197.2 billion yuan.

The efficiency of business operations from the view, AlixPartners select working capital as a measure of the turnaround time standard, that is payable to the accounts receivable cycle, parts enterprises in China has improved, from the original 78 to 70 days of heaven. However, the financial crisis is gradually reduced, cash flow is also considered an important reason to accelerate. Chinese parts enterprises in Europe and the United States on operational efficiency is about half of its peers.

The domestic component companies in 2009 also began the wave of mergers and acquisitions, which mainly market behavior, such as Weichai Power (000338.SZ) acquisition of the French engine maker Bowen (MoteursBaudouinSA), Universal Group acquired the U.S. Global Control System Company (GlobalSteeringSystems); also government-led acquisitions, such as the acquisition of Delphi Jingxi Heavy braking and suspension business, Weifang Diesel, Shandong Engineering Machinery and was merged into Shandong Mountain Steam Heavy Industries.

At present China’s auto industry is still very low concentration, the largest five vehicle manufacturers account for all of its sales volume of 50%, compared to 65% of the United States, Japan is 87%. OEMs situation of low concentration, resulting in very scattered upstream supporting enterprises. 100% of those surveyed believe that mergers and acquisitions activity this year and next year will be significantly increased, 40% of executives said that the future will have its own acquisition plans.

“However, there are mergers and acquisitions will not be able to implement mergers and acquisitions, the automotive market a good situation, so many good parts enterprises that day too, if there is no government match, most domestic enterprises do not consider selling, we recommend that the domestic parts manufacturers Foreign M & A target should be locked. “AlixPartners Managing Director of China Roman told reporters.