Trends in China's Automotive Component Manufacturing Industry

Ipsos Business Consulting have published this report highlighting the risks posed by counterfeiters in China's fast-growing automotive parts market.

The report explores the market drivers, manufacturer overviews and intellectual property protection issues within the Chinese automotive component manufacturing industry. 

Key findings include:

• In 2013 sales of new vehicles surpassed the 20 million mark in China and new vehicle sales will continue to drive demand for automotive components.
• The independent aftermarket will soon start to grow substantially given the rising number of cars no longer covered by manufacturer warranties.
• As used cars become a more viable option for first time buyers, increased government scrutiny of the developing sales network will positively impact the independent aftermarket.
• Based on these strong fundamentals, China’s component manufacturing industry is expected to experience growth of more than 20% per year for the next 5 years.
• While the outlook remains positive, the central government has identified over-capacity as a potential threat for the industry and has put it under observation since early 2012.
• Counterfeiting will increase as the market expands and continue to threaten manufacturer’s profits, requiring parts makers to implement stringent intellectual property protection practices.
• Exporting products remains challenging, especially for domestic component manufacturers, due to a lack of technology development and low competence in exporting high value-added products.
• Ongoing pressure from rising labour costs and the expected appreciation of the yuan will continue to challenge exporters of low value components. 

Klaus Paur, Global Head of Ipsos Automotive, said:

“As the automotive vehicle fleet in China continues to grow at a fast pace and maturing in the process, the aftermarket offers an ever increasing source of profitability. Protecting this business has become a top priority for parts manufacturers to ensure sustainability.”

Lynn Morgan, Ipsos Business Consulting, Europe, said:

“Our research stresses the need for IP protection in what is the world’s largest counterfeit market for auto parts”.