What are the prices of auto parts and raw materials?

At the beginning of the new year 2010, the auto parts industry ushered in a wave of product price increases. It is reported that this increase in raw material prices not only brings great cost pressure to the automaker, but also brings heavy cost pressure to auto parts companies.

According to domestic media reports, parts and components that currently increase prices include transmissions, tires, engines, rubber, axles, and lubricants. The news that the tires are rising is no longer news, and tire prices have been rising for several months now. Some tire brands have made large-scale tire price adjustments. Among them, Bridgestone (China) Investment Co., Ltd. announced that since August it has adjusted the sales price of its branded tires, with price increases ranging from 7% to 10%. At this point, Bridgestone's annual increase has reached 10% -15%. Since this month, all Goodyear brands have increased their prices by 10%. It is not difficult to see that the new round of price increase for tires has become even greater, clearly surpassing the slight price adjustment in the first half of the year.

The increase in the price of raw materials not only brings greater cost pressure to OEMs, but also places greater pressure on parts and components companies.

“Rising raw material prices have a direct impact on the profitability of each company.” According to the person in charge of procurement of Foton Green Power Co., Ltd., “At the end of each year, the Purchasing Department will send a letter to the supplier according to the company’s request, requesting price adjustments. Depending on the type of part, after the price is finished, it is written into the procurement contract and signed with the supplier.This is the price adjustment at the beginning of the next year. After that, if the price of raw materials in the international or domestic market changes too much, the supplier can not afford it. Both parties will adjust the price again. Under normal circumstances, after the price adjustment at the beginning of the year, the OEM will basically disagree with the price increase."

The person said: "The company does not have to be able to raise prices. It is important to negotiate prices with its suppliers. It is important to grasp its internal management and reduce costs from the inside. Commonly there is manufacturing cost control (process routes, Parameter optimization), optimize product structure design, lean production, zero inventory management, personal capabilities (including execution, management capabilities, technical capabilities, etc.)."

“The pressure is very high. The price of raw materials is rising, and the price of the product must also rise. However, talking to dealers about price reductions can be very unpleasant when it comes to price increases. But to ensure profits, the price of products can only rise, if not increase again, We will have a hard time surviving.” Yang Yunshan, manager of Shandong Linglong’s overseas marketing department, said: “It is expected that the price of natural rubber will continue to rise after March.”

With the increase in raw material costs and thinning profits, although the increase in costs is unlikely to affect auto companies, it has become the main force for shifting cost pressures to parts and components companies in the downstream of the industry, and has felt the pressure. In order to further ease the pressure on costs, it is a good idea for parts and components companies to become strong players in the industry, speed up industrial restructuring, and exert scale advantages. Moreover, auto parts companies should increase their awareness of service, and in the face of intense product price competition and rapidly shrinking profit margins, service quality will be upgraded to a higher level, which will become a new profit-added space for enterprises in the future.

Xu Changming, director of the information resource development department of the State Information Center, suggested that the merger and reorganization of parts and components companies is more urgent than the entire vehicle. Xu Changming believes that the current merger and reorganization focuses on vehicle companies. The reorganization of parts and components companies is actually more urgent and necessary than the entire vehicle. If there are no large parts and components companies, the costs will not come and the quality will not go. The development of the entire industry will be extremely difficult. According to experts, domestic parts and components companies are small in scale, weak in strength, and have a severe shortage of research and development capabilities. Under this background, if the parts and components industry wants to develop rapidly, it must speed up mergers and reorganizations to form a scale effect.