Concerns about the Auto Parts Business

There is an ancient Chinese saying that goes, 'Without foresight, one must have immediate worries.' Foresight represents being prepared for the future and paying attention to it; And near worry represents being exhausted and living in the present; According to the literal meaning of this sentence, there is a choice between foresight and immediate worry: if there is no foresight, there will always be immediate worry; If someone has immediate worries, they will not have foresight.



At present, for most auto parts companies, they only think about "short-term worries" and rarely think about "long-term plans" in three to five years.



The number of cars in China is 350 million, and it continues to grow. In theory, those who make auto parts should have confidence in the future, but most people express concerns. The main reasons for this are twofold:



One is the rapid growth of new energy vehicles: According to data from the China Association of Automobile Manufacturers, the penetration rate of new energy vehicles in May this year was 47%, which means that for every 100 new cars sold, 47 are new energy vehicles. For parts suppliers mainly engaged in fuel vehicle business, this inevitably creates some panic.



The second is the intensification of competition in the auto parts market: the intensification of market competition is not only due to the increase in peers and lower prices of auto parts suppliers; This is also reflected in the fact that the opponents we face have become stronger. If the original competitors were taller and stronger men than oneself, then the current competitors are an elephant and a dinosaur.



Leaving aside capital backed auto parts chains such as Kangzhong, Kuaizhun, and Three Headed Six Arm, there are now more and more auto parts suppliers forming auto parts alliances for vehicle parts and horizontal parts through clustering and collaboration. As an individual auto parts supplier, competing with them is very weak.



Furthermore, more importantly, the downstream market environment has undergone significant changes.



The downstream of auto parts dealers are auto repair shops, which are the main source of parts business. Although auto repair shops face a larger market and many people also want to ride the waves here, unfortunately, in the ocean of auto repair, there are five waves of huge waves, and each wave is stronger than the last.



The first wave: peers who have certain advantages, such as marketing experts and video influencers;

The second wave: brand stores with dozens or even hundreds of auto repair chains, such as Huasheng, Zhongxin Zhibao, Xiaoli Tire Repair, etc;

The third wave: auto repair shops endorsed by international auto parts brands, such as Bosch Car Service, Chijia, etc;

The fourth wave: auto repair shops with a background in OEMs, such as Chexiangjia, Chegongfang, Haoxiu, etc;

Fifth wave: repair garages with Internet background, such as Tuhoo, Tmall, JD, etc.



In theory, the more downstream auto repair shops there are, the better the business of auto parts dealers. However, the opposite is true: the more auto repair shops there are, the worse the business of auto parts dealers will be compared to before.



On the one hand, the reason is that large auto repair chains have their own auto parts departments and do not need to seek loans from you; On the other hand, the larger the auto repair chain, the more they value the price of auto parts. For auto parts dealers without strength, it is difficult to do business. So we can only do some individual stores.



This is like a distributor of a supermarket: some large supermarkets will negotiate direct supply with the manufacturer; And some chain convenience stores have greater bargaining power, and ordinary distributors cannot do it, so they can only do some individual run supermarkets.