Some local small and medium-sized parts companies are facing huge life and death problems.

Text丨Zuo Maoxuan, Zhang Xing, Wang Yangqing

Since February 10, domestic automobile manufacturers have resumed work in stages at different times. However, relevant people from automobile OEMs told Think Tank that at this stage, the main focus is to restore some workshops, and it will still take some time for the large-scale production of complete vehicles to be restored.

The main reason is the insufficient supply of some parts. Producing a car requires tens of thousands of parts. Without one of them, the car cannot be produced with high quality and quantity.

Affected by the new coronavirus pneumonia epidemic, the automobile industry is facing a huge impact. On the one hand, parts companies in Hubei Province are unable to resume work, which directly leads to some car companies resuming work in a timely manner; on the other hand, the impact of the epidemic on circulation has hindered the transportation and export of parts across provinces and cities. The global automobile industry has been affected by the epidemic in "Chinese factories".

The biggest impact is on Hubei and Wuhan. On February 20, the Hubei Provincial Novel Coronavirus Infection Pneumonia Epidemic Prevention and Control Headquarters issued a notice stating that all types of enterprises in the province are required to resume work no earlier than 24:00 on March 10.

Think tank Tianyancha found that there are more than 1,200 auto parts manufacturing companies in Wuhan. Among them, they include factories established in Wuhan by multinational parts giants such as Bosch, Valeo, and Visteon, as well as supporting companies supplied by Dongfeng's subsidiaries, and hundreds of large and small companies that produce seat belts, interior air-conditioning systems, Local small and medium-sized enterprises in sunroofs, bolts, fuel tank valves, etc.

Auto parts R&D and verification cycles are long. Parts giants cooperate closely with OEMs and master core technologies. They are faced with adjustments mainly in production capacity. Some local small and medium-sized parts companies are facing huge life and death problems.

The impact has spread around the world

The novel coronavirus epidemic has given the world a clearer and more eye-catching understanding of the importance of China’s automobile industry and the closeness of the world’s automobiles. The supply interruption of Chinese manufacturing has damaged the global supply chain, and due to the long automobile supply chain, recovery will still take a long time.

Think Tank found through Sky Eye that among the more than 1,200 parts and components companies in Wuhan, 140 are foreign-invested institutions or branches of foreign-invested institutions. Among them, Japanese companies account for the most. This is mainly because Wuhan is the headquarters of Dongfeng Group, which owns Dongfeng Honda and Dongfeng Nissan, two joint ventures with Japanese car companies.

“From the perspective of the industry rules of parts and components, generally large parts will be produced nearby. Some small and sophisticated core parts will be purchased globally.” January 23 On the same day, a senior executive of a multinational parts company in China told Think Tank.

Think Tank Jun learned that in addition to supplying parts to OEMs that produce cars in China, some parts companies in Wuhan are also responsible for export business. Among them, most of them are Japanese and Korean car companies that are closer to China.

In fact, thanks to China’s lower costs of raw materials, labor, logistics, etc., Japanese and Korean car companies purchase large quantities of different auto parts in China. Many auto parts are purchased by the joint venture and supplied to its models produced globally.

“At present, the domestic automobile market is not in good condition, and sales have declined significantly. OEMs, especially independent automobile companies, have smaller supply demand for parts and components. At present, for Japan and The impact on Korean automobile production is relatively large, and the impact on the United States and Europe may be felt later," said a senior executive of the above-mentioned parts company.

Since Hubei Province, the epicenter of the epidemic, is home to Nissan’s partner Dongfeng Motor, and Nissan purchased more than 800 parts from the Hubei factory, ranging from brake hoses to air conditioning controllers, this makes Nissan is more susceptible to disruption than most other automakers. The company is concerned that if factories in the province remain closed, most of the components will be exhausted.

Nissan stated that the postponement of production was due to the Hubei Provincial Government’s instructions requiring companies to cease operations before March 10. In Japan, Nissan closed some production lines in Kyushu, southwest Japan, on February 14 and 17.

Faced with the spread of the epidemic, Japan’s auto industry and government are forming a joint committee for automakers and suppliers. It is currently cooperating with the Japan Automobile Manufacturers Association and the Japan Auto Parts Industry Association. The Ministry of Economy, Trade and Industry said in a statement on February 20 that the agency will monitor developments and coordinate communications, and work with the Japanese government to take measures to ensure the smooth flow of components through the supply chain. If the situation worsens, the agency will share information and provide necessary financing and policy support.

South Korean car companies have also been hit hard by the epidemic. Because the wiring harness used to connect complex electronic products has been exhausted, Hyundai Motor closed its five-factory production system in Ulsan Industrial Park, South Korea, with an annual output of 1.4 million vehicles on February 7.

In addition, on February 6, Fiat also stated that due to the impact of the epidemic in China, parts production has encountered difficulties, resulting in the company's assembly lines in Europe being forced to suspend production in early March.

From the current point of view, it will still take a long time to restore the supply of parts and components in Wuhan, and parts suppliers in other regions are also facing production difficulties. On the one hand, due to insufficient logistics preparations by upstream raw material suppliers, most parts companies have insufficient material reserves. On the other hand, due to logistics problems, many obstacles need to be overcome to transport parts to the port.

However, some people in the parts industry told Think Tank that due to the long cycle from research and development to verification of parts, although most car companies will choose two to three different parts suppliers for certain parts. business. However, for some core parts, multinational parts companies are highly irreplaceable. Local parts companies are worried about losing global orders from some car companies.

Anxiety of local small and medium-sized parts manufacturers

Among the thousands of auto parts companies in Wuhan, in addition to parts giants and parts subsidiaries backed by OEMs, more The company is a small and medium-sized enterprise with a small registered capital and a small scale. It has only dozens of employees, many of whom are second- and third-tier suppliers of first-tier suppliers. The COVID-19 epidemic has brought huge operating pressure to these small and medium-sized enterprises.

“Work here has been suspended for nearly more than a month, and I have seen economic losses of at least 3.5 million yuan, because wages are still being paid and rents are still being paid. The workers’ wages alone are nearly 300,000 yuan. There are also rent and market maintenance costs,” Manager He of a Wuhan parts company that produces seat belt accessories told Think Tank on February 24.

A parts supplier in Wuhan that produces fuel tank valves is also facing tremendous economic pressure. Ms. Wang, the person in charge of the company, told Ji Zhikujun that she hopes that the main engine factory can help Wuhan's parts suppliers ease their operating pressure at this time.

"We can't produce in February now, and the production in March will also be affected, but the people in the company on the 20th and 30th have to support and pay wages. Where do the wages come from? There are more below Second-tier and third-tier suppliers should also pay the supplier's money, which is a chain reaction," said Ms. Wang.

Ms. Wang told Think Tank Jun that for auto parts suppliers in the hardest-hit areas, she hopes that OEMs can give priority to the delivery of arrears. "I hope that for Wuhan auto parts suppliers, the money owed by customers can be paid in time. Now our company's customers owe one or two million, but one or two million is very important to small businesses."

As China's auto market has been declining for two consecutive years, many OEMs have suffered profit losses and are also facing huge pressure on capital flows. Defaulting on payments to suppliers and lowering prices are not uncommon in the industry.

“We know that car companies are also in difficulty right now, and car sales are not very good now. But we still hope that the OEMs can help our parts partners in Wuhan tide over the difficulties. The losses suffered by the OEMs are invisible. It will be gradually passed on to mid-stream and upstream suppliers. If the OEM cannot pay properly, there will be a chain reaction. If the suppliers die, will the existence of the OEM still be meaningful? "Ms. Wang said.

She said frankly that from the current point of view, the impact on Wuhan parts suppliers comes from many aspects, and the first problem they face is the problem of resumption of work.

“The issue of resumption of work involves human resources and material resources, which must be kept up with. Only when all resources in the entire supply chain are restored in place can work be resumed normally. We, small and medium-sized enterprises, need to prepare Some disinfection resources, alcohol, masks, gloves and other supplies. I know there are a lot of preparations, but the 84 liquids and alcohol I ordered online have not arrived. How can we resume work? Even if we resume work, logistics and transportation are still a problem. " Ms. Wang said.

For small and medium-sized parts companies, the bigger concern is that their market share is being taken away by competitors. Generally speaking, OEMs will choose multiple suppliers to ensure the flexibility of the supply chain and reduce costs. If the supplier at point A is unable to supply, there is the possibility of choosing suppliers at point B and point C.

“Whether it can be replaced depends on the complexity of the parts and the technical strength. I am definitely worried about the emergence of point B or even point C. If the market share is reduced, the turnover will be correspondingly reduced. It has always been , we are all improving our industrialization capabilities, but we are afraid of being preempted by suppliers at point B. Improving our own industrialization capabilities requires funds and reinvestment," said Ms. Wang.

However, Manager He told Think Tank Jun that he is not particularly worried about being replaced by competitors. He said that some customers have verbally agreed to retain their market share but still want to retain it.

“This is all about mutual understanding. Customers also know that we are a Wuhan company and are facing a special period, but the technical conditions still exist. They are also very considerate of our feelings and will not add insult to injury. We can’t supply it now. , then find other companies to supply it first, and we will make up for the share later. But this is just verbal, and there may be some differences in actual implementation," said Manager He.

This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.