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“We can only minimize production, delay delivery time, and use such negative measures to cope with rising costs.†The general manager of a parts and components company reluctantly said.
The current rise in raw material prices and other factors have brought unprecedented pressure on component suppliers. The above-mentioned component company is a manufacturer of engine shafts, and the general manager told the reporter that “even if the above-mentioned negative measures do not solve the problem, the general parts and components companies have money in the main engine plant. If they cannot deliver on time, they will be fine."
Nowadays, parts and components companies are faced with not only the price increase of steel products, but also the price increase of chemical materials. In addition, as labor-intensive enterprises, the increase in labor costs cannot be ignored.
It is understood that some small suppliers have already chosen to switch to production, and some large-scale parts and components companies do not like these small companies, "the boat is better off," and can only support.
Supporting companies will experience a process of “ebbingâ€.
Double extrusion
Parts companies have become the "sandwich biscuits" for the rise in raw material prices.
The rise in the prices of upstream raw materials such as steel and chemical materials has first brought impact to parts and components companies.
In the iron ore contract reached between Baosteel and Brazil's Vale, the long-term contract price rose by 65%. Baosteel subsequently announced the second quarter steel prices. According to relevant information, most of Baosteel's steel products have risen above 600 yuan/ton, exceeding market expectations. As the price of crude oil continues to rise, the prices of chemical raw materials have also steadily increased. At present, the international oil price has reached 135 US dollars per barrel. The increase in the cost of labor has also given companies a headache. With the implementation of the new Labor Contract Law, companies have increased their management and production costs. Unlike parts and components, OEMs can achieve a high degree of automation. Parts companies are mainly labor-intensive. The labor costs also put pressure on parts and components companies.
In the face of rising raw material prices, car prices have continued to decline. Although the intensity of car price cuts this year is not as big as in previous years, but any one manufacturer can not easily raise prices and give up market share. There have been such extreme comments: "Whoever wants to rise first will die first." The car companies will not act rashly.
In this way, it is also more difficult for parts and components companies to implement the price increase requirements of OEMs.
A person in charge of the parts and components company told the reporter: “Our contract is signed with the OEM for half a year. Now despite the cost pressure, the price in the first half of the year cannot be changed. It can only be decided in the second half of the year.†The person in charge hopes that the prices of the products that the mainframe plant can give him in the second half of the year will increase by 15%.
Some parts factories have submitted applications to the main plant. However, some financial analysis and financial statements have to go, and parts companies still have some distance from the price increase. It is also known that some OEMs continue to shirk and shirk, making it difficult for parts and components companies to take a difficult step. The person familiar with the situation said: "It can only be the parts and components companies to bear first, and there is no way to afford them."
Now we can only see who can sustain this past. Under the double squeeze, the parts and components companies took the initiative to enter the "elimination round."
Large-scale suppliers can achieve internal adjustments, such as the production of more profitable products and less production of products that have lost profits. Some smaller suppliers can only look at the attitude of the OEM.
How to survive
With increasing pressure from upstream and downstream, the parts and components companies must first find a solution to their own problems. A parts and components company said: “Some companies may choose some lower-priced suppliers to reduce costs, but these are generally small-scale suppliers, low management costs, and there is no guarantee of quality. Embark on the road to self-destruction."
Therefore, automakers cannot ignore the plight of parts and components companies, and parts prices have become a trend. It is understood that parts and components sold in some auto parts markets have started to increase prices. Commercial vehicles that are under greater pressure to withstand the rise in raw material prices have generally raised their prices, and the corresponding parts and components companies have also increased their prices. There has been little news of passenger car prices rising.
These conditions may change in the second half of the year. Now that the parts and components companies cannot afford the cost pressure, they have almost reached the limit, and the entire vehicle company cannot be indifferent and will eventually adjust its prices. Vehicle companies will usher in a severe test. Even if the parts and components companies mentioned above want the price to increase by 15%, there will be tremendous pressure on the entire vehicle industry, especially the fierce market competition.
Will the car price increase in the second half of the year? The industry believes that the profit rate of China's auto industry has been at a relatively high level, so the cost pressure may lead to a drop in profit margins, the possibility of price increases is not.
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Encountered double squeeze of Chinese parts companies to enter the "elimination round"