Market research on China's automotive aluminum die-casting parts industry and "14th Five-Year Plan" development trend research report

Automotive lightweight parts automotive aluminum die-casting parts industry trends and opportunities and key enterprises

Global: Against the backdrop of increasing global energy demand and environmental pressures, reducing automotive energy consumption and emissions has become one of the major issues facing governments and the automotive industry. Automobile lightweight is an important way to achieve automobile energy conservation and emission reduction, and has become the trend of automobile development in the world. As one of the main development directions of automotive lightweight material technology, aluminum alloy materials are increasingly used in the auto parts industry.

Domestic: Energy and environmental issues are the challenges that the mainland automobile industry must face to achieve sustainable development, and automobile lightweight is also an important development path for the mainland automobile and parts industry. As a traditional resource country, the mainland has maintained the position of the world's first output for several years, and the rich lightweight material resources have provided conditions for the development of continental automobile lightweight.

Source: Compiled by Puhua Youce

1. Industry development trend

(1) Automobile lightweight is an important way to achieve automobile energy conservation and emission reduction

The "14th Five-Year Plan for the Mainland and the Outline of Long-term Goals for 2035" proposes to formulate an action plan for peaking carbon emissions by 2030, strive to achieve carbon neutrality by 2060, promote clean, low-carbon, safe and efficient use of energy, and further promote low-carbon transformation in the fields of industry, construction, transportation and other fields, and automobile lightweight is an important way to achieve energy conservation and emission reduction in the automotive field.

In addition to the air resistance, a variety of resistances that must be overcome during the driving process of the car are directly proportional to the mass of the vehicle, so reducing the quality of the car can effectively reduce fuel consumption and emissions. Automobile lightweight is a common choice for global automakers to cope with energy and environmental challenges, and it is also the only way for the sustainable development of the automotive industry. For the mainland automobile industry, the development of automobile lightweight technology is the need for energy conservation and emission reduction in the mainland, the need for industrial structure adjustment, and the need to enhance the international competitiveness of mainland automobile products, enhance the ability of independent innovation, and build an automobile power.

Automobile lightweight is a comprehensive project that integrates material technology, manufacturing technology and structural design technology, including the application of lightweight materials, new manufacturing technologies and processes, and advanced structural optimization or design methods, which are reflected in the three aspects of product structure, materials and manufacturing. In terms of materials, it is necessary to vigorously promote the application of high-strength steel, aluminum alloy, magnesium alloy, engineering plastics, composite materials and so on in automobiles.

The density of aluminum alloy is small, only one-third of steel, with good craftsmanship, corrosion resistance, vibration dampness, weldability and easy recyclability, etc., is an excellent lightweight material. The weight reduction effect of traditional structural parts aluminum can reach 30%-40%, and after the weight reduction of the body, due to the reduced load, the brake system and suspension and other components can be designed to be lighter to bring about secondary weight reduction, and the weight reduction effect can reach 50%. Therefore, replacing steel with aluminum alloys as structural materials can bring about significant weight reduction. At the same time, aluminum is easy to recycle. According to the Analysis of the European Aluminium Association, 95% of the aluminium material can be recycled after the car is scrapped, and 95% of the energy consumption can be saved compared to the production of primary aluminum.

According to the statistics of the European Aluminum Association, the amount of aluminum used on each car in Europe has risen sharply in the past 20 years, from 50 kg in 1990 to 140 kg in 2012, and it is expected to reach 160 kg in 2020, and the amount of aluminum used in some models has even exceeded 500 kg. According to the "Roadmap for Energy-saving and New Energy Vehicle Technology" compiled by the Society of Automotive Engineers of China, the development goals of mainland automobile lightweight technology include reaching 190 kg of aluminum for bicycles in 2020, 250 kg in 2025, and 350 kg in 2030.

(2) New energy vehicles are an important development trend of future automobiles

As a non-renewable energy source, oil is difficult to sustain the huge demand for vehicle fuels in the long run, and it is difficult to avoid pollution problems such as carbon emissions. Therefore, new energy vehicles came into being as a product of the era of the development of the automobile industry. As one of the strategic emerging industries in the mainland, the development of new energy vehicles carries the historical mission of alleviating the pressure on petroleum resources, solving the problem of environmental pollution, realizing the structural adjustment and transformation and upgrading of the mainland automobile industry, and making the automobile industry bigger and stronger.

With the strong support of national policies, the new energy automobile industry in the mainland has developed rapidly. According to statistics from the China Association of Automobile Manufacturers, the sales volume of new energy vehicles in mainland China in 2020 was 1.367 million units, with a year-on-year growth rate of 10.90%. According to 2020 mainland vehicle sales of 25.311 million units, the penetration rate of new energy vehicles in mainland China has risen to 5.40% in 2020. According to statistics from the Ministry of Public Security, by the end of 2021, the number of new energy vehicles in the mainland will be 7.84 million, accounting for 2.6% of the total number of vehicles, of which the number of pure electric vehicles will be 6.4 million, an increase of 60% year-on-year, accounting for 81.6% of the total number of new energy vehicles. According to data from the China Automobile Association, in 2021, the production and sales of new energy vehicles reached 3.545 million units and 3.521 million units, respectively, an increase of 1.6 times year-on-year, and the market share reached 13.4%, 8 percentage points higher than that of the previous year. Among them, the production and sales of pure electric vehicles reached 2.942 million units and 2.916 million units, up 1.7 times and 1.6 times year-on-year, respectively; the production and sales of plug-in hybrid vehicles reached 601,000 units and 603,000 units, respectively, an increase of 1.3 times and 1.4 times year-on-year, respectively; the production and sales of fuel cell vehicles completed 0.2 million units, showing year-on-year growth. The "New Energy Automobile Industry Development Plan" mentioned that by 2025, the penetration rate of new energy in the mainland should reach 20%, and the continuous development of the new energy automobile industry has brought new development opportunities and challenges to auto parts. On the one hand, new energy vehicles are one of the important development directions of the automotive industry in the future, which can bring a broader incremental market space to the automotive industry and promote the innovation of technologies and products in the auto parts industry. On the other hand, new energy vehicles also have certain differences with traditional cars in terms of structural design and power system, which requires auto parts manufacturers to quickly respond to the needs of downstream OEMs and develop and produce products suitable for the development trend of new energy vehicles.

(3) The global competitiveness of domestic auto parts enterprises has been improved

With the improvement of the manufacturing process and scientific and technological level of mainland auto parts products, coupled with the fact that the mainland still has certain advantages compared with Europe and the United States and other regions in terms of labor costs, mainland auto parts enterprises occupy an important position in the layout of the global industrial division of labor. Over the past two decades, the amount of mainland auto parts exports has grown rapidly, from US$1.123 billion in 2000 to US$18.652 billion in 2010 to US$56.516 billion in 2020, with an average annual compound growth rate of 11.72% from 2010 to 2020. In 2021, it reached $75.568 billion, an increase of 33.7% year-on-year.

Driven by the huge demand of the mainland automobile market, automakers and auto parts manufacturers around the world have laid out in China, coupled with the continuous growth and expansion of the mainland's own automobile brands, the mainland's local auto parts enterprises have received more and more development opportunities. In recent years, international trade frictions have aroused concern about the localization of key auto parts, and foreign auto parts suppliers have also been generally affected by the epidemic, which is conducive to domestic auto parts companies to obtain more business opportunities and further enhance their position and market share in the world.

(4) Intelligent and information technology helps the auto parts industry to upgrade to intelligent manufacturing

At present, the new generation of information technology represented by the Internet of Things, big data, and cloud computing is promoting the transformation and upgrading of traditional manufacturing to intelligent manufacturing. As a pillar industry of the national economy, the automobile industry will become an important industry for the transformation and upgrading of the mainland's manufacturing industry. "Made in China 2025" proposes to accelerate the intelligent transformation of production equipment in automobiles and other industries, and improve precision manufacturing and agile manufacturing capabilities.

According to the "Energy-saving and New Energy Vehicle Technology Roadmap" compiled by the Society of Automotive Engineers of China, intelligent manufacturing technology will gradually become a key component of the automobile manufacturing technology system in the future. After consolidating the automation, digitalization, networking and informatization foundation of the automobile manufacturing industry, building intelligent units and intelligent production lines, and breaking through the key technologies of intelligent workshops and intelligent factories, we will comprehensively deepen the application of the Internet of Things, big data and intelligent technologies, build intelligent workshops, and finally realize the whole process of intelligent automobile manufacturing from design, production, logistics to service, build intelligent manufacturing enterprises, and achieve the goals of accurate control and environmentally friendly manufacturing.

2. The opportunity factors facing the industry

(1) Industry opportunities brought about by the rapid development of new energy vehicles

Since 2020, new energy vehicles in the mainland have developed rapidly. According to the statistics of the China Association of Automobile Manufacturers, in 2020, the sales volume of new energy vehicles in the mainland was 1.367 million units, an increase of 10.90% year-on-year; in 2021, the production and sales of new energy vehicles were 3.545 million units and 3.521 million units, respectively, an increase of 1.6 times year-on-year, and the market share reached 13.4%, 8 percentage points higher than that of the previous year. Among them, the production and sales of pure electric vehicles reached 2.942 million units and 2.916 million units, up 1.7 times and 1.6 times year-on-year, respectively; the production and sales of plug-in hybrid vehicles reached 601,000 units and 603,000 units, respectively, an increase of 1.3 times and 1.4 times year-on-year, respectively; the production and sales of fuel cell vehicles completed 0.2 million units, showing year-on-year growth.

In order to improve the cruising range, lightweight design is one of the main measures for new energy vehicles to reduce weight and consumption, and aluminum alloy is the key material for the current new energy vehicles to achieve lightweight. Therefore, the rapid development of the new energy automobile industry has brought new development opportunities to the automotive aluminum die-casting parts industry, on the one hand, it has brought a broader incremental market space to the automotive industry, on the other hand, it has also promoted the innovation of technology and products in the automotive aluminum die-casting parts industry, bringing new business growth opportunities for automotive aluminum alloy die-casting parts enterprises.

(2) Lightweight is the only way for the sustainable development of the automobile industry

Automobile lightweight is an important way to save energy and reduce emissions, and it is also one of the important directions for the development of the automobile industry. The vehicle quality of the car is highly correlated with the resistance during driving, and reducing the quality of the car can effectively reduce the fuel consumption and emissions of the fuel vehicle, and can also help the new energy vehicle to install a larger battery while reducing the energy consumption and improving the endurance.

Aluminum alloy density is small, and has good craftsmanship, corrosion resistance, vibration dampness, weldability and easy recyclability and other characteristics, is one of the most important lightweight materials, can bring significant weight reduction effect to the car. Therefore, aluminum alloy materials will play an important role in the development of automotive lightweight technology. According to the "Roadmap for Energy-saving and New Energy Vehicle Technology" compiled by the Society of Automotive Engineers of China, the development goals of mainland automobile lightweight technology include reaching 190 kg of aluminum for bicycles in 2020, 250 kg in 2025, and 350 kg in 2030. Therefore, the trend of automobile lightweight provides opportunities for the development of aluminum alloy die-casting parts enterprises.

(3) Global procurement and localization substitution trend

With the development of global economic integration, the auto parts industry has shown a trend of global procurement and industrial transfer. Starting from factors such as cost control and nearby supporting OEMs, large auto parts companies often choose to transfer industries to countries and regions where the vehicle manufacturing industry is concentrated and have manufacturing cost advantages.

As a major automobile manufacturing and consumption country, the mainland has introduced a series of industrial policies to support domestic and foreign enterprises to develop the auto parts industry in the mainland, with the improvement of the strength and brand awareness of domestic vehicle manufacturers in the mainland, as well as the gradual improvement and improvement of the industrial supporting system, more and more automakers and auto parts manufacturers have increased their attention to the Chinese market, through investment in production bases, technical cooperation with Chinese enterprises, the establishment of research and development centers in China and other ways to complete the business layout in China. In recent years, the intensification of international trade frictions, foreign manufacturing industries affected by the epidemic and other factors have highlighted the importance of localization and substitution, and also created opportunities for domestic auto parts companies to accelerate their development.

(4) The downstream automotive industry has a broad market

(5) Strong support of industrial policy

3. Challenges

(1) The prosperity of the industry fluctuates with macroeconomic development

The prosperity of the automotive industry is closely related to macroeconomic factors such as domestic and foreign economic development, trade pattern, industrial policy, and upstream and downstream supply and demand. When macroeconomic developments and per capita disposable income slow down, the state's support for the automotive industry decreases, and the price of raw materials or products rises due to trade policies, the sales scale of automobiles is often affected. At the same time, the automotive industry is a huge industrial chain, and when the key components in the industrial chain are not delivered in time, it will affect the output of downstream vehicles.

Therefore, with the changes in the above factors, the operating performance of automobile and its parts companies will also fluctuate to a certain extent.

(2) Emerging technologies and market demand are constantly updated

Under the background of the rapid development of emerging technologies and market demand such as automobile lightweighting and new energy vehicles, more and more new materials, new processes and new structures are applied to automotive products. The emergence of new technologies and new markets has brought new growth space to the automotive industry, but also requires existing automotive and parts companies to continuously innovate technology and products and realize industrialization in a timely manner to meet the needs of the downstream market, thus putting forward new challenges for automotive and parts enterprises.

(3) Limited financial strength and financing channels

Compared with the world's well-known large auto parts manufacturers, there is also a certain gap in the financial strength of mainland auto parts enterprises. The types of auto parts products are diverse, the market is relatively scattered, and there are many private enterprises in the industry whose operating scale and financial strength are relatively weak. Auto parts enterprises have higher requirements for equipment and personnel investment, and it is also necessary to further increase capital investment in capacity expansion and technology research and development to enhance the market competitiveness of domestic auto parts enterprises. However, these enterprises often have a single financing channel, and the source of funds mainly relies on their own business accumulation and indirect financing by banks, which is not conducive to the sustainable development of enterprises.

(4) The scale of enterprises and international competitiveness still need to be improved

Due to the late start of the mainland automobile industry, compared with countries with a long history of automobile industry development, there are still deficiencies in the overall technical level of the automobile industry in the mainland, and there is also a certain gap in the operation scale, industry experience and technical strength of domestic auto parts enterprises. Although the mainland has become the country with the highest automobile production and sales in the world, in the list of the top 100 global auto parts suppliers in 2020 released by Automotive News, Chinese auto parts manufacturers occupy only eight seats, compared with traditional automobile manufacturing powers such as Japan, Germany, and the United States. On the one hand, the lack of scale advantage is not conducive to the formation of scale effects and the optimization of economic benefits by auto parts enterprises, on the other hand, it is also not conducive to mainland auto parts enterprises to build well-known brands, enhance international competitiveness, and drive the overall development of the mainland auto parts industry.

4. Major enterprises in the industry

At present, foreign enterprises mainly engaged in automotive aluminum die-casting parts in the automotive lightweight parts industry include Nemak, Ryobi, Georg Fischer and Ahresty, etc., and domestic enterprises include Aikodi, Wencan shares, Chervon Automobile and Rongtai shares. The basic situation of the above enterprises is as follows:

(1)Nemak, S.A.B. de C.V.

Headquartered in Mexico, N.A.B. de C.V., a company listed on the Mexican Stock Exchange (stock code: NEMAK), Nemak, is a leading supplier of innovative lightweight solutions for the global automotive industry, focusing on the development and manufacture of aluminium components for powertrain and body structure applications, achieving revenues of $3,151 million in 2020.

（2）Ryobi Limited

Headquartered in Japan, listed on the Tokyo Stock Exchange (stock code: 5851), Ryobi Limited has been engaged in the die casting industry since its establishment in 1943, and after years of technological innovation, it can provide a wide range of parts and components products for the automotive industry, and achieve operating income of 170.973 billion yen in 2020.

(3)Georg Fischer Ltd

Headquartered in Switzerland, the company listed on the Six Swiss Exchange (stock code: FI-N), Georg Fischer Ltd is an international industrial enterprise with operating income of CHF 3.184 billion in 2020, including pipeline transportation, lightweight castings and the manufacture of high-precision components.

（4）Ahresty Corporation

Headquartered in Japan and listed on the Tokyo Stock Exchange (stock code: 5852), Ahresty Corporation has focused on the manufacture of aluminum alloy die-cast products in the automotive sector since its inception, with annual revenue of JPY 92,973 million as of March 31, 2021.

(5) Aikodi

Founded in 2003 and headquartered in Ningbo, Zhejiang Province, Ecodi Co., Ltd. is a company listed on the Shanghai Stock Exchange (stock code: 600933. SH), the company is mainly engaged in the research and development, production and sales of automotive aluminum alloy precision die castings, the main products include automotive wiper systems, automotive transmission systems, automotive steering systems, automotive engine systems, automotive braking systems and other aluminum alloy precision die castings that meet the needs of automotive lightweight, energy saving and environmental protection, and achieve operating income of 2.591 billion yuan in 2020.

(6) Nanjing Quanfeng

Nanjing Chervon Automotive Precision Technology Co., Ltd. was established in 2012 and is headquartered in Nanjing, Jiangsu Province, and is a listed company on the Shanghai Stock Exchange (stock code: 603982. SH), the company is mainly engaged in the research and development, production and sales of automotive powertrain, electrified chassis, vision and other related parts. In 2020, the company achieved operating income of 1.386 billion yuan.

(7) Jiangsu Rongtai

Jiangsu Rongtai Industrial Co., Ltd. was established in 2000, headquartered in Yangzhou, Jiangsu Province, is a listed company on the Shanghai Stock Exchange (stock code: 605133. SH), the company is mainly engaged in the research and development, production and sales of aluminum alloy precision die castings, the main products include automotive steering system, transmission system, brake system and other aluminum alloy precision die castings. In 2020, the company achieved operating income of 991 million yuan.

(8) Changsha is broad

The main business is the research and development, production and sales of automotive lightweight parts, the main products are automotive aluminum alloy precision die castings, which can be widely used in automotive generator systems, starter systems, air conditioning systems, interior systems, wiper systems, engine intake control systems and other products, as well as industrial fans, industrial robots and other application fields.

(9) Guangdong Wencan

Founded in 1998 and headquartered in Foshan, Guangdong Province, Wencan Group Co., Ltd. is a company listed on the Shanghai Stock Exchange (stock code: 603348. SH), the company is mainly engaged in the research and development, production and sales of automotive aluminum alloy precision casting products, products are mainly used in traditional fuel vehicles and new energy vehicles engine systems, transmission systems, chassis systems, braking systems, body structure and other auto parts. In 2020, the operating income will be 2.603 billion yuan.

For more industry information, please refer to PwC Consulting's "China Automotive Aluminum Die-casting Parts Industry Market Research and "14th Five-Year" Development Trend Research Report", and PwC Consulting also provides industry research reports, industrial chain consulting, project feasibility reports, 14th Five-Year Plan, BP business plans, industrial maps, industrial planning, blue white papers, IPO fundraising feasibility studies, IPO working paper consulting and other services.

Market research on China's automotive aluminum die-casting parts industry and "14th Five-Year Plan" development trend research report

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