The battle between oil and electricity has entered a white heat, electric vehicles are blooming everywhere in China, and many car companies are contending.
With the advantages of electric vehicles, the domestic automotive supply chain has become more and more mature, and many key components are rapidly being localized to seize the market share of foreign manufacturers.
Air suspension, which is a core component of great value in automobiles, is a typical example.
What components are included in the air suspension and what are the most valuable parts?
Air suspension is similar to an air cushion, which reduces the vibration of the car during driving, which is crucial to improving the smoothness of the body, and is also the highlight of many car manufacturers.
Structurally speaking, there are three main systems of air suspension, including many important components, air supply system (air compressor, air storage tank, distribution valve), vibration damping system (air spring, electronically controlled shock absorber), electronic control system (vehicle height/acceleration sensor + ECU controller).
Among the many parts, air springs, electronically controlled shock absorbers (variable damping shock absorbers), and air compressors are the most valuable, accounting for more than 3/4 of the total cost.
Compared with traditional suspension, the advantages of air suspension in terms of vehicle safety, driving comfort and energy economy are very obvious, and high-end models have begun to adopt this suspension method.
However, the cost of air suspension is higher, so air springs are generally used in independent suspension, and air suspension is only available on more high-end models.
So, what is the level of permeability of air suspension now?
In the past, air suspension mainly relied on imports, resulting in a relatively high price, a set of air suspension 15,000 yuan, a car with four will need 60,000 yuan, so low-end models can not be equipped with air suspension because of the cost.
However, in the past two years, with the progress of domestic substitution, the price of air suspension has begun to decline, and the penetration rate has increased rapidly.
In terms of overall sales, the data shows that in 2023, the sales of new cars equipped with air suspension as standard in China will be about 564,000 units, with a penetration rate of 2.7%, while in 2022, there will be only 238,000 units, with a penetration rate of 1.2%, and the number of vehicles will increase by 137% year-on-year.
In January 2023, 29,000 air suspension units were installed with a penetration rate of 2.3%, and by December 2023, the number of air suspension units had doubled to 69,000 units.
At present, the domestic air suspension can achieve a set of 8,000 yuan, which is nearly 50% lower than the price of imported products, so that the air suspension began to penetrate into the low-end cars.
From January to November 2022, the price distribution of models equipped with air suspension was more scattered (more than 300,000 yuan), more concentrated in 40-500,000 yuan, while from January to November 2023, there were 267,000 vehicles equipped with air suspension of 30-400,000 yuan, accounting for 54%, an increase of 24.85% year-on-year.
In terms of subdivided brands, brands such as Weilai, Ideal, Xiaopeng, VOYAH, and Zeekr all have standard air springs for their models, and the starting price of models equipped with them in 2023 has dropped to 190,000 yuan.
According to the air suspension configuration rate of new models, it is expected that the penetration rate will be about 15% by 2025, the market size will be about 26.676 billion yuan, and the compound annual growth rate from 2023 to 2025 will be 74.38%.
What impact does the rise of local companies have on the air suspension market pattern?
The upstream of the air suspension system industry chain includes air springs, air supply units, shock absorbers, guide mechanisms, control systems and other subdivided components, the midstream is the system assembly, and the downstream is the application end of the main engine factory.
Among them, the air spring, air supply unit and shock absorber are the core of the system, which tests the supplier's technical reserve and manufacturing process, and the midstream system assembly tests the supplier's system integration ability and suspension tuning know-how.
After domestic manufacturers achieve technological breakthroughs, they have obvious cost advantages over foreign brands by virtue of their mature and complete supply chain systems, and begin to quickly seize the market.
In 2022, the top four domestic air suspension system front-loading suppliers and their shares are: Vibratory (35.8%), Konghui Technology (21.4%), Continental (19.2%) and Baolong Technology (16.5%).
However, in 2023, the top four domestic air suspension system front-loading suppliers and their shares are: Kong Hui Technology (44.5%), Vibrator (21.7%), Baolong Technology (20.7%) and Continental (8.3%).
It can be seen that in 2023, local suppliers will develop rapidly, and local suppliers will occupy nearly seventy percent of the air suspension market.
Which one is the most noteworthy among the many vendors?
Market share is an important indicator to measure the status of an enterprise in the industry, and from the perspective of market share in 2023, Konghui Technology and Baolong Technology are undoubtedly the peerless double pride of domestic air suspension.
However, Kong Hui Technology is not listed, and Baolong Technology is the strongest in the A-shares.
The traditional business of Baolong Technology is automotive tire pressure monitoring system (TPMS), automotive metal pipe fittings (exhaust system fittings and EGR pipe fittings), valves and balance weights.
The company entered the field of air suspension in 2012 and has begun to increase the volume, which has become a new growth point for the company's performance.
In terms of performance, the revenue in 2023 will be 5.90 billion yuan, a year-on-year increase of 23.4%, and the net profit attributable to the parent company will be 380 million yuan, a year-on-year increase of 76.9%.
In terms of composition, the company's traditional business and new business will achieve good growth in 2023.
In terms of traditional business, in 2023, the revenue of TPMS transmitters will be 1.91 billion yuan, a year-on-year increase of 29.3%, and the revenue of its subsidiary Baofu Electronics will grow rapidly under the scale effect.
Vehicle valves sold 220 million units, with revenue of 780 million yuan, a year-on-year increase of 9.6%, and business revenue grew steadily, while metal pipe fittings benefited from the trend of lightweight industry, with revenue of 1.42 billion yuan, a year-on-year increase of 6.1%.
It is worth mentioning that Baolong Technology said on the investor interactive platform on February 14 that the company provides tire pressure monitoring services for Xiaomi SU7.
In the emerging air suspension business, air springs, body acceleration sensors, suspension height sensors, air spring shock absorber assemblies, controller ECUs, air storage tanks, air supply systems and other products have begun to be mass-produced, and the main customers include NIO, Li Li, BYD, etc.
With the recent order of 120 million yuan from a brand, the air suspension system produced by Baolong Technology, a leading domestic auto parts company in Songjiang District, has received an order of 370 million yuan in the first two months of the year.
At present, the orders in hand brought by air suspension have reached 20 billion yuan, and the customers cover BYD, Ideal, NIO, Xiaopeng and other new energy vehicles and new car manufacturers of the head brands.
This is after the six-fold growth of the air suspension business in the first half of last year, the development of Baolong's new business segment represented by it has further entered the fast lane of development.
Based on these orders, in October 2023, the company announced the prospectus for the issuance of convertible bonds, which intends to raise no more than 1.4 billion yuan for the expansion of air suspension system production capacity.
This will add an annual production capacity of 4.82 million pieces of air suspension system components, air springs, damping system accessories and other new products, laying the foundation for the growth of the company's subsequent air suspension system business.
In the future, with the acceleration of domestic substitution of domestic air suspension, the cost will continue to decline, which will drive the air suspension to sink to low-end models, and the company's performance will be long-term.
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Source: Flying Whale Investment Research