Multinational car suppliers continue to cast a heavy bet on China

Detroit (June 14, 2012) Inspired by the highly attractive growth prospects, despite the short-term deceleration in car sales in China, multinational car suppliers are still investing heavily in the world’s largest auto market.

Among them, the Continental Group plans to increase 5,000 people in China by the end of the year. At present, the company has a total of 16,000 employees in China.

Magna International also has an ambitious expansion plan. The company plans to increase the number of factories in China to 28 by 2014, which is 8 more than it is now. In 2001, Magna had only one factory in China.

While the global auto industry is still struggling to recover from the Great Depression, China has almost guaranteed a steady growth momentum.

As more and more models are based on global automotive platforms, suppliers can quickly prepare for production as long as they produce the same components as the rest of the world.

However, in this process, suppliers must be flexible, such as cooperating with influential government officials in China, and at the same time help Chinese domestic automakers to make up for deficiencies in engineering technology.

The Chinese government issued a decree in the first quarter that required government officials to purchase cars produced by domestic automakers. This is a bad news for Audi, which has traditionally been loved by government officials, but it may be good news for auto suppliers such as Magna and Johnson Controls. Since government officials are usually equipped with drivers, they often need to be able to customize the spacious rear seat space according to their preferences.

The steady growth of the Chinese auto market has enabled global automotive suppliers to achieve good results in 2011. Of the top 100 auto suppliers in the “Automotive News” list, 68 suppliers achieved double-digit growth compared to 2010, and the recovery in the North American market is also one of the reasons. In the Top 100, only Japanese suppliers performed unsatisfactorily, because the major earthquake in Japan on March 11 caused heavy losses to them.

The expected growth of the Chinese market in the future is also very encouraging. According to analysts and industry managers, China’s light vehicle sales will reach 30 million by 2020, more than double the 14.5 million in 2011.

In other words, in another eight years, the scale of the Chinese auto market will catch up with the sum of the current European and American markets.

According to the China Association of Automobile Manufacturers, at the same time as formulating future development plans, it seems that car suppliers have not been affected by the decline in sales in China. In the first four months of this year, sales of passenger cars in China rose by only 2%.

Lead-acid and lithium-ion battery maker Johnson Controls Power Solutions Division is investing more than one billion US dollars to expand production capacity in China.

The company expects its battery production in China this year will be about 17 million, will increase to 30 million by 2017, accounting for about 70% of the aftermarket, accounting for 30% of the automotive manufacturing market. The company said that all of these batteries supply the Chinese domestic market.

Kim Metcalf-Kupres, vice president of global strategy at this division of Johnson Controls, predicts that by 2020 China will become the world's largest automotive battery market, which will also provide her company with unprecedented opportunities. North America is currently the largest market for this company.

Johnson Controls also produces car seats, full interiors, interior electronics and other automotive components.

Metcalf-Kupres said that Chinese automakers usually do not need engineering assistance to improve their standard lead-acid batteries according to their vehicle needs.

However, the fuel-saving start-stop technology is very different. When encountering traffic lights, advanced lead-acid batteries, also known as absorption glass mat batteries, need to work together with sensors and other devices to stop the engine.

Metcalf-Kupres said that the Johnson Controls engineering team worked closely with the engineers of Chinese domestic automakers to help them integrate these technologies into their cars.

To create soft-touch car buttons for Chinese people Magna International, which ranks fourth in the “Global Automotive News” global supplier top 100, expects that its sales in China will reach approximately US$1.5 billion by 2014. double. Magna produces a wide variety of automotive components including seats, body and chassis components, automotive electronics and electrical systems.

Chinese consumers are increasingly aware of and increasingly eager to have advanced technologies applied in cars sold in Europe and the United States. However, Chinese car buyers still have their own preferences. Therefore, multinational suppliers have established many technology centers in China and improved global models according to the preferences of local consumers.

For example, Frank O'Brien, executive vice president of Magna's Asia Pacific region, said that Germans like hard-touch and precise buttons and controls, while Chinese people prefer softer buttons.