Cargo Electric Vehicle,3 Doors Open Electric Tricycle,Electric Tricycle Truck,Cool Electric Tricycle FengXian Enland International Trading Co.,LTD , https://www.jsenland.com
Europe and the United States purchases Chinese parts and components purchases of US$35 billion by 2007
China's auto parts industry has sparked a mix of admiration and concern among European and American companies. On one hand, they are raising alarms, threatening to file complaints with the WTO over what they claim are trade protectionist policies in China’s spare parts sector. On the other hand, they are aggressively increasing their purchases of Chinese auto components, driven by the desire to leverage China’s cost advantages and cut production expenses.
Volkswagen is ramping up its "China Purchasing" strategy. According to recent reports, the automaker plans to buy $1 billion worth of auto parts from China by the end of this year, with a significant portion being exported to its subsidiaries in Germany and other regions. This move is expected to boost Volkswagen’s import volume of auto parts by 400% over three years. The company is focusing on regions like Jiangsu, Zhejiang, and Changchun, where the auto parts industry is well-developed. Once agreements are finalized, a large number of parts will be shipped globally.
Similarly, General Motors has also increased its procurement from China. Shanghai GM revealed that the share of foreign suppliers has been decreasing, while domestic suppliers now account for over 70% of total purchases. Currently, more than 200 local suppliers—ranging from state-owned to private enterprises—are supplying components to the joint venture, compared to just 100 foreign suppliers.
Many Chinese auto parts manufacturers are now entering the global supply chains of major automakers. For example, Binzhou Piston, a leading manufacturer in heavy-duty pistons, has started supplying parts to global giants like GM, Ford, and DaimlerChrysler. Industry data shows that China’s auto parts sector generated over 500 billion yuan in revenue last year, with exports reaching $15.235 billion—an increase of 75.11% year-on-year. Export revenue now accounts for 25% of total sales.
Industry forecasts suggest that by 2007, global automakers will spend $50 billion on low-cost parts, with 70% coming from China. In the mid-to-low-end market, Chinese parts manufacturers are competing effectively, much like “lighters†in terms of cost efficiency. A foreign car dealer noted that Chinese parts often meet international standards but are 30%-50% cheaper than their foreign counterparts. This cost advantage makes them highly attractive in global tenders, where companies like Volkswagen, GM, and Ford frequently participate.
Chinese firms have achieved large-scale production and overcome technical and quality barriers, making their products increasingly competitive. For instance, a plastic door component that costs $10 in the U.S. market can be produced for just $5–$6 in China. As a result, multinational companies like Delphi and Bosch are investing more in China to reduce their overall costs.
European and American car dealers face a complex dilemma. While they fear China’s growing self-sufficiency in auto parts, they also recognize the undeniable benefits of sourcing from China. Many multinational companies want China to abolish certain import regulations that restrict the use of domestic components in vehicle assembly, as it would allow them to avoid tariffs and competition from low-cost Chinese suppliers. However, with China’s auto industry becoming more mature and its parts reaching international standards, purchasing from China has become a practical and strategic choice.