China's Automotive Steering Parts Industry Sees Rapid Development

Competition intensifies between foreign and domestic brands

According to statistics compiled by the China Association of Automobile Manufacturers (CAAM), China exported US$108 million worth of automotive steering parts in May 2013, a 5.34% drop from the same period of last year; in the first five months of this year the export figure was US$498 million, an increase of 5.17% compared with the January-May period of 2012. The biggest export markets were the U.S., South Korea, Japan, India, and Thailand.

China's imports of automotive steering parts amounted to US$150 million in May, up 8.45%, and US$720 million in the first five months of the year. The main sources of the imports were Germany, Japan, South Korea, France, and the U.S.

With the development of the automobile industry in China accelerating due to such factors as rising incomes and improving road conditions, the average annual growth of new-car production over next five years is projected at more than 13%. The original equipment (OE) and aftermarket (AM) auto-parts markets are also expected to grow, by 15% and 10%, respectively, each year. Over the next five years, exports of China-made steering parts are expected to grow by 20% annually.

In the passenger car steering parts industry, foreign invested and Chinese-foreign joint-venture enterprises now account for more than 81% of the electric power steering system segment, compared to only about 9% for purely Chinese suppliers. In the commercial vehicle steering parts market, the greatest majority of Chinese suppliers are still focusing on producing hydraulic rather than electrically powered products. Industry experts urge domestic enterprises to catch up with market trends as quickly as possible by paying more attention to market information and technical developments.

Some major Chinese steering-parts suppliers have been working aggressively to upgrade themselves. One of these is the Taizhou Yihao Steering Gear Co., Ltd., which was founded in 1991 and produces hydraulic steering racks, manual steering racks, and steering-gear connectors.

The company has advanced at a robust pace and grown into an integrated supplier with strong development and manufacturing capability, as well as a powerful sales team that provides customers with the finest of services. Taizhou Yihao now operates a modern plant with total floor area of over 10,000 square meters; it is manned by around 500 skilled people, including five senior engineers, 45 administrative staffers, and about 60 senior technicians. R&D and testing/inspection shops assure that all products achieve the highest level of quality and precision.

The firm has never slackened in its efforts to upgrade its products and technology, and to forge long-term trust and partnership with customers worldwide, especially in major markets such as Europe, Latin America, the Middle East, Africa, and Southeast Asia.

Future Development
Automotive steering systems have evolved from purely mechanical and hydraulic systems to modern electric power steering systems, and ongoing evolution is now guiding them in the direction of “steer by wire.”

Thanks to their ability to provide improved fuel efficiency and better driving safety, electric power steering systems have won a share of 9% to 10% of the Chinese passenger-car market. More and more new commercial vehicle models, too, are shifting to these more advanced and safer steering systems.

The overall annual demand for automotive steering systems in China reached 19.31 million sets in 2012, a 4.3% increase over the year before. The volume is expected to increase to 22.35 million sets in 2015, for a compound annual growth rate (CAGR) of 5%. Mechanical and hydraulic systems currently account for more than half of the market, but electric power steering systems are expected to gain increasing share as costs drop and the technology improves.

Chinese Domestic Market
China's domestic auto steering system market is currently characterized by fierce competition between local and foreign products. Own-brand Chinese makers are striving to win OE orders from local independent automakers (Chinese automakers without partnerships with international auto brands), while foreign companies and joint ventures are using their technological advantage to capture orders from foreign-brand cars makers there.

However, some Chinese own-brand steering parts makers have made vigorous efforts to upgrade their technology with the aim of tapping into the supply chains of foreign-invested and joint-venture automakers, and they are expected to win a growing share of the market as sales of Chinese independent Chinese car brands increase.