Auto parts sea not optimistic!
In the beginning of 2024, many auto parts manufacturers will hope to look overseas and regard auto parts as the best way to deal with internal volume and break through development, however, many people have not yet stepped out and have felt the resistance from overseas. And some of those who have already stepped out are also anxious at the moment, because the recent international political situation has become more volatile, and various uncertainties affecting business have increased. The following is an inventory of recent international events and their impact on the sea of auto parts.
ONE
The US political "containment", the direction of the Sino-US auto trade war is unclear
In February, the United States launched an investigation to assess whether Chinese electric vehicles pose a threat to U.S. national security. In effect, it is an anxious reaction to the rise of Chinese electric vehicles in the United States. Since China became the world's largest auto producer and one of the largest auto exporters last year, especially in the field of electric vehicles, the United States has felt the "threat" that China has brought challenges to the American auto industry.
At present, the US tariff on Chinese electric vehicles is 27.5%, and US senators have recently proposed raising the tariff to 100%, which is almost equivalent to boycotting and banning Chinese electric vehicles from entering the US market. As of press time, the matter of additional tariffs has not been finalized. Although the Sino-US auto trade war is mainly aimed at electric vehicles, it may have an impact on the sea of auto parts, there are the following points:
01
Increased trade barriers: Trade frictions between China and the United States may lead to an increase in trade barriers, including tariff increases, quota restrictions, etc., making the trade environment of auto parts to the sea more complex and uncertain.
02
Market share changes: As competition between the U.S. and China in the electric vehicle space intensifies, market share may change. Some auto parts companies may lose part of their market share because of trade restrictions, or need to adjust their market strategies to adapt to the new trade environment.
03
Increased cost pressure: Trade friction may lead to rising raw material prices, increased transportation costs, etc., thereby increasing the cost pressure of auto parts to go to sea. Companies may need to find alternative supply chains or adjust pricing strategies to cope with rising costs.
04
Technology transfer and cooperation: In order to avoid trade barriers and improve competitiveness, auto parts companies may need to strengthen technology transfer and international cooperation. This may include measures such as joint production with local enterprises and the establishment of overseas research and development centers to improve the adaptability and competitiveness of products.
TWO
The US, Japan and the Philippines are escalating provocations and driving a wedge between China and ASEAN
On April 12, the leaders of the United States, Japan and the Philippines held a trilateral summit, which covered security and economic issues, including joint patrols, US-Japan military assistance to the Philippines, security and supply chain cooperation in key industries across the Taiwan Strait, and stressed that the three countries will carry out deeper cooperation in economic and trade investment, military security and regional affairs. This is the Biden administration's strategic layout to promote the "small multilateral" in the Indo-Pacific region, aiming to serve to consolidate the US-centered axis and spoke alliance system, and another important role is to alienate the increasingly close cooperative relations between China and ASEAN. It can be predicted that the "small multilateral" mechanism will further stir up the complex and delicate situation in the South China Sea, and have the following possible impacts on the export of the automobile industry:
1. Regional political tensions: The US-Japan-Philippines joint naval patrol will increase political tensions in the South China Sea region, lead to an unstable trade environment and adversely affect exports of the automotive industry, especially if countries related to the South China Sea implement new trade policies or tariffs.
2. Safety of shipping routes: The South China Sea is one of the world's important shipping routes. If joint patrols affect the safety or free flow of shipping routes in the South China Sea, export logistics for the auto industry could face delays or higher costs.
3. Changes in trade partnerships: Joint patrols may lead some countries, including ASEAN countries (Malaysia, Indonesia, Thailand, Philippines, Singapore, Brunei, Vietnam, Laos, Myanmar and Cambodia) to adjust their trade partnerships, which may affect the market for automotive exports.
4, market access restrictions: the "small multilateral mechanism" may lead to the destruction of cooperation between China and ASEAN, Chinese auto parts products in the ASEAN market access may be affected, including the strengthening of tariffs on Chinese auto parts products, quota restrictions, etc., making it more difficult for auto parts companies to go to the ASEAN market.
5, market share pressure: If the cooperation between China and ASEAN is alienated, other competitors may fill the gap, and competitive pressure may increase. Auto parts companies may need to face competition from other countries to compete for limited market share.
THREE
Iran's involvement in the Palestinian-Israeli conflict makes the escalation of the situation in the Middle East more complicated
In the early hours of April 14, Iran launched its first direct attack on Israel from the mainland, firing missiles and drones into Israel, while Iran's Allies Hezbollah in Lebanon and the Houthis in Yemen joined the attack. As an important power in the Middle East, Iran openly supports Palestine, which makes the situation in the Middle East more complicated and the future full of variables. The Middle East market is regarded as the "blue sea" of China's auto parts, and the escalation of the war has a major impact on the sea. The details are as follows:
1
Regional stability is challenged: Iran's involvement in the Israeli-Palestinian conflict may exacerbate geopolitical tensions in the Middle East, leading to regional stability challenges, which in turn leads to increased uncertainty in the trade environment, affecting the predictability and stability of the auto parts sea.
2
Reduced safety of transport channels: The escalation of war has led to a decline in the safety of some transport channels in the region, such as sea transport channels or land transport channels, which will increase the risk and cost of transportation of auto parts and adversely affect the sea of auto parts.
3
Adjustment of trade relations: Countries in the Middle East may adjust their trade relations with Iran because of Iran's involvement, which may affect the import and export of auto parts, causing changes in auto parts to the sea.
4
Supply chain disruption risk: If the conflict escalates into a full-blown conflict or war, the risk of supply chain disruption may increase, and automakers may face supply chain disruptions from the Middle East, affecting vehicle production and exports.
5
Increased regional economic uncertainty: Iran's involvement in the Israeli-Palestinian conflict could lead to increased economic uncertainty in the Middle East, which could affect auto sales and consumer confidence, which in turn could affect demand for auto parts to the sea.
Relevant enterprises should pay close attention to the development of the situation in the Middle East and take corresponding measures to reduce possible risks and impacts.
Looking at the world, the sea is a huge opportunity, but also by geopolitics, international relations, supply chain changes and many other factors, market demand and competitive environment changes rapidly, the sea and the line and cautious!
Article from "Auto Parts Ring"
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