The automobile industry is a technology- and capital-intensive industry, and its industrial chain is quite large, affecting a wide range of related industries. The upstream of the automobile industry is about production of auto parts, such as lights, tires, sheet metal, aluminum alloy steel rims, hoods, bumpers, and others; midstream is vehicle assembly, repair and technical services; downstream is sales, import and export business.
The automobile industry is a technology- and capital-intensive industry, and its industrial chain is quite large, affecting a wide range of related industries. Services and other different industries, and the relevant professionals include R&D, manufacturing, procurement, marketing, management, warranty and other skills, so they are integrated into a complete automotive industry, so the automotive industry is known as the "locomotive industry". The upstream of the automobile industry is mainly related to component manufacturers, the midstream is the large vehicle center manufacturers, assembly, repair and technical services, and the downstream is the brand manufacturers and sales and service bases. Let’s dig in more details at different stages of automotive industry chain.
Production of auto parts: lights, tires, sheet metal, aluminum alloy steel rims, hoods, bumpers, and others.
There are many upstreams in the automotive industry, mainly the production of components, including casting, stamping, forging, machining and heat treatment. The products include lights, tires, sheet metal, aluminum alloy steel rims, hoods, bumpers, etc. Due to the complexity of the automobile manufacturing and assembly process, more than 30,000 parts are required. After the components pass the quality inspection, they are sent to the central factory for assembly. Therefore, the component manufacturer and the vehicle center factory are formed. The central satellite factory system has a long-term and stable cooperative relationship, and each vehicle central factory will carry out vertical integration of different degrees in the upstream, midstream and downstream.
Auto parts can be divided into "original car parts" and "after-sales maintenance parts"; "original car parts" can be divided into original factory commissioned manufacturing (OEM) and original factory commissioned design and manufacturing (ODM); the gross profit of OEM is approximately at around 10%. For example, Taiwan is mostly OEM, but at present domestic manufacturers are actively improving their R&D and design capabilities, and are moving towards ODM production for large automakers, which can save mold development costs and provide bargaining power in the supply chain. And "after-sales maintenance parts" can be divided into genuine parts (OES) and non-genuine parts (AM). OES parts have the original brand, but the price is expensive, and the sales channels are mostly designated by the original factory. AM parts are usually used for repair and modification. The products are only copied from existing products, and the price is relatively low. The AM factory mainly produces collision parts, such as sheet metal parts, car lights, plastic parts, cooling parts and so on.
Vehicle assembly, repair and technical services
The midstream of the automobile industry is the central assembly plant. The process of assembling a car in the central plant includes body welding, painting, pre-assembly of some components, and finally the assembly of the whole vehicle. OEMs outsource components to Tier 1 satellite factories, which then subcontract detailed parts to Tier 2 and Tier 3 satellite factories, forming a multi-level division of labor structure. The central factory integrates long-term cooperative upstream component manufacturers and satellite manufacturers. The factory can immediately provide the complete vehicle, parts and technical services required by the downstream sales end, so that the downstream sales industry can reduce the cost related to the self-provided inventory and reduce the operation risk. A complete car must pass various inspection and testing standards under different conditions before leaving the factory. Only after it is confirmed as qualified, can a safe and reliable car be completed.
Electric vehicles will be the new trend of future mobility. The four cores of future mobility are C.A.S.E., Connectivity (Internet of Vehicles), Autonomous (autonomous driving technology), Shared (sharing) and Electrified (electric vehicles). The century-old revolution will also create an unprecedented business model for enterprises. More and more traditional automakers are using strategic alliances to face the huge number of resources, money, and time required for product transformation. Electric vehicles, like mobile phone manufacturing, have entered the era of specialized division of labor, which will create more opportunities for the automotive electronics industry, information and communication industries, and component manufacturers.
Sales, import and export business
The downstream of the automobile industry is vehicle sales and after-sales service. In the first half of 2021, due to the epidemic, the sales of the auto market were not good. However, after the alert was downgraded, the epidemic was under control and the vaccination rate increased, which triggered a wave of car purchases after the epidemic. However, due to the current global shortage of automotive chips, the industrial chain is in chaos, and the order production capacity will continue to 2022, which shows that the auto parts supply chain of factories in 2022 is quite optimistic. The future is the generation of electric vehicles. With the upsurge of environmental protection and carbon neutrality, electric vehicles have more business opportunities and are also the main force for the future development of various automakers.
In terms of supply chain, it is estimated that the global sales of electric vehicles will reach 27 million units in 2025. The future business opportunities should not be underestimated. At present, major international manufacturers attach importance to the Internet of Vehicles, which has driven the development of automobile intelligence. Through wireless communication technology, vehicle-related information is transmitted to the remote management platform, and the automobile is used as a big data center, integrating navigation, entertainment, information security, and communication. With the rise of the sharing economy, and the rapid development of the Internet of Vehicles, smart cars and smart manufacturing, traffic safety, autonomous driving, and smart transportation, the future of automobiles and components will also move towards mass production and customized services.