The "neutralization" of Shanghai auto parts industry
October 03 11:09:11, 2025
Editor's Note: Over the past 20 years, the Shanghai auto parts industry has evolved significantly. Initially supplying components for the Santana series, it has since expanded to support numerous domestic vehicle models and entered global OEM markets in North America and Japan. This transformation reflects a shift toward becoming an independent, globally-oriented supplier. From localizing parts for the Santana to establishing a global supply chain, Shanghai auto parts companies have undergone major changes, embracing a "neutral" development path. At the same time, many spare parts and components from Shanghai Volkswagen and Shanghai GM have developed core competencies in production and R&D, marking a new model for China’s auto parts market—one that emphasizes global procurement, international markets, and diverse product lines.
Today, Shanghai has established a relatively complete production and development system for automotive components, placing it at the forefront of China’s industry, with some sectors reaching international standards. Technological advancements in key areas such as energy efficiency, safety, environmental protection, and control systems—like ABS braking systems, fuel injection controls, airbags, and microelectronics—have played a vital role in upgrading vehicle performance. Local auto parts companies have earned recognition for their ability to develop in sync with整车 (complete vehicles), supporting many new models introduced by Shanghai Volkswagen and Shanghai GM, including headlights, drive shafts, interior parts, and more.
Shanghai's auto parts technology has grown rapidly, achieving what is known as the “Shanghai Speedâ€â€”developing multiple models within a single year. According to a 2004 report titled “Overview of China’s Auto Parts Market,†one-third of Shanghai’s auto parts companies have achieved international competitiveness. Some foreign experts even consider Shanghai the heart of Chinese auto parts innovation, a crucial window into the industry.
Now, Shanghai auto parts companies not only serve local manufacturers like Shanghai Volkswagen and Shanghai GM but also major domestic automakers such as Guangzhou Honda, FAW-Volkswagen, and Changan Ford. Many products have entered the OEM supply chains of global giants like GM and Ford. Export volumes continue to rise, with over 80% of SAIC Group’s auto parts companies supplying both domestic and international brands. The market share exceeds 30%, with some suppliers achieving up to 60% in specific components.
Despite these achievements, challenges remain. While Shanghai auto parts have the technical capability to go global, their prices are generally 20–30% higher than those of foreign competitors, increasing production costs. To address this, companies are focusing on large-scale production and lean management. For example, Shanghai Yanfeng Trim exported over 1.3 million units to the U.S. last year, earning $52 million, with expectations to reach $80 million this year. Another company, Shanghai Yichu General Machinery, reduced compressor prices by 20% through efficient management, securing a spot in Ford’s global procurement system.
The “neutralization†of Shanghai auto parts is a result of a dual strategy of “bringing in†and “going out.†As part of this effort, the Shanghai Automotive Industry Parts and Components Corporation aims to become a “zero-grade†supplier, continuously enhancing its core capabilities. The trend toward neutralized support services is inevitable for the future of China’s auto parts industry. Although progress has been made, true neutrality remains a long-term goal. Only by adopting bold strategies and systemic reforms, similar to global giants like General Motors and Ford, can Shanghai truly embark on a sustainable, neutral development path.