The "neutralization" of Shanghai auto parts industry
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October 03 11:18:24, 2025
Editor's note: Over the past 20 years, the Shanghai auto parts industry has evolved significantly. Initially focused on supplying components for the Santana series, it has since expanded to provide parts for numerous domestic models and even entered the OEM markets in North America and Japan. This journey represents a shift toward global supply chain integration, marking the path of an independent supplier’s globalization. From localizing Santana car parts to achieving global supply capabilities, Shanghai auto parts companies have undergone major transformations, embracing a "neutral" development model.
At the same time, many spare parts and components from Shanghai Volkswagen and Shanghai GM have developed core competencies in production and R&D. This move has set a new precedent for China's auto parts market, showcasing a structure characterized by global procurement, international markets, and diverse product offerings.
Currently, Shanghai has established a relatively complete system for the production and development of automotive parts, placing it at the forefront of China and some reaching international standards. Technological advancements in key components—such as ABS systems, fuel injection controls, airbags, electric seats, microelectronics, mufflers, and purifiers—have played a crucial role in enhancing vehicle performance and meeting modern demands like energy efficiency, safety, and environmental protection.
Shanghai-based auto parts enterprises have gained recognition from both domestic and international experts for their ability to develop in sync with整车 (complete vehicles). Many parts, including headlights, drive shafts, ABS systems, interior components, steering gears, and air conditioning systems, are now supplied by local companies, contributing to high-tech localized products.
In the past decade, Shanghai's auto parts industry has accelerated its development, managing to launch several models within a year, a pace known as the “Shanghai Speed.†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 as the core of Chinese auto parts innovation, a vital window for the industry.
Today, Shanghai auto parts companies not only supply local manufacturers like Shanghai Volkswagen and Shanghai GM but also major domestic automakers such as Guangzhou Honda, FAW-Volkswagen, and Changan Ford. Many of their products have entered the OEM supply chains of global giants like GM and Ford. What is particularly encouraging is that high-quality parts are increasingly entering the North American and Japanese markets, boosting exports significantly.
The global auto parts market is worth hundreds of billions annually, and Chinese companies are beginning to make their mark. More than 80% of SAIC Group's auto parts companies supply major domestic and international automakers, holding over 30% of the market share. Some companies achieve support rates as high as 60%, while others reach around 25%.
With joint ventures established in cities like Chongqing, Wuhan, and Guangzhou, many companies have adopted a “production area sales†model. Enterprises like Yanfeng Johnson, ZF, United Electronics, and Shanghai KS have more than 50% of their products entering the international market. In 2003 alone, the export value of Shanghai auto parts companies reached $300 million.
Many of these companies are designated producers of key national components, undertaking trial production and manufacturing tasks for critical auto parts. In essence, Shanghai auto parts companies have long been qualified as global suppliers.
Facing the trends of global procurement, market globalization, and product diversification, Shanghai auto parts companies have shifted their strategies, aiming to break into both domestic and international markets. They are gradually moving away from being exclusive suppliers of the past to becoming globally competitive players.
This year, the SAIC Group made component exports a key part of its global strategy, starting with a major exhibition in Detroit—the world's largest automobile city. This shows that Shanghai auto parts possess the technical strength to go global, though they often face higher production costs compared to foreign competitors.
Mr. Chen Rongxiang, President of Shanghai Bearing Co., Ltd., suggests that large-scale production and lean management can help reduce costs. For example, Shanghai Yanfeng Automotive Trim Co., Ltd. achieved significant economies of scale by exporting 1.3 million sets to the U.S. market last year, earning $52 million in foreign exchange. With continued growth, this number is expected to reach $80 million this year.
Another example is Shanghai Yichu General Machinery Co., Ltd., which implemented a “Everyone is a business operator†model, reducing compressor prices by 20% and securing a place in Ford’s Visteon procurement system.
The “neutralization†development of Shanghai auto parts reflects the success of the “bringing in†and “going out†global strategy, as well as the implementation of a “strategy and siege†approach. The goal is to become a “zero-grade†supplier, continuously improving core competitiveness and achieving breakthroughs in the scope of support.
The trend toward neutralized auto parts support is inevitable, representing the only path for China's auto parts industry. While Shanghai has made great progress, true neutrality remains a long-term goal. Only by having the courage and determination of a “strong warrior,†similar to global giants like General Motors and Ford, can the Shanghai auto parts industry truly embark on a sustainable “neutral†development journey.