Hangzhou Zhengqiang Corporation

Mar 24, 2023

(Yicai Global) March 24 -- A number of Chinese car parts suppliers recently claimed that the price war in the world's biggest auto market would not affect them in the short run. Cars with larger price cuts are mainly poor sellers, so the price war has little impact on our after-sales service, Hangzhou Zhengqiang, a supplier of universal joints for vehicles, said on March 21. The firm usually signs deals with automakers once a year, so its new car business will not be affected by the price cuts unless they continue for a long time or other unexpected factors come into play, it added. US electric vehicle giant Tesla sparked China's auto price war in January. Since then, more than 40 auto brands have followed suit with discounts and subsidies, Ries Positioning Strategy and Consulting said in a report on March 22. Winstech Precision Holding has not been affected so far, China Securities Journal cited the stamping tool and auto plastic parts supplier as saying. Clients have not adjusted their procurement prices, so there are no impacts, said metal parts maker Ningbo Yinbin Technology Supplier. This wave of price cuts may squeeze the high profits of industrial chain materials suppliers, with the prices of copper and aluminum foil for lithium-ion batteries and lithium salts under continuous pressure to fall in the short run, Huatai Securities said in a research note. But at the same time, higher auto sales will boost the demand for upstream materials, it added. Moreover, carmakers' need to use fewer materials may promote the application and penetration of new technologies, such as integrated die-casting, magnesium alloy, and composite materials, Huatai Securities noted. "We are researching and developing lightweight products to meet clients' needs to cut costs," an insider at a listed auto parts firm told Securities News today. "For carmakers, lowering costs is a definite trend in the long run." The price cuts will affect the company’s operating performance to some extent, despite production remaining normal, as the decline in fuel cars will impact the sales of new energy vehicles and lithium carbonate prices will continue to fall, said Hunan Yuneng New Energy Battery Material, a Chinese supplier of cathode materials for lithium-ion batteries. Editor: Futura Costaglione