Disadvantages of auto parts industry

(1) The production and sales of fuel vehicles declined

The decline in the production and sales of domestic vehicles from 2018 to 2020 is mainly caused by the decline in the production and sales of fuel vehicles. The fuel truck parts can be divided into related parts of internal combustion engine and non-related parts of internal combustion engine according to whether they are used in the fuel truck engine and the closely matched system. In the situation of declining production and sales of fuel vehicles, the parts and components related to internal combustion engines will be directly and adversely affected, because fuel vehicles still account for the majority of the production and sales of automobiles, and the non-related parts and components of internal combustion engines used in other parts of automobiles will also be affected. The decline in the production and sales of fuel vehicles has intensified the competition in the stock market of auto parts. When the pressure brought by the decline in the production and sales of finished vehicles is transmitted to the upstream parts supply system, the parts enterprises with weak technology and innovation capability will face greater challenges.

(2) Rising labor costs

In recent years, the structural contradiction between the supply and demand of labor force and the acceleration of population aging have led to the rising of labor cost in China, and the labor cost advantage of China's manufacturing industry is gradually disappearing. According to the data of the National Bureau of Statistics, the average annual wage of manufacturing workers in China continues to rise, from 59.470 yuan/year in 2016 to 92.459 yuan/year in 2021.

At present, the production of automobile forging parts still needs more operators. The labor cost and expenses account for a relatively high proportion, and the labor cost continues to rise, which is not conducive to maintaining the cost advantage of the industry.

(3) Difficult to recruit operators

The Ministry of Human Resources and Social Security of the People's Republic of China said that the prominent manifestation of the current contradiction in the employment structure in China is the coexistence of employment difficulties and recruitment difficulties. There is a general shortage of skilled workers in China, and the ratio of skilled workers' demand has remained above 2 for a long time. The degree of automation of enterprises is generally not high, and more manual operations are still required, and workers need to master certain operating technology. The difficulty of recruitment is especially reflected in the difficulty of enterprises to recruit enough young operators, which leads to the generally older age of enterprise operation technical workers, which is not conducive to the teaching of operation skills.