"The car's price has dropped, and so have the parts," said Zhao Yan, chief engineer at the China Automotive Industry Consulting Company, to reporters. However, this contradicts what the reporter found during an investigation into auto parts pricing. In the survey, almost all auto parts remained unchanged since the launch of new models. Even when there were price reductions, they were minimal—just a few dollars or so. Zhao Yan’s reference to falling part prices was about OEM (Original Equipment Manufacturer) parts, which are purchased directly by整车 companies. The parts that the reporter investigated—those available in the automotive service market—have seen little to no change in price. Auto parts are generally divided into two categories: those produced for assembling vehicles and those sold in the aftermarket. The former, used in vehicle production, have been declining in price in recent years, often in line with the overall vehicle price. In the total cost structure of a vehicle, parts and components typically account for around 70%. Dong Jianping, deputy director of Beijing Hyundai Motor’s procurement division, explained that many of the recent vehicle price cuts have come from reduced component costs. In some cases, automakers have even pressured suppliers to lower their prices in order to meet cost-cutting goals. Additionally, factors like tariffs and exchange rates also influence part prices. Increased tariffs and unstable exchange rates can drive up the cost of auto parts. Currently, the price reduction of domestic cars is largely due to the growing proportion of locally produced parts. When a new foreign model is introduced, it is subject to a 40% import tax, prompting manufacturers to gradually localize their parts and components. Dong Jianping noted that the Sonata and Elantra models from Beijing Hyundai now have a localization rate of around 70%, with most parts sourced from nearby areas in Beijing, contributing to lower vehicle prices. The price of spare parts is also influenced by fluctuations in raw material prices, such as steel. Furthermore, intense competition in the parts industry can lead to price drops. For example, after the completion of the Beijing Hyundai Motor Project, several Korean-owned parts companies established factories in Beijing, while domestic suppliers also became more active in supporting the automotive industry. In the auto parts market, there are original parts and non-original parts. Original parts are typically sold through 4S dealerships and authorized service centers, and the prices surveyed by the reporter remained stable. These are the parts that consumers often rely on for repairs. Zhao Yan explained that the price of spare parts in the market is mainly driven by supply and demand. If original parts are expensive, consumers may opt for alternatives, but these often lack consumer confidence in terms of quality. So why do vehicle prices drop, but original parts don’t? The main reason is that most parts companies are affiliated with automakers. Their profits come primarily from supplying parts to automakers, not from retail sales. Therefore, changes in the automotive service market have limited impact on these companies. Moreover, auto parts prices are not significantly affected by gasoline price fluctuations. Hao Dianying, vice general manager of the Northern Automobile Trading Market, told the reporter that most first-time car buyers focus more on price and appearance rather than long-term maintenance costs. Surveys show that Chinese car buyers today prioritize factors like price and design, while the cost of accessories is rarely considered. Without market pressure, automakers are unlikely to sacrifice their profit margins. As a result, they continue to maintain high profitability in the parts sector. Source: Beijing Times

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