"The car industry has seen a drop in both vehicle and parts prices," said Zhao Yan, chief engineer at the China Automotive Industry Consulting Company. However, this contradicts the findings of the reporter’s recent investigation into auto parts pricing. According to the report, most auto parts have remained stable since the launch of new models. Even when there was a price decrease, it was minimal—just a few dollars or so. Zhao Yan’s reference to falling part prices pertains to OEM (Original Equipment Manufacturer) components, which are directly purchased by整车 companies. In contrast, the parts examined by the reporter are those sold in the automotive service market, where prices have largely remained unchanged. Auto parts are typically divided into two categories: one is components used in the production of complete vehicles, and the other includes spare parts available in the aftermarket. The former has experienced a decline in price in recent years, aligning with the overall vehicle price trend. In the total cost of a vehicle, parts and components account for approximately 70%. Dong Jianping, deputy director of Beijing Hyundai’s procurement division, explained that many vehicle price reductions have been achieved through lower component costs. Some automakers have even pressured suppliers to reduce prices to meet their own cost-cutting goals. Additionally, factors such as tariffs and exchange rate fluctuations also influence auto parts pricing. A rise in tariffs or unstable exchange rates can lead to higher part costs. Currently, the reduction in domestic car prices is largely due to increased local production. When a foreign model is introduced, it is subject to a 40% import tax, prompting manufacturers to localize more parts. Dong Jianping noted that the Sonata and Elantra models produced by Beijing Hyundai now have a localization rate of around 70%, with most parts sourced from nearby regions, contributing to lower vehicle prices. The price of spare parts is also influenced by fluctuations in raw material prices, such as steel. Moreover, intense competition within the parts industry has led to downward pressure on prices. 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 actively involved in supporting the industry. In the automotive service market, parts are categorized into original and non-original. Original parts are sold through 4S dealerships and specialized service centers, and the prices reported by the journalist have not changed significantly. These are the parts that consumers often purchase for repairs. Zhao Yan explained that spare part prices in the market are mainly influenced by supply and demand. If original parts are expensive, consumers may opt for alternatives, but these are often not well-recognized in terms of quality. That’s why many people still prefer original parts despite the higher cost. So why do vehicle prices go down, but original parts don’t? The main reason is that most parts companies are affiliated with automakers. Their profits come primarily from supplying automakers, not from retail sales. Therefore, changes in the service market have limited impact on these companies. Additionally, auto parts prices are not significantly affected by gasoline price fluctuations for car buyers. Hao Dianying, vice president of the Northern Automobile Trading Market, told the reporter that most first-time car buyers focus more on price and design rather than long-term maintenance costs. Surveys show that Chinese car buyers prioritize factors like price and appearance, while the cost of spare parts is rarely considered. Without market pressure, automakers have no incentive to reduce profits from spare parts. Source: Beijing Times

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