In the first half of this year, the domestic auto parts industry market is keeping downturn. On the one hand, the sales of vehicle continues to slow down, downward pressure; on the other hand, in the case that business income growth slow or even decline, the auto enterprises still can ensure sales rose, generally better than the whole car business. As of July 6th, 113 listed companies in the automotive category, there are 40 released their first half forecast, more than 70% is good. So people will doubt whether the auto parts industry can deserve a place in the period of economic downturn or not?
First, The forecast shows that the adjustment of the product structure is the main reason which makes the profit of automotive parts grow. Optimize the layout of the industry, implement a series of the efficiency measures, actively expand the joint ventures and independent vehicle customer business, strengthen cooperation and merger with overseas, these measures make the Chinese enterprises change a lot.

Second, some auto parts enterprises expand business scope, carry out restructuring and add other services.
Third, in recent years, continuing to exploration and reform, expanding market share, and "going out become the choice of auto parts enterprises. A lot of small and medium enterprises ask the listing Corporation for help to accelerate the merger of overseas quality assets. In addition, auto parts enterprises have made full use of Internet to build B2B website. In this context, the performance of the auto parts companies keeps steady growth on the first half year.
Experts said the rise of the performance should be expected. On the one hand, because the supply price of spare parts in the first quarter has been determined, the down of car sales can produce little impact; on the other hand, in the current situation, the profits of car parts will be more and more less, but some new growth and high return business can stabilize the business. Therefore, many parts enterprises are doing epitaxial mergers and acquisitions in order to expand its business scope, which also will play a positive role for the performance.

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The costs of auto parts constitute about 70% of the total production cost of the entire automobile. Some of the major raw material and sub-components used in this highly complex industry that spans auto glass/float glass, car tires, car wheels, engine-oil radiators, and inter-coolers as well as car batteries. The great majority of the companies focus on particular parts or markets, and most concentrate on single products. Only some larger companies can manufacture a wide variety of auto parts.

Typically, Chinese auto parts sell for around 30–50% less than comparable auto parts made in Europe, North America, or Japan. Estimating costs in the Chinese auto-parts industry becomes especially difficult because of subsidies to Tier-3 suppliers including steel and glass manufacturers, and government-controlled pricing of energy.

In 2010, mechanical parts and accessories, including bearings, filters, covers, brakes, and clutches, made up the largest segment of this industry, accounting for 56% of total revenues. Mechanical parts formed the majority of automobile components, and their prices have increased in the past few years due to rising raw-material prices. Electric motors, including starting motors, alternators, control units for electronic systems, and mechanical and electronic drivers were the second-largest industrial segment, accounting for 23% of total revenues. Electronic parts and accessories, including electronic-control systems for engines, anti-lock brake systems, meters, GPS, transducers, entertainment systems, and items used for control, safety, communication, and entertainment made up the third industrial segment in the industry, accounting for 21% of total revenues.

Raw materials and sub-component purchases, including iron, cold-rolled steel, glass, rubber, and machine parts contributed to 66% of the costs of manufacturing Chinese auto parts. Labor accounted for just 5% of costs, with another 2% for management costs. Total industry wages have increased significantly during the period under study; annualized growth has been 22%. Total wages experienced the fastest growth in 2008, when the employment level rose by 45%. The average wage per employee steadily increased over the current performance period, and, simultaneously, the share of wages in industry revenue decreased. This indicates technology changes, higher usage of machinery and equipment, and higher skill requirements in this industry. Foreign and SOE companies’ large-scale production requires significant capital to install automated processes, equipment, and machinery. Upgrades of plant and equipment and upgrades for process and product development also require significant investment. Many manufacturing processes involve repetitive activities that large and foreign companies have automated to increase production speeds and cost efficiencies. Small-scale domestic manufacturers generally have lower capital-investment levels than larger firms because of the high costs of acquiring new equipment, and because of the basic auto parts they produce.

In 2011, foreign capital accounted for more than 36% of China’s auto-parts market. Foreign companies monopolize Chinese production of some complex auto parts, such as high-end electronic controls, fuel-injection systems, transducers, brake systems, and steering systems.

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     When discussing Chinese car brands, the entire relationship between the vehicle and parts often contains the meaning of the china  auto parts system which can support the vehicle’s development.
     First of all, a strong component system is the essential condition of the automobile power.
     From the perspective of industrial relations, the competitiveness of the entire vehicle is a good quality, meet the needs of customers and continuously improve the performance of the regulations and regulations, as well as low cost control. These are mainly dependent on the component system; From the historical experience, USA, Germany, Japan and South Korea have a strong  automotive parts industry  system. Although the capital relationship and development experience of the whole vehicle and parts industry in these countries are different, the same is that they have a good strategic alliance relationship, mutual promotion and synchronous development.

     Secondly, the development of Chinese brand is the core of the construction of automobile power problem.
     China has the world's first automobile production and marketing power, the development goal of industry is to build a automobile power, but the important task is the development and strong of Chinese brand. The history of China's auto industry has been more than 60 years, but the real growth is about 30 years since the reform and opening up, which is the power of development. When we make full use of the foreign’ s capital, technology and management, and also created the current situation that China's  auto parts industry  is the dominant position in the foreign brand .
     Therefore, we need to be open positively to the outside world, and encourage the development of foreign brands in China when we develop ourselves. In addition, the construction of Chinese auto parts system has considerable brand strength is the key to the development of Chinese-brand vehicles that we need to build powerful Chinese brand parts system. The reason is very simple, if Chinese brand vehicles wants to get development in competition with foreign brands, they must be better and cheaper. Just relying on the existing week strength and the low level of parts system, it doesn’t work, because the vehicle performance can’t reach the level of competition with foreign brands; but we can’t completely rely on foreign brands either, because this will make the vehicle costs remain high, lost competitive advantage.
      For Chinese automobile and parts enterprises , I would like to suggest that the vehicle enterprises establish Chinese brands parts strategic partnership, and consciously helped excellent brand parts enterprises in China. We should pay attention to the international OEM matching, because winning the world can really win China. 

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