In recent years, Chinese automotive manufacturers have significantly boosted their own research and development efforts. Brands such as Chery, Geely, and BYD now hold strong positions both domestically and internationally, with a growing number of vehicles featuring full intellectual property rights. However, the industry still faces challenges. While the initial growth was impressive, the road to sustainable development lies in continuous innovation and self-reliance. This includes not only vehicle design but also a strong focus on auto parts R&D and independent technological advancement. Since the 1990s, the global automotive industry has undergone significant transformations. Major automakers are expanding into new markets and adopting global production and procurement strategies. This shift presents major challenges for developing countries, especially China, which must adapt its industrial strategies accordingly. Experts note that the global auto parts industry is evolving in several key directions. Mergers, acquisitions, and strategic alliances among auto parts companies have accelerated, driven by the need to consolidate resources and enhance competitiveness. Large corporations are forming partnerships based on shared technology and expertise, creating more integrated supply chains. At the same time, there's a trend toward centralizing core business functions, outsourcing non-core activities, and focusing on modular and system-based component development. This has led to greater specialization, large-scale production, and cost-effective manufacturing. As a result, many auto parts companies are becoming more focused on specific areas of expertise, while others are shifting toward lower-cost production models. The structure of the auto parts industry is also changing. Fewer companies now support entire vehicles directly. Instead, a tiered system is emerging: top-tier suppliers provide complete systems, while second- and third-tier suppliers offer sub-assemblies and individual components. This shift reflects the increasing complexity and integration of modern vehicle systems. To improve efficiency, leading auto parts companies are also expanding beyond their core businesses, leveraging technology and resources strategically. They are reorganizing their global production layouts to remain competitive in an increasingly international market. In China, the auto parts sector is also evolving. Strong, specialized companies with technical capabilities and market influence are rising to prominence. Meanwhile, the number of large and medium-sized parts firms is decreasing, while subsidiaries under big companies are increasing. The future will likely see a mix of large-scale R&D-driven enterprises and smaller, specialized suppliers. According to statistics, there are over 5,000 auto parts companies in China, including 1,200 foreign-invested firms. Despite this, the industry still lags behind global leaders in terms of scale, technology, and investment. Many Chinese parts companies operate at a small scale, lack core R&D capabilities, and invest insufficiently in innovation—limiting their long-term growth potential. Meanwhile, foreign auto parts giants are aggressively entering the Chinese market. With projected growth in domestic car production, the potential of the auto parts market is enormous. Companies like Delphi and other global players are investing heavily, setting up advanced facilities and expanding their presence across the country. Given these trends, experts warn that without stronger emphasis on domestic auto parts development and faster R&D progress, China’s automotive industry risks building a "tower on sand"—a structure that may look strong but lacks real foundation.

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