With the ongoing rise in raw material costs, both automobile manufacturers and component suppliers are feeling significant financial pressure. Shanghai General Motors has confirmed to reporters that it does not plan to raise prices in China, stating that increased parts costs can be offset through improved production efficiency.
In the automotive supply chain, after-sales parts face less competitive pressure compared to new vehicle pricing, which has helped ease some of the cost burden. Industry sources report that tire prices have seen the most noticeable increase, rising by 5% to 10% since the start of this year. Meanwhile, other auto parts have also experienced price hikes of 20% to 30%.
Car accessories have also seen a sharp increase. Many car owners are now facing higher repair costs as parts prices rise. According to suppliers in Shanghai, approximately 20% of auto parts have gone up by 20% to 30%. For example, the average car battery has risen from 270 yuan to 400 yuan, while common antifreeze has increased by 50% per barrel. Some parts, such as water tanks, crankshafts, and electrical components, have seen smaller increases of around 10%. However, wear-and-tear items like hoods, fenders, and fasteners have seen more dramatic price jumps—some hoods have gone from 300 yuan to 400 yuan. Freight truck hubs have also risen significantly, with front hubs increasing from 250 to 280 yuan and rear hubs from 300 to 400 yuan. Some imported rare parts have even seen price increases of up to 30%.
Tire companies have also begun raising prices. Michelin announced a 3% average price increase for engineering and industrial tires in the U.S. and Mexico starting February 1st. Bridgestone adjusted its branded car and truck tire prices in March, with increases ranging from 3% to 5%. Continental, known for its Hankook brand, also raised tire prices in the first quarter. Hankook Tire plans to increase prices in China by 5% to 8% starting in February.
As part of their strategy, car dealers are locking in profits on parts sales. Industry data shows that in 2007 alone, due to rising raw material costs, tertiary suppliers saw an 80% increase in costs, while secondary suppliers like gears and axles experienced a 8.7% to 26.6% rise. The purchase cost for drive axle companies increased by 10.7%, and suspension bridge suppliers saw a 13% increase. A parts seller explained that with rising iron ore prices, cast iron has become much more expensive, making higher prices for iron-based auto parts inevitable.
Faced with rising costs, most automakers are hesitant to pass on price increases to consumers. A spokesperson from Shanghai Volkswagen stated that large-scale adjustments to market guide prices are not possible. Similarly, Shanghai General Motors told reporters that it has no plans to raise prices in China and will absorb the cost increases through operational improvements.
The after-sales service market is becoming a key way for dealers to maintain profitability. An industry source revealed that with increased production scale and localization, auto parts should theoretically decrease by 10% annually. However, in practice, this is difficult to achieve. In the domestic after-sales market, the total contract price for replacement parts often exceeds the sale price of the vehicle itself. After dominating the domestic market through price wars, multinational dealers are confident in the growing potential of the parts and service market. Therefore, despite rising production costs, vehicle prices may fall, but parts prices are likely to continue rising. Compared to new car buyers, car owners have more rigid demand for after-market parts and services.
Galvanized Steel
Galvanized steel can be classified into two main types: hot-dip galvanized steel and electro-galvanized steel.
Hot-dip galvanization is the most common method of galvanizing steel. In this process, the steel is first cleaned and then immersed in a bath of molten zinc at a temperature of around 450°C. The zinc reacts with the surface of the steel, forming a series of zinc-iron alloy layers that provide excellent corrosion protection.
Electro-galvanization, on the other hand, is a process that involves using an electric current to deposit a thin layer of zinc onto the steel surface. This method is typically used for thinner gauge steel and provides a smoother finish than hot-dip galvanization. However, it may not be as durable as hot-dip galvanization and is typically used for less demanding applications.
In addition to its corrosion resistance, galvanized steel is also fire-resistant and has good thermal conductivity. It is also relatively easy to fabricate and can be formed into a wide range of shapes and sizes, making it a versatile material for various applications.
However, galvanized steel may not be suitablefor all applications. It has a shorter lifespan than some other corrosion-resistant materials, such as stainless steel, and may require regular maintenance to ensure its continued protection against corrosion. Additionally, galvanization can affect the appearance of the steel, giving it a characteristic dull gray or silver color that may not be desirable for some aesthetic applications.
Another consideration with galvanized steel is the potential environmental impact of the galvanizing process. The production of galvanized steel typically involves the use of large amounts of energy and resources, and the disposal of waste products from the galvanizing process can have environmental implications. However, efforts are being made to improve the sustainability of the galvanizing process, such as through the use of more energy-efficient production methods and the recycling of waste materials.
Overall, galvanized steel is a popular and versatile material that offers excellent corrosion resistance and durability. Its use is widespread in a variety of industries and applications, and it will likely continue to be an important material for many years to come.
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