"Beijing's parts and Components industry is on the verge of a revival," said a senior executive from a local auto parts company. In the past, he often voiced concerns that the sector was fading away. However, recent developments suggest a turning point.
Beijing Automotive Industry Holding Co., Ltd. and Beijing State-owned Assets Management Co., Ltd. have signed a framework agreement to jointly invest nearly 1 billion yuan in establishing Beijing Automotive Components Co., Ltd. and building an industrial base for auto parts in the city. This move is expected to give a major boost to the local industry.
According to a high-ranking official from Beijing Auto Holding, "The formation of this company will drive the development of the auto parts industry in Beijing, leading it onto a fast track." The company is now preparing for its official launch, with plans to go public in October.
During the "10th Five-Year Plan" period, Beijing’s automotive industry experienced rapid growth, with companies like Beijing Hyundai, Beijing Benz-Dike, Beiqi Foton, and Beijing Auto Manufacturing making significant progress. However, the auto parts industry remained fragmented, small-scale, and disorganized, lacking a unified strategy. That is about to change.
Recent months have seen increased activity among Beijing auto parts companies, with many exploring partnerships and collaborations. Chen Weimin, a manager at one of these firms, has been busy traveling, attending meetings, and discussing new opportunities. He recently returned from a trip to Shanghai after being away for almost two weeks.
On September 14, the preparatory group of Beijing Automotive Components Co., Ltd. held a meeting to finalize the company’s structure and personnel. They are currently working with audit and evaluation agencies to assess existing auto parts companies and select the best assets to join the new entity.
Chen Weimin noted, “Although Beijing’s auto parts industry started later, it has a high starting point. We only partner with top global companies or the leading domestic firms. So far, 12 companies have joined, with another five or six in the pipeline, including Lear, Johnson Controls, Delphi, and Bosch. Some are even considering setting up R&D centers in Beijing.â€
Despite the progress, challenges remain. Beijing Hyundai, once known for its rapid expansion, has faced declining sales this year. One reason cited by insiders is the high cost of parts. Many suppliers are based in South Korea, and key components are still imported, limiting local participation in the supply chain.
A source from a Beijing auto parts company explained, “We hoped that vehicle production would boost the parts industry, but we were left out of the joint venture support system.†An official from the Beijing Municipal Bureau of Industry added that while major automakers like Beijing Hyundai and Beijing Benz-Dike are growing, their impact on the parts sector is limited due to low supplier integration and low-value products.
To address this, BAIC has prioritized developing parts platforms and combining industrial growth with capital operations. The goal is to create a unified platform for Beijing’s auto parts industry, fostering innovation and local competitiveness.
With the decline in Beijing Hyundai’s sales, tensions between Chinese and Korean partners have risen. However, both sides have reached a consensus to balance interests and improve procurement from local suppliers.
Experts warn that while the industry is showing signs of recovery, it remains weak and vulnerable. A balanced approach is needed to ensure sustainable growth.
As the new company prepares to launch, representatives from Beijing Hyundai, Beijing Benz-Dike, and Beiqi Foton are actively engaging with the preparatory committee to discuss parts procurement. Beijing Auto Holding has emphasized a policy of "equal priority," giving preference to parts from its own subsidiaries if they meet quality standards.
Beijing Hyundai also stated that its procurement criteria are strict, requiring suppliers to meet specific quality, cost, and delivery standards.
Moreover, incidents like Bosch acquiring Wei Fu highlight the risks of relying solely on foreign partners. Beijing Auto Holding is aware of this and is building its own R&D and manufacturing capabilities, ensuring that local teams are involved in product development during joint ventures.
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