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With the rapid growth of the automobile industry, China's auto parts sector has also evolved significantly over the years, going through four distinct phases: initial development, fluctuation, transition, and adjustment. During the early stage, the industry was mainly driven by vehicle production, with most component manufacturers focusing on supplying fixed parts. However, at that time, these companies had limited production capacity, low output, and lacked the ability to innovate or develop new products. As a result, their products were of poor quality, expensive, and could only be sold to specific original equipment manufacturers (OEMs), mostly for domestic medium and heavy trucks and light vehicles.
From the mid-1970s to the mid-1990s, the industry entered a wave phase, where auto parts began to develop in tandem with整车 (complete vehicles). Competition among component suppliers started to take shape, and an industrial system supporting the automotive sector gradually formed. In the late 1980s, the government set its sights on making the automobile industry a key pillar of the national economy, leading to the emergence of numerous small and medium-sized component enterprises. However, many of these companies were still small in scale, with more than 80% having annual sales below 100 million yuan, and there was significant duplication in construction. While there were 2,000 designated component manufacturers nationwide, the actual number exceeded 5,000, and technical capabilities remained weak.
In the transitional phase, from the mid-1990s to 2001, the auto parts industry made considerable progress in productivity, product variety, management, and technological innovation. After joining the WTO, the industry entered an adjustment period, marked by increased foreign investment and restructuring. By 2003, the number of foreign-invested auto parts companies in China had nearly reached 500, with most of the world’s top 20 auto parts firms establishing joint ventures or wholly-owned subsidiaries. This influx of multinational corporations brought advanced technology and capital, increasing competition for domestic players and forcing them to adapt through partnerships and strategic adjustments.
The industry is now shifting from a closed-loop system relying on domestic resources to a more globally integrated model. Policies are evolving from purely supply-side approaches to more balanced strategies that consider both demand and supply. Over the past few years, the auto parts sector has grown rapidly, playing an increasingly important role in the automotive industry and the national economy. By 2003, the share of auto parts in total automotive output had risen to over 27.5%, and the industry employed more than 12.56 million people.
Looking ahead, the auto parts industry will continue to develop alongside the automotive sector. Global competition is intensifying, and major auto-producing countries are witnessing changes in their component industries. Similarly, China’s auto parts sector is expected to follow several key trends: closer integration with OEMs, increased mergers and acquisitions, greater internationalization, and faster technological advancement. These shifts will require stronger collaboration between parts suppliers and vehicle manufacturers, as well as a focus on cost reduction, quality improvement, and global market expansion.