Export Restrictions on Full Rise in Prices of Automotive Parts and Components



The result of further increases in oil prices is beginning to show that almost all the prices of automotive parts are rising. This means that the purchasing costs of automobile manufacturers will increase further.

According to BLOOMBERG's latest news, ASAHIGLASS, Asia's largest glass manufacturer and Japanese automotive glass giant, has reached an agreement with Asian automobile manufacturers such as Toyota and Honda to raise the overall price of automotive glass by 10%.

As a result of the news, ASAHIGLASS shares rose 2% on Tuesday. Two percentage points, to 1336 yen per share. The decision was made by ASAHIGLASS because of rising oil prices, which led to higher prices of fuel and raw materials essential for glass manufacturing.

Car manufacturers, on the other hand, are forced to accept the price adjustment and 'swallow up the excess costs; the fundamental reason is that the overall global auto production is still oversupply. The result of rising car prices is clearly a loss in sales, and no company is willing to take the risk. Even Toyota.

Fuyao, an important domestic automotive glass manufacturer, is obviously not so lucky, or because its status as a riverbank has not yet been established, it is not strong enough to negotiate with automobile manufacturers.

As the main raw material of automobile glass, the average price of soda ash in the first five months of 2008 has increased by about 20% compared with the end of 2007. In addition, the manufacture of automobile glass consumes a lot of heavy oil. Since 2008, the price of international crude oil has been soaring. At present, the price of automobile glass is stable at about 130 US dollars, which also puts great pressure on the cost control of Fuyao glass.

Rising prices are obviously not a good thing for Fuyao. Opening Fuyao Glass's performance report in the first quarter of 2008 found that the gross profit rate of its main business, float glass and automobile glass, was declining, and the gross profit rate of sales was 37% from mid-2007. 69% fell to 32% in the first quarter of 2008. 95%.

If automakers are strong enough, this part of the rising cost pressures will be temporarily self-absorbed by glass manufacturers, unless the cost pressures of oil prices on automobile glass manufacturers expand to losses. Otherwise, in the context of the general business rules of 'big shopper bullying'. Automotive glass manufacturers have to digest the excess costs.

However, other parts manufacturers obviously do not have such a large space for cost digestion. The reason why the purchase price of automobile parts has risen in an all-round way is that some automobile parts have been unable to absorb the profit pressure brought by the rising cost to the enterprise itself.

In a report on the impact of rising oil prices on the automotive industry, Shenyin Wanguo said that a sustained rise in oil prices would increase the manufacturing costs of the industry.

The automotive industry is a very wide-ranging industry. Many raw materials used in manufacturing automobiles, such as tires, plastics, glass and so on, are made of petroleum. The price change of crude oil will drive the price change of raw materials for the above-mentioned industrial products. Because the price of domestic natural rubber has been in line with the international price of natural rubber, the increase of domestic product oil price has little effect on the price of natural rubber, that is, it will not lead to the price of natural rubber rising, and thus will not lead to the price of tyres rising. However, if the international oil price continues to rise, there will still be room for the price of automobile tyres and other prices to rise, which will still exert some pressure on the cost of automobile manufacturing.

On the other hand, the price of spare parts has risen in an all-round way due to the rise of oil price, and the result of restraining the export of spare parts has begun to appear. China is currently the major exporter of spare parts in the world, which has a great impact on the overall development of spare parts.

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