Abstract
China has become a manufacturing center of aluminum automotive wheels in the
world now. The export of wheels mainly focuses on the retail market. In the
recent years, many foreign OEMs have begun to purchase aluminum automotive
wheels directly from China because:
In the cost structure of Chinese aluminum automotive wheels, raw materials
account for 55%-60% of the total cost, and labor cost takes 4%-5%. For
developed countries, raw materials account for 50%, and labor cost takes
15%-20%. Therefore, China has competitive advantages in labor cost. At
present, the average profit margin of foreign automotive aluminum alloy
industry has fallen to 2%, so there is no possibility for the decline of
selling price. In order to control the cost, international automobile giants
have begun to purchase from China aluminum automotive wheels with price
advantage or set up joint ventures in China. Japanese manufacturers have
already established joint ventures in China.
China also has advantage in upstream resources, but the advantage is reflected
in the quantity of alumina manufacturers instead of rich bauxite resources.
The competition in the prices of alumina is fierce. After breaking the
monopoly of Chinalco, private alumina factories emerged everywhere. To the
aluminum wheel industry, raw material cost is the most important factor, in
which Chinese manufacturers have advantage. Roaring alumina prices in 2008
made many manufacturers suffer losses. Although alumina price decreased in the
second half of 2008, it was kept stable with a slight increase after major
manufacturers made efforts to reduce output.
China' s output of aluminum automotive wheels rises rapidly. In 2001, China
exported 3.5 million aluminum automotive wheels; in 2003, nearly 10 million;
in 2008, 35 million, 10 times that in 2001. China produced 35 million aluminum
automotive wheels in 2008, of which 30 million ones were for OEM sale, 1.5
million for inventory, and 1.5 million for after-market. Aluminum-alloy
motorcycle wheel industry is an important branch of China' s aluminum wheel
industry, with the annual output of 15-20 million.
Prosperous automobile industry stimulates a number of cities and enterprises
to start aluminum wheel projects. In Baotou, Chongqing, Xining, Luoyang,
Fushun, Zunhua, Guangyuan, Yuncheng, Kangping, Tongliao, Baise, Shenyang,
Jiamusi, Peixian, Baiyin, Xuzhou and Wenchuan, aluminum wheel projects with
the investment of RMB in millions have been under preparation or construction.
In fact, aluminum wheels are applied to 68% of passenger cars in the world, so
the development space for aluminum wheel hubs is limited. Majority of small
Chinese enterprises rely on the after-markets of Europe and America, which get
inflicted seriously by the economic crisis. As for the field of OEM, it is
hard to enter, and requires efforts and funds for continuous years.
Although China has nearly 100 aluminum wheel manufacturers, but few of them
have real strength. In China, large aluminum wheel manufacturers are generally
supported by foreign investors. Manufacturers funded by Taiwan investors are
mostly export-oriented, with the export mainly to Japan, and usually Japanese
investors have their shares, for example, Toyota holds shares of Lioho
Machinery. Manufacturers funded by Hong Kong investors often cooperate with
larger enterprises, aiming at OEM market. Large-scale local enterprises also
target OEM market, while small enterprises are engaged in after-market. Citic
Dicastal is backed up by the super-large enterprise --- CITIC Group, so it has
no difficulty in gathering capital and it has the courage to invest in large
scale, which is the key to its success. Besides, Citic Dicastal started to
work in aluminum wheel industry earlier than others. Wanfeng Auto is also a
pioneer in the industry and was first listed in 2006, and its development
depends on financing. Jinfei Machinery is an enterprise restructured from a
state-owned enterprise with adequate fund, and motorcycle wheel business takes
a large proportion of its business. Jinfei Machinery has set up joint ventures
with Indian manufacturers. In the initial phase of 2001, Huatai was supported
by foreign investors, who held 60% shares of the first Huatai factory in
Shenzhen. At present, Huatai has branches all over China, even merges and
acquires foreign production lines directly. Lizhong Wheel is listed in
Singapore, depending on Lizhong Group that has aluminum mines, and it has
great development potential. Zhongnan Aluminum Wheel enjoys technology
strength and cooperates with Japanese investors to produce products with good
quality. Fucheng aims at export. Mingqi mainly cooperates with BYD. Jingyuan
Heavy Duty Machinery is backed up by the largest tire enterprise --- GITI Tire
Group. Shanghai Youfa is a member of Youfa Group and listed in Singapore,
aiming at after-sale market. Wuxi Zhenfa is an Indonesian enterprise listed in
Indonesia.
Currently, European and American manufacturers of aluminum wheels are at the
verge of bankruptcy, for example, Hayes Lemmerz filed for bankruptcy on May
11, 2009. In German, the annual sales of the best-known enterprise --- BBS was
less than 8 million euros in 2008, declining 40% with huge losses. However,
the situation will benefit Chinese enterprises, especially large enterprise
like Citic Dicastal.
In Japan, the giants --- CMW, ENKEI and TOPY cooperate with Toyota, Honda and
Nissan respectively. Asahi Aluminum, Hitachi Metals and UBE that have smaller
scale cooperate with Honda, Nissan and Mazda respectively. UBE has less than
JPY10 billion. In German, the giants --- BORBET, RONAL and UNIWHEEL are
unlisted semi-private family enterprises with a history of one hundred years
and they acquired a number of small manufacturers. The scale of UNIWHEEL is
relatively smaller, but has much shares in after-market. BORBET and RONAL
cooperate with BMW, Mercedes-Benz, Audi and Porsche. American SUPERIOR and
Hayes Lemmerz are surviving difficultly.
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