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2021

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Future trends in automotive gears

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First, the continuous entry of new car manufacturers is irreversible. In the past two years, traditional automakers have slowed their previous rapid development, even leading to concerns that some companies may gradually withdraw from the historical stage. However, at the same time, we have also seen many powerful companies flocking to the auto industry and quickly demonstrating their competitiveness in this trillion-dollar market. China's three internet giants BAT, as well as Apple and Google from overseas, and the aggressive new car manufacturers, are all strong contenders. Not long ago, Xu Jiayin, chairman of the board of directors of Evergrande Group, a real estate giant, held talks with automotive industry leaders such as Bosch and Magna in Germany, demonstrating a strong posture of "overtaking on a curve".
  First, the continuous entry of new car manufacturers is irreversible. In recent years, traditional automakers have slowed their previous rapid development, even causing concerns that some companies may gradually exit the historical stage. However, at the same time, we have also seen many powerful companies pouring into the automotive industry and quickly demonstrating competitiveness in this trillion-dollar market. China's three major internet giants BAT, and foreign companies like Apple and Google, are aggressively entering the new energy vehicle market. Not long ago, Xu Jiayin, chairman of the board of directors of Evergrande Group, a real estate giant, held talks with automotive industry leaders such as Bosch and Magna in Germany, entering the automotive field with a posture of "overtaking on a curve" and aiming to build a world-class brand. Alphabet, Google's parent company, does not produce self-driving cars, but has grown into the world's leading autonomous driving technology company. It has cooperated with Toyota, Fiat Chrysler, Jaguar, and others to provide autonomous driving technology. Although it hasn't produced a single car, it is valued at over US\$170 billion by Morgan Stanley. These cross-border business examples are enough to prove that the automotive industry still has sufficient development potential, but who will be the protagonist of this feast, the old giants or the new forces, will be full of uncertainty.
  Secondly, the outsourcing trend of auto parts is irreversible. In the traditional industrial model, automakers mostly produced gears as core components themselves, and their procurement strategy for gear suppliers was positioned as backup supply. However, in recent years, as the management of professional gear manufacturers such as Shuanghuan has become increasingly mature and the quality has become excellent, the trend of automakers entrusting professional manufacturers to manufacture gear components will become more and more obvious.
  Furthermore, the continuous need for structural adjustments is irreversible. We have clearly seen that the automotive industry is undergoing structural changes due to the technological revolution brought about by new technologies. Traditional manual transmissions have rapidly switched to automatic transmissions, and the market share of pure electric and hybrid new energy vehicles is steadily increasing and accelerating. In terms of a single vehicle, the demand for gears has indeed decreased significantly, but gears will be indispensable for vehicles of any power form, and more stringent requirements are placed on the quality and lifespan of gear products. For gear companies, this will be a winnowing process, and market concentration will increase significantly. Excellent companies, while leveraging to improve their own technology and management levels, will occupy a larger market share and stand out in fierce competition.
  Opportunities arise from crisis, but opportunities must be seized; adapt to the trend, but also have the ability to act. Strategic planning during industry downturns, diligent cultivation of internal strengths when peers are confused, adherence to the objective laws of industry development, establishment of leading market competitive advantages, and seizing the opportunities for business transformation, can allow companies to stand firmly in the rapidly changing automotive industry and achieve rapid development to become a leader in the many but not necessarily excellent gear companies!

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