Joint-venture automakers’ major retreat hurts 300,000 auto parts suppliers most

Porsche plans to close another 40 dealerships this year, Honda is cutting its production capacity in China to 720,000 units, and Skoda has officially announced its exit from China by mid-year... Regarding "former giants," news of a "major retreat" seems to break almost every few weeks.

Audi China delivered 127,100 vehicles in the first quarter, a 12% year-on-year decline.

Volkswagen Group delivered 548,700 vehicles in China in the first quarter, down 14.8% year-on-year.

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Especially “genuine parts”: As 4S dealerships close and their inventory floods into independent channels, a hidden storm is already forming in the automotive parts industry, undermining car owners’ maintenance rights.

- Joint-venture automakers are accelerating their withdrawal; what kind of “covert restructuring” is the OEM parts channel undergoing?

- In what “invisible” ways will car owners suffer losses to their maintenance rights?

In other words, the official accessory system is shrinking, but the maintenance demand for existing vehicles remains. Aftermarket parts suppliers are buying original factory parts through returning online stores and auction channels, while also clearing inventory of branded parts and remanufactured parts. Overall, "prices have dropped, but quality is inconsistent."

For after-sales, this means a more thorough page turn: as new models are equipped with a large amount of electronic controls and intelligent configurations, under the safety protocols and authorization frameworks, the original parts of new models, similar to those of "new forces," will hardly flow to independent after-sales anymore.

Industry insiders analyze that after traditional brands undergo significant downsizing, it may give rise to more "authorized independent repair stations" as a new type of franchise model. Whether or not this happens, the three paths mentioned above point to a clear fact:

The distribution channels for original parts are undergoing an unprecedented restructuring. The "official gateways" once tightly controlled by 4S dealerships are now collapsing on a large scale.

Incomplete statistics from AC Cars show that since 2020, 29 car manufacturers have gone bankrupt or ceased operations; in the past five years, more than 8,000 4S stores have closed, merged, or transformed, and industry predictions suggest that by 2028, only half of the 4S stores may survive.

Every time a store is closed, the supply structure of original parts will be "shaken", the reason is clear:

However, with the large-scale withdrawal of 4S stores, the distribution chain has been disrupted, and powerful third-party chains and regional large stores have started to directly enter the "circulation circle." The change in channels is essentially due to a shift in the bargaining power of the players.

Specifically:

To make matters worse, auto parts suppliers themselves are also facing immense downward pressure, with auto repair shop customers demanding more and more from their parts suppliers.

Visible is the fact that this domino effect is spreading not only to medium- and small-sized cities but is now expanding further.

The risks of overstocking are further amplified in an environment where price order is out of control. Some auto parts sellers have reported an overall scale shrinkage of 15% to 30% year-on-year. Channel distributors who once focused on a single brand now find themselves in a difficult position.

Joint-venture automakers are experiencing a sales collapse, with 4S stores shutting down en masse, and OEM parts transforming from a "scarce resource" into "unsellable inventory." This seemingly macro-level industry shakeout has ultimately landed on two groups: 300,000 auto parts dealers and countless vehicle owners.