Smart Automotive Components: Global Industry Insights 2025

Abstract

The auto parts industry is undergoing an unprecedented transformation, and the market size is expected to exceed RMB 1.2 trillion in 2025, and will continue to grow driven by new energy and intelligent technologies. From traditional mechanical parts to electrification, lightweight, and intelligent upgrades, the industry’s competitive landscape is accelerating. This article analyzes the industry’s development trends and challenges through eight dimensions, including market size, technological innovation, industrial chain integration, and aftermarket potential, and reveals the path of Chinese companies’ rise in the global supply chain.

1. Market size continues to expand, and new energy drives structural growth

The global auto parts market has exceeded US$100 billion. As a core market, China’s output value is expected to exceed RMB 5.4 trillion in 2025, with an annual compound growth rate of more than 10%. The explosive growth of new energy vehicles is the core driving force: global new energy vehicle sales are expected to reach 25.422 million units in 2025, with China accounting for more than 60%, driving a surge in demand for three-electric systems such as batteries, motors, and electronic controls. CATL and other companies have taken a leading position in the global power battery market with their technological advantages, with revenue exceeding 285.3 billion yuan in 2023.

2. Electric technology innovation reshapes the industrial chain

The wave of electrification has pushed 70% of the parts of traditional fuel vehicles to be eliminated, and the three-electric system (battery, motor, and electronic control) has become the new core. Solid-state battery and hydrogen fuel cell technology are accelerating commercialization, and the market size of new energy vehicle parts is expected to reach 1.2 trillion yuan in 2025. Taking Tesla as an example, its localization rate has increased to 95%, driving local supply chain companies such as Xusheng Group (aluminum alloy die-casting supplier) to achieve an annual output of 37 million pieces, and in-depth cooperation with new forces such as Weilai and Xiaopeng.

3. Intelligence and networking give rise to new demands

Intelligent driving technology promotes the development of spare parts towards integration and sensing. The cost of lidar has dropped from US$1,500 in 2020 to US$500, and the localization rate has exceeded 50%. Huawei, DJI and other companies have deployed intelligent driving perception modules, and the V2X communication module has passed the EU certification, promoting the implementation of vehicle-road collaboration technology. The proportion of software costs increased from 15% to 60%, and the demand for domain controllers and high-precision sensors surged, giving rise to a market with a scale of hundreds of billions.

4. Application of lightweight materials accelerates industry upgrade

Lightweighting is a key technical path under the “dual carbon” strategy. The demand for materials such as aluminum alloys and carbon fibers increased by 15% annually. Ningbo Xusheng Group achieved a 30% weight reduction in aluminum castings through die-casting and forging processes, and increased the range by 2.5 kilometers/10 kilograms. Fuyao Glass occupies 25% of the global automotive glass market share, and lightweight glass products are suitable for new energy vehicles. The new EU battery law requires the use of recycled materials to reach 25%, forcing companies to upgrade their technology.

5. Aftermarket potential is released and independent channels rise

In 2025, more than 3 million new energy vehicles will be “out of warranty”, and the scale of the independent after-sales market is expected to reach hundreds of billions, with three-electric maintenance becoming the core increment. Tuhu Auto Care and Tmall Auto Care have laid out a power battery repair network, and the number of repair orders will reach 22,000 in 2023. The contribution rate of cross-border e-commerce platforms is 28%, promoting socialized inventory management and 30-minute express delivery. After independence, the market penetration rate has increased to 80%, and the share of the 4S system has continued to shrink.

6. Global layout and supply chain resilience improvement

Chinese companies set up factories in Southeast Asia to circumvent EU anti-dumping duties (covering 40% of exports), and the proportion of cross-border RMB settlement has increased from 12% to 35%. In 2022, the export value of parts will be 81 billion US dollars. CATL, HUAYU Automotive and other companies will accelerate their overseas expansion and set up after-sales centers in Russia and the Middle East to provide localized technical support.

7. Policy dividends and tax empowerment innovation

The additional deduction ratio for R&D expenses has been increased to 100%, and high-tech enterprises will enjoy a 15% income tax rate. Hubei New Torch Technology has enjoyed a tax incentive of 149 million yuan in 3 years to promote the development of wheel hub bearings; a lithium battery diaphragm company in Hebei has received an additional deduction of 45.06 million yuan to accelerate patent layout (159 authorized patents). The export tax rebate of the free trade zone will be received in 3 days, covering 90% of categories, reducing the financial pressure of enterprises.

8. Industry Challenges: Technical Barriers and Ecological Synergy

Foreign-funded enterprises still account for 90% of the market share in the fields of ESP systems and air-conditioning compressors, and local enterprises need to break through certification barriers (such as EU CE and Russian GOST-R). There is a shortage of 824,000 new energy maintenance technicians, and the equipment investment exceeds 100,000 yuan per store, which restricts the expansion of the service network. In addition, problems such as supply chain monopoly and the proliferation of counterfeit and shoddy parts urgently need to be solved by ecological synergy.

Summary

The automotive parts industry is in a strategic opportunity period driven by “technology + market”. The three major trends of electrification, intelligence, and lightweighting reconstruct the industrial chain, and the aftermarket and global layout release incremental space. However, technological breakthroughs, talent reserves and ecological synergy are still key challenges. In the future, companies with core technologies, rapid response capabilities and digital ecological integration advantages will dominate the global competitive landscape. Chinese parts companies are expected to move from “followers” to “leaders” with cost advantages and policy dividends, and reshape the trillion-level market map.

References