An introduction to the China auto air-conditioning market
1． Brief introduction to the output of the vehicle A/C
Data from the China Association of Automobile Manufacturers (CAAM) showed that China produced 8.88 million vehicles in 2007, up by 22% year-on-year, while 8.79 million were sold, up by 21.8%. The heady growth of China’s automotive market has created the boom of the country’s automotive air-conditioning (A/C) sector. The output of vehicles with A/C was 5.83 million units in 2007, up by 23.7% from a year ago.
Figure 1: Outputs of Vehicles and Vehicles with A/C in China 1994-2007
Figure 2: Outputs of Auto A/C Compressors in China （M units）
2．Foreign-fund Companies Snatched the biggest Market Shares
A few large corporations from Japan and the U.S. have dominated the production of the core parts of the auto A/C systems—A/C compressors. With its leading technology and a dominant market share of one third in the world, Japanese Denso Corporation is second to none. And there are also other world leading producers of A/C compressors, including Zexel, Saden Behr, Seiko, Panasonic, Mitsubishi Heavy, Delphi, Visteon, and Chrysler. So far all the above-mentioned producers have set up joint or wholly-owned ventures in China.
With their superior technology, foreign producers have established their dominance in China’s auto A/C compressors market. While the overall sales volume of automotive A/C compressors in China was 6.43 million units, up by 13.6% year-on-year in 2007, Saden Behr accounted for 2.54 million of them; Denso Yantai 810,000; Jianshe Chongqing, Halla Dalian, and Aotecar Nanjing more than 650,000 each. Also in 2007, Futon Mudanjiang produced 620,000 automotive A/C compressors and sold 580,000, while Valeo Changchun made 136,000 units all for export.
3. China auto A/C compressors industry concentration ratio becomes lower, while product prices go down.
Concentration of China automotive air-conditioner compressor industry has declined attributing to severer market competition in recent years. Statistically, output concentration of top five and top ten compressor producers hit 71.9% and 92% respectively in 2004, and the rate dropped to 57.2% and 80.7% in 2007.
In recent years, some multinational manufacturers of automotive air-conditioner compressor have sped up their pace into Chinese market.
According to statistics, matching price of China automotive air-conditioner compressor was around CNY1, 200/set in 2001, and then fell to CNY800/set in 2005, down 33% or so during the four years. At the end of 2007, China’s average matching price of automotive air-conditioner compressor was just CNY700/set, which shows the matching price will further slow down in the future.
Figure 3: Average matching price of china’s major three vehicle A/C manufacturers, 2001-2007