Apr. 17, 2009: recently, AlixPartners a global business advisory firm, released a report citing that over 40% auto parts & accessories manufacturers are faced with severe liquidity problems this year in China. In the next 12 to 18 months, a number of players in this field are mostly likely to disappear unless some drastic measures are taken to insure their smooth cash flow.  

After collecting related data and taking in-depth interviews with some high-level managerial staff from 40 state-owned enterprises, private businesses and multinationals that are involved in auto parts & accessories manufacturing industry, AlixPartners found out over 20% companies was falling in red in 2008. In sharp contrast, a similar investigation conducted last year indicated that 55% interviewees were quite upbeat about their business expansion.

How will these auto parts & accessories manufacturers fare in 2009? Over 50% have already adjusted their expected net profit rate below 5%. However, not even one supplier would have ever lowered the rate at such a low level one year ago.

Mr. Roland, General Manager of AlixPartners in charge of Shanghai Office pointed out Chinese auto parts & accessories suppliers need to enormously enhance their cash management capabilities to insure their sound liquidity in face of a shortage of external financing.

In 2008, China’s auto parts & accessories industry registered a total sales revenue of RMB 928 billion (about USD 135.8 billion), 23% of which was from exports. During the investigation, 60% enterprises revealed that their biggest challenge in the coming months is how to live with the declining overseas demand.

Source : english.chinabuses.com

Editor : Mark

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Tags: Parts Accessories Manufactures