According to statistics provided by Kato, in 2000, the output of passenger cars in China was about 600,000 vehicles, and the number of models was only about 35. In 2003, production increased to approximately 2.2 million vehicles, while the number of models increased to approximately 100. According to this trend, it is estimated that the output in 2006 will increase to approximately 2.5 million vehicles, and the number of vehicle models will be further expanded to approximately 130 types. In this way, the average output of each type of vehicle has basically remained flat or even decreased. From the average output of each model, it was 18,000 in 2000 and 21,000 in 2003. It is estimated that it will be reduced to 18,000 in 2006. Therefore, in order to develop a new customer base, Japanese automobile manufacturers entering the Chinese market began to gradually increase the models of various grades. As a result, the orders for each type of vehicle model issued by automakers to accessory manufacturers are more refined, thus increasing the difficulty for the accessory manufacturers to increase their production efficiency. Another hit by auto parts makers is the sharp drop in parts prices. According to Kato, the retail price of cars fell by an average of 8% from March 2003 to March 2004. If it falls at this rate, vehicles with a price of 3 million yuan in 2003 will drop to 150,000 yuan by 2008. "This fall is still the first time in the automotive industry" (Kato). In this way, automakers have imposed extremely stringent cost reduction requirements on accessories in the Chinese market. Historically, in order to ensure sales in the Chinese market, Japanese auto parts manufacturers have taken measures to establish joint ventures with local manufacturers to capture the market. Although the Chinese government has provided preferential policies, from the perspective of Japanese manufacturers that have not really entered the Chinese market, it is necessary to ensure sales and production quantities through cooperation with local accessory manufacturers. In recent years, Japanese automobile manufacturers have entered the Chinese market one after another. China has also joined the WTO and has actively adjusted related policies. As a result, auto parts manufacturers have entered China more and more in the form of wholly-owned (100% foreign-funded limited liability companies). However, Kato warned that in order to cope with environmental changes such as the increase in the number of models and falling prices, the sole proprietorship will face great risks. To increase production efficiency, the experience of local manufacturers who are familiar with the Chinese market is indispensable. Of course, Kato is not in favor of adopting the original joint venture and cooperation method. Kato advocated alliances based on specific projects. Kato cited the following four examples. The first is the module project. When automakers add models, accessory manufacturers supply the best modules for each model in an alliance. By sharing components that make up the module as much as possible, it is possible to increase the production of each component. Nissan Motors, which is actively engaged in module production, will also adopt a modular production method in China in the future. Kato said that accessory manufacturers should follow the trend of modularization and form alliances with Chinese manufacturers. In terms of supporting modular production alone, Japanese parts manufacturers should also form a coalition. Kato puts forward: “Only the information of local parts manufacturers that can fully grasp the customer's ideas can be reflected in the design and development of the modules to improve their competitiveness.†. The second case mentioned by Kato is: to control the market information and provide high value-added to automakers to control the decline in the prices of accessories. For example, in China, alliances with engine oil companies that master oil components are being developed to provide the most suitable oil filters. The third is to form alliances with circulation companies in the after-sales market. This is an attempt to help develop customer-demanding products based on market feedback information. For example, Japan Denso Co., Ltd. cooperates with the China Association of Automobile Products, using the latter's distribution network to sell Denso products is a good example. The fourth is an example that is very suitable for the final product. It is to cooperate with counterfeit manufacturers and make full use of their experience in design and development. In fact, Honda has already begun to do so in the motorcycle field. Kato emphasized that only through active cooperation with local manufacturers in the above manner can they accurately assess their product development capabilities and feed market information back into product development.
China's auto production and demand have indeed increased rapidly, and it is estimated that the future growth rate will further accelerate. However, due to the lack of experience in increasing the number of models, which led to the decline in car prices, in order to solve a problem, Japanese auto parts manufacturers should establish a new type of alliance with Chinese manufacturers well-known in the Chinese market —†Beijing, 2004, held on June 8. At the International Automobile Conference (sponsored by Nikkei BP, China Economic Times, China Association of Automobile Manufacturers, and China Association of Automobile Engineers), Kato Shinichi, director of the Abeam Automotive Research Institute of the Japanese resident company, made the above observations.