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Auto parts suppliers brace for order surge post lockdowns

2022/05/16 | By EDN

Auto parts and components were affected by the COVID-prompted lockdowns in various Chinese cities, leading to expected losses in revenue and profit in the first quarter. However, after May, various regions have gradually reopened and resumed work, and auto factories have stepped up the pace of delivering orders. Laster Tech Group and Yingli-KY are among the suppliers optimistic about the performance in the second half of the year.

Yingli representatives have said that since Q1 of this year, the auto market in China is still suffering from a shortage of automotive chips, which affects the assembly schedule of car manufacturers. In addition, since March, Jilin, Shanghai, and Guangdong have been affected by China's COVID lockdowns, leading to the shutdown or reduced production at some of the company's production bases to cooperate with the government's epidemic prevention policy.

The resulting blockade of the city's supply chain has also led to a decrease in demand on the customers' side. In addition, the market price of raw materials remains high, resulting in a loss in the first quarter.

After May, various regions have reopened and resumed work, and the operations of the company's factories have also resumed back on track. As a result, customers are expected to strengthen their efforts to pull goods in the second half of the year to make up for the production shortage in Q1. At the same time, the company actively expands electric vehicle customers, and gradually expands the supply scale of electric vehicle customers while maintaining the advantages of complete vehicle body structure parts. In terms of research and development, it focuses on the development of lightweight body structure parts and collision avoidance system parts.

Laster Tech Group representatives pointed out that the overall gross profit in the first quarter was affected by the Spring Festival in Shanghai in February and the shutdown at the end of March. However, the new car sales of major brand car manufacturers are in short supply. For example, the current sales quota of new energy vehicles in Europe and the United States of the Volkswagen Group has been sold out, and the delivery schedule of Tesla is scheduled for 2023. At present, the demand for new cars shows no signs of slowing down.

Even if there is a shortage of chips, Laster Tech Group's overall orders on hand and order visibility will not be affected. The company will continue to pay attention to the epidemic control policy and adjust production capacity flexibly to ensure that the group's operating performance and production shipments remain stable. In addition, the headlight controller produced by Taoyuan Guanyin Factory is expected to see applications increase from the current six models to 14 new models in Q3.

Guanghua emphasized that there are still risks of changes in the international situation in the market, as the strict control of COVID prevention measures has deeply impacted the supply chain, and the shortage of automotive chips remains to be solved, both affecting the company's overall revenue growth in the short term. In order to ensure smooth production and delivery, the company aims to flexibly adjust production operations and strictly implement various anti-epidemic measures in accordance with the needs of depot customers to pull goods.