In order to reduce operating costs as much as possible in the depressed market, layoffs and cuts in aggressive business may be the pain that many auto parts companies have to accept in 2016. Since 2015, many parts and components companies have reported the news of salary reductions and layoffs. Some companies may voluntarily perform their duties, while others may take the initiative to reduce their salaries and adjust their management methods in the past.

The drastic decline in the commercial vehicle market, especially the truck market, in recent years has brought unprecedented difficulties to diesel engine and other commercial vehicle parts and components companies. Since May of last year, the actual production of most diesel engines has continued to increase from the original target. Yu Ping, chairman of Yuchai, said in an interview with reporters that Yuchai’s product lines in the past were large and complete, and will focus on high-end resources in the future. Not only will the product line be adjusted, but staff distribution mechanisms will also change greatly. It is understood that Yuchai has started a series of internal transformations since 2014, and the corporate management system has been flatter than before. Last year, the company’s victory reduced the original 13 management lines to six, and the streamlined management brought more efficient management mechanisms and faster market resilience. According to the reporter’s understanding, Yuchai’s streamlined staff has expanded to include thousands of people, including management personnel and front-line employees.

Facing the decline of the heavy machine market, Weichai Group will focus on streamlining loss-making enterprises, turning off non-strategic businesses, moving to the high-end market, strengthening collaboration among businesses, and fostering strategic emerging businesses. According to the information provided by the insiders of Weichai, in addition to light diesel engines, the profit contribution rate of the diesel engine business of Weichai vehicles continued to decline. The Group accelerated the consolidation of various business segments and will cumulatively streamline 12% of management personnel.

In the diesel engine industry, the upgrading of emission standards has prompted engine companies to accelerate the elimination of backward production capacity and reshuffle the industry. People in the industry believe that with the implementation of the Five National Emissions, the engine industry is likely to shuffle again. According to Zhu Guo'an, director of the marketing center of Jiangxi Isuzu Engine Co., Ltd., the simplest and most powerful strategy is a temporary strategy adopted by diesel engine companies to respond to market changes. The adoption of a series of measures to reduce expenditures and accumulate more profits is to accumulate R&D funds for the upgrading of product emissions, and provide greater room for the development of the country’s five aircraft types.

In other subdivided parts and components markets, there are also many parts and components companies that have proposed measures to improve the quality of government. In contrast, tires and wheel companies are under greater pressure. The tire and wheel industry is the auto parts industry with the most overcapacity in recent years. In 2015, many tire companies had less than half of the operating rate. The increase in manpower cost and raw material costs, and the impediments to entry business caused the company’s profit accumulation to continue to decrease. Large-scale enterprises reduced the composition of staff and total business volume, and increased the proportion of domestic sales, making it difficult for local SMEs to cope with market changes or even to close down. Wang Xiaodong, deputy secretary-general of the Wheels Committee of the China Association of Automobile Manufacturers, said: The overcapacity in the wheel industry is mainly expressed in the relatively low-end products in the retail market, and these products will gradually be eliminated in the competition.