BEIJING, July 12 /Xinhua-PRNewswire/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (HKSE: HK08235), analyzed the reasons of the TPMS market dilemma and raises suggestions of developing the TPMS market.
Following its fast growth in 2005, China’s auto industry reached a new high in 2006. For the whole year, auto output reached almost 7.30 million, up by almost 20% over 2005. Driven by a fast-growing auto industry, China’s auto electronics market has also grown rapidly, with sales revenues reaching 86.76 billion Yuan in 2006.
With the development of the auto industry, auto product upgrading has also continuously gathered pace in China. The percentage of auto electronics has been rising all the time. This indicates the acceleration of the overall pace of the auto electronics upgrading industry. All varieties of auto electronics have penetrated on a big scale in homemade autos, like EMS, ABS, gasbag, etc. Those products have reached a very high percentage of equipping rate in home-made autos, especially in sedan cars. The tire pressure monitoring system (TPMS), a product that can improve auto safety effectively, has gradually started to rise in the Chinese market in the past few years. Currently, the market has attained a considerable size. In 2006, almost 340,000 TPMS were sold in China, generating 650 million Yuan in sales revenue. Compared with 2005, both figures have grown significantly.
(Photo: http://www.ccidconsulting.com/upload/11662.jpg
(Caption: Fig. 1 Size of China’s TPMS Market, 2002-2006; Source: CCID Consulting, January 2007)
A few years ago, TPMS attracted the attention of numerous firms in the industry. Particularly after it became widely used in Europe and America, many local firms have entered the TPMS industry. At one stage, a TPMS fever emerged in China, with almost 100 enterprises involved. A few years on, the TPMS market has maintained a rather fast growth momentum. However, the large-scale blowout penetration of TPMS expected by many people has not emerged. In 2006, only a few high-class cars of all locally cars in China were equipped with TPMS. These included BMW, A6L, Crown, Royaum and LaCROSSE. Only 5.7% of China’s local cars were equipped with TPMS. The main reasons for the dilemma facing China’s TPMS market include the following:
1. Currently, China has no preferential policies towards TPMS. In the
U.S., the preferential policies towards TPMS contribute largely to the
penetration of TPMS products and the compulsory policies set by
the government directly pushed the penetration of TPMS products.
There is a direct link between the penetration of many electronic
products and State policies. For example, China’s ABS requirement
for heavy trucks has directly pushed forward the penetration of ABS.
The country’s rising emission standards have also forced the full- scale equipment of EMS in all locally made automobiles. However,
there are no corresponding policies for TPMS. The market still needs
time to build up to explosive growth.
2. Lack of standards restricts market growth. Currently, China does not
have a unified industry standard for TPMS. The local industry is
also in a state without demand. Though many firms can produce TPMS,
limited market demand means that many firms do not meet their
production capacity and many plants only produce several hundreds
sets of TPMS a year, some even less. To a certain extent, TPMS has
become a "sideline" for many firms.
3. The market demand is not as urgent as people have expected. TPMS is
indeed a product with tremendous market potential and we can affirm
that TPMS is bound to be the standard equipment for locally made
autos in the future. However, Chinese consumers have not yet shown a
great enthusiasm for it at present. There are many reasons for this,
such as lack of industry standards, chaotic post-installation
product market, insurance compensation claim obstacles and auto
reconstruction cost. In addition, Chinese consumers have different
vehicle usage habits from their European and American counterparts,
which to an extent restricts the TPMS market demand.
In conclusion, Chinese TPMS market indeed faces some problems. When can this potential market blow out? Is the state compulsory policy the only rescue boat? In fact, it is not true that China does not have the environment or conditions for the TPMS market to grow fast. It is only certain problems still need to be solved:
Firstly, unify industry standards, and create an orderly market. From the technical perspective, because most local TPMS firms adopt chips and mature solutions from Infineon and Freescale, product design and manufacturing are not so difficult. However, it is precisely because TPMS products do not have a high technology threshold, numerous firms have entered the field, resulting in a disorderly industry. Currently, most TPMS firms in China are concentrated on direct-type TPMS products, which are mainly for the post-installation market. Because only a few homemade luxury cars are equipped with TPMS, the post-installation market can precisely become an explosive growth point for China’s TPMS market. Because post-installed products are directly facing end consumers, the only way to raise consumer’s recognition of TPMS products is to unify industry standards and build an orderly market.
Secondly, change the way of thinking and grasp the true demand for TPMS. It is different from Europe and America that many private auto consumers in China drive mostly in the cities instead of on highways. Therefore, consumers do not regard TPMS as a necessity. Compared with private cars, lorries,
long-distance passenger vehicles and public transport vehicles have heavy loads. Their tires also bear bigger pressures, and the probability of tire fault is also bigger. In addition, long-distance lorries and passenger buses also need to travel in highways from time to time. So, equipping TPMS can play a role for these types of vehicles. Given this, long-distance passenger vehicles, lorries and buses are very likely to become the carrier for the large-scale application of TPMS. These vehicles face greater tire fault dangers, and tire problems may cause greater damage and losses to them. If the State introduces compulsory policies, these types of vehicles also look to be the most likely targets for compulsory TPMS applications.
Thirdly, strengthen cooperation with local automakers, and lead the way for China’s TPMS market. For local TPMS firms, it will not be easy to enter foreign car makers’ pre-installation supplier list. This is particularly the case of spare parts for high-class automobiles. Under such a situation, local TPMS firms should strengthen cooperation with local automakers. Such cooperation will not only push forward market development but also introduce TPMS into middle-class cars and usher TPMS products into an era of full-scale penetration.
In a word, while China’s TPMS market faces many problems at present, its overall development direction will not change. When the above problems, particularly the policy and standards problems are solved, all the other problems can be readily addressed. Like auto sound systems and in-board GPS, TPMS is bound to become a new star in China’s in-board electronics market. Meanwhile, it will also become an important staring point for local firms to set up their efforts.
About CCID Consulting
CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company’s business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
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CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com .
