Friction Products in China – an OE Market Perspective

Our new blog gives an overview of China’s automotive market, and summarizes Original Equipment brake pad developments.

1985 saw the establishment of SAIC Volkswagen Automotive Co., Ltd, the first car joint venture on the China mainland. Since then, China has continuously introduced foreign technologies to develop the automotive industry. And since the end of the 1990s, some local brand car makers have started developing independent car production, which has grown rapidly.

After the China Association of Automobile Manufacturers joined the WTO at the end of 2001, the Chinese automotive industry grew extremely quickly – in both market size and production scale. It is now fully integrated into the world's automotive industry and has become a large producer. In 2009, China’s annual automotive production and sales volume for the first time passed that of the United States, ranking it as the top 1 manufacturer in the world. It still holds this position today.

In the second half of 2018, however, China’s automotive market shrank for the first time in recent years. In 2019, it showed further negative growth. There is no sign that the slowdown will end soon, and it is now suffering from the effects of the global COVID-19 pandemic too. That makes the market even more uncertain in 2020. Experts have predicted that the negative growth will continue into the near future, and some car companies are already in crisis.

According to China News, the number of civilian vehicles in China reached 261 million by the end of 2019, including 226 million private vehicles. That basically means one car per household. However, car ownership per thousand people reached 170+ at the end of 2019 which is about 1/5th of that in the United States. So, there is still a big gap between China and many other nations. The country’s per capita income level is still far behind that of countries in the West. Moreover in tier 1 and 2 cities traffic congestion, traffic restrictions, parking difficulties, license restrictions, purchase restrictions and so on are further reducing car demand. But in the long run, with the development of China’s economy, car ownership per thousand people will continue to increase.

Passenger Car Disc Pad (PCDP) OE supplying structure

In 2019, the sales volume of each of the major car series was made up of around 35% local brands, 29% European, 28% Japanese and South Korean, and 8% American. And the major brake system producers are European, Japanese, Korean and local. So too are the main OE friction players.

Brake system suppliers differ depending on the car maker:

Local brand car makers choose mainly local, European and Korean brands. High-end car models use more European brand callipers, while medium & low-end models choose local and Korean brake system suppliers. For benchmarking car models, they will generally choose the same suppliers as do others. Local brand car makers often choose “European brand callipers + local brand brake pads” or “local brand calipers + European brand brake pads”. That is because these combinations can reduce costs while assuring good quality. As the Chinese automotive industry has developed, more and more car makers have improved their knowledge and research & development of auto parts. They not only directly nominate tier one suppliers of brake systems, but also limit the range of brake pad suppliers and even the friction material formulation. At present, though, very few car makers still directly nominate brake pad suppliers and their friction material formulation.
European car makers mainly choose European brand calipers and brake pad suppliers. Because of costs, European car makers are also starting to use Korean and local brand calipers (and Korean brake pad suppliers) for some car models. Only the very few models that are outside their production expiry dates or have been developed independently adopt local brake pads. European car makers also attach great importance to selecting their brake pad suppliers, either nominated at their headquarters in Europe or defined within a range. Friction producers who have not committed to getting the business by entering the car producer supplier system must start from benchmarking, and will find approval very difficult.
Japanese and Korean car makers mainly use suppliers from their own countries. A small number of models will of course also use European or local brand calipers and brake pads.
American car manufacturers generally choose European calipers and European, South Korean or Japanese brake pads. With increasing cost pressures, they are looking to make changes.

In short, the major OE brake pad players are still dominated by foreign brands, while local brands are gradually expanding their market share.

Technical requirements and challenges of PCDP OE

The rapid development of the local automotive industry has been achieved by continuous improvement of local car brands. At the same time, consumers are increasingly familiar with types of cars – and even auto parts. For friction materials, consumers are not only concerned about the basic performance such as braking safety and brake pad life, but also comfort requirements such as noise, judder, pedal feel, etc. Some car makers are even demanding extremely strict zero noise requirements.

A series of dynamometer tests (including friction efficiency, NVH, DTV, MPU, AMS and stiction) must be passed in early brake pad development stages. During later field tests, many parameters will be tested again one by one. Besides some closed road test sites, the Huangshan open road test site (which is very similar to Mojacar in Spain) is favoured and recognized by car makers, brake system makers and brake pad producers alike. The testing route includes mountain roads, high-speed sections and urban roads, and it can be used to evaluate specific requirements like creep groan, squeal and judder.

Friction products are at the end of the supply chain, and friction material formulation is relatively easy to change. It is therefore possible to adapt it during the road test stage if problems are found in parameters like MPU, Stiction and NVH in either the friction product itself or the brake system. In addition, friction producers are faced with repeated development and verification, because the correlation between early stage friction material development and later field testing is limited. It is also difficult for friction producers to evaluate up front how well friction material formulation matches vehicle model. For example, low-frequency noise is difficult to detect during dynamometer testing, but it often occurs in the real vehicle road test.

With people’s enhanced requirements for brake comfort, the formulation style of friction materials has changed from low-metal to predominately NAO. Only very limited low-end models and some models with large inertia from local brands will choose low-metal formulations. Japanese and South Korean brand cars mainly use NAO. European middle and low-end models use NAO, while high-end models stay with low-metal formulations. The wide application of NAO has made stiction issues and poor rotor cleanability evident. This is still a major problem that friction producers need to solve.

Governments are also increasingly demanding improved environmental performance. Asbestos has been forbidden in the PCDP market for a long time. Because of copper-free regulations in the United States, the whole world has started making copper free brake pads. In China, some car makers have started mass production using copper free brake pads, and this will continue in new projects. Although the copper-free formulation has not yet been widely implemented it is an important trend, and this R&D focus has over the past few years been the main task for friction producers. Without the high-quality and unique characteristics of copper fibres (reinforcement, thermal conductivity and wear resistance) issues like judder, wear, high and low frequency noise all come up. Copper-free formulations are essential for environmental and health & safety reasons. There are still many challenges in the research and application process, but we believe that copper-free friction materials will become more and more mature.

As a leading mineral fibre producer for the friction industry worldwide, Lapinus has thoroughly researched sustainable mineral fibres for copper-free formulations. Complying with the increased focus on health & safety and the environment, all Lapinus products are certified bio-soluble. That means they are proven to be safe to humans.

The Chinese OE market is clearly unique. The technical requirements are not only extensive but also to a very high standard. And at the lowest possible cost levels.

New Energy Vehicles (NEV)

In 2019, China’s NEV production and sales reached 1.2 million: half the global volume. With the downturn of the economy and the decline of NEV subsidies since 2018, the NEV market has lost some of its strong momentum. Consumers worry about battery life and the inconvenience of charging, which is also causing demand fluctuations. Focusing on how to improve R&D strength and make better cars is the long-term direction, irrespective of subsidies.

At present, there are more than 100 NEV brands in China, but many are unlikely to survive the move to mass production. In comparison, new energy projects from traditional vehicle producers have more advantages than the brand new NEV producers. That is because they have a sound supplier system, a good sales network and sufficient resources and experience. With Tesla locating in Shanghai, NEV producers will face more challenges and pressures.

Regenerative braking in new energy and hybrid vehicles reduces the need for braking resulting in lower wear. Combined with the lightweight requirements of NEVs, this will reduce the thickness of brake pads. And without the noise of traditional combustion engines, NEV brakes will have higher noise requirements.

If the market share of NEVs continues to increase, there will be less need for replacement brake pads, resulting in a disruption of the friction materials market. The friction industry will therefore face a reshuffle and corresponding challenges.