Be Aware of the Sudden Rapid Spike in Market Demand of Auto Parts

Published In: Sourcing TipsCreated Date: 2021-03-16Hits:1486

Recently some customers are placing a much larger order quantity (about 3-4 times) than their normal order. And according to my experience, it should not be a good situation, it may be very bad.

 

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1. The Chinese New Year is just over, many importer customers in the market are out of stock, and their distributors are pushing them for goods. and every distributor will ask for goods from many different importers like the picture shows below.As we can see in the picture, actually, the distributor A,B,C only need 100 pcs, and a total of 300 pcs, while when it comes to the factory, it becomes 900 pcs. So we think after 1-2 months when the factory shipped these 900pcs goods to market, every importer will be full of stock and difficult to sell out.

2. The reason that some importers are selling so good recently is their competitors are out of stock, and all the distributors are buying goods from the importers who have stock, which gives them a misconception that the auto parts market is getting so great. While the reality is all importers are starting to import goods from China now and they will get their goods after 1-2 month, at that time, every importer will have enough stock, and their sales quantity will reduce because of competition.

3. We have got the feedback from our factory suppliers that they have so many orders to fulfill, the leading time has been extended to 2-3 month (normally it's only 15-30 days). which makes me more nervous because the long leading time increases the stock risk and price risk (the material price is very high now, and many customers are purchasing auto parts with a high cost, what if the material price drops within the next 2-3 months? the customers will get a high price product when the price should be low).

So we suggest you should be aware of this sudden increase of market demand, and do some investigation, find out what the reason is. After you confirm everything is fine, then place the order boldly.

By Andy Han

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