Winter in the auto industry will allow car companies to avoid collective panic

The automotive industry ushered in a new round of adjustment period, whether mature manufacturers can avoid collective panic

In anticipation of falling sales and hopeless long-term torturous profit, the three giants of Detroit finally touched the bottom line of the business rules. Following last year’s $25 billion government loans fell into the abyss of losses, at the end of August, they and some The parts manufacturer once again applied to the U.S. government for the same amount of secured loans. It can be imagined that in the face of losing face, the Big Three are indifferent to any news that the US market is weak.

But there is a news enough to make them wake up from the state of numbness: In the Chinese market where they have just increased investment, there have been terrible signs of decline. In July 2008, the monthly auto sales in Mainland China increased by only 3.88% year-on-year, which was the lowest point in nearly 40 months, of which the growth rate of passenger cars was only 6.79% year-on-year, and that of commercial vehicles was -3.35% negative growth. A common interpretation in the industry is that the good days for the Chinese auto market that fell in 2006 ended.

Is the industry slump really on schedule? In fact, the sales figures for the first half of 2008 are still encouraging. The cumulative sales of domestic cars totaled 5.17 million, up 17.9% year-on-year. The year-on-year increases in passenger cars and commercial vehicles reached 16.8% and 19.6%, respectively, and the growth rate did decline. Not obvious.

Only relatively lasting happiness will make people so alert to tiny bad news. In fact, over the past two years, automakers have become accustomed to the speeding sensation that sales in China’s auto market have increased by more than 20% year-on-year and profits have grown by more than 50% annually. Once this speed is slightly reduced, inertia will make the driver at a loss.

However, for the many car manufacturers who are working diligently in Risin, this kind of mentality of falling down to midwinter is not entirely unreasonable. Since the beginning of this year, all the tests that the Chinese economy has suffered have left a mark on the auto industry. The natural disasters such as freezing rain, snowstorms in the south, Wenchuan earthquake and so on have prevented a large number of products from being shipped out in time, which has had a significant impact on short-term sales. In addition, the rise in steel prices, high oil prices, the appreciation of the renminbi, and the tightening of credit have brought about a qualitative change in the macroeconomic environment in which the automobile industry is located. In particular, the negative expectations caused by the slowdown in China’s economic growth are causing the automotive industry to lose its past. Brilliance.

At the same time, at the consumer level, the actual demand for car purchases has dropped significantly as SMEs have been in trouble, real estate prices have fallen, and the stock market has fallen.

This is the current reality of China's auto consumption market. In particular, China's own-brand automakers are experiencing multiple difficulties due to declining market demand, the advent of rivals, and cost increases.

The month-on-year growth rate is continuing to decline, automobile sales have become more and more difficult, and the market share of self-owned brands has fallen from 26.28% in 2007 to 25.24%, which clearly indicates that the Chinese auto industry will end its rapid growth in the past two years. Growth, and entering a new round of adjustment period.

Of course, not all auto companies have entered the winter, and Toyota, Honda, Ford and other joint ventures in China have maintained rapid growth in the first half of the year, but this still cannot change the unfavorable expectations of the auto industry. Many analysts predict that the sales growth rate of the Chinese auto industry in 2009 may fall below 10%, so as to reach a true “bottom”.

In fact, no matter those auto companies that are in the “winter season” or those that are still in their own hands, they cannot turn a blind eye to this cyclical adjustment caused by the macro economy. Now, they must consider how to spend the winter.

Walking in a hurry

In an industry downturn, corporate turmoil is always frequent. On August 9th, Li Feng, deputy general manager of Chery Automobile and general manager of sales company of China’s own brand leader, left the company for 4 years. In the past four years, relying on Li Feng's integration of sales channels, Chery’s auto sales have grown rapidly from 100,000 units to nearly 400,000 units in 2007, achieving a breakthrough in scale.

Now, it seems like another round of reincarnation. Four years ago coincided with the depression period of China's auto industry, as the Chery Automobile sales of the industry dark horses had a serious crisis, the sales general manager has changed for a few moments and no improvement, Li Feng as the "savior" eventually let Chery's sales system on the right track . Now, Li Feng's departure has given quite a bit of speculation to the outside world. The most widely circulated argument is that Chery's sales have fallen sharply in recent months, and Li Feng has suffered tremendous pressure and left the company. However, the relevant person in charge of Chery’s general manager office denied this claim. “Li Feng's departure is a normal personal career choice, and Chery has no problem at present. In the first half of the year, sales still ranked fourth in the industry.”

However, it cannot be denied that Chery is one of the companies that has been hit a lot in this round of depression in the auto industry. According to data from the National Passenger Car Information Association, in July 2008, the sales of Chery Automobile fell more seriously, totaling 22,843 units, which was a 40% drop from June sales, and its ranking fell from the third place in June to Seventh in July. In order to cope with this situation, Chery spends heavily on Yang Bo, general manager of Brilliance International, and will be led by Yang Bo in charge of Chery's sales. Yang Bo has held senior positions in major auto companies such as FAW, FAW-Volkswagen, and Jinbei GM, and has extensive marketing management experience.

In addition to accelerating the formation of a new sales team, Chery also made price adjustments to several of its models to stimulate sales. During the Olympic Games, Chery increased its marketing efforts for numerous models. On August 18th, the price of A5, one of Chery’s main models, was reduced by 11,000 yuan. In any case, as the profits of the industry continue to decline, Chery’s pressure on the frontier is growing.

This situation reflects that the auto industry is closely related to the degree of macroeconomic prosperity. At present, the real estate prices have fallen, the stock market has fallen unilaterally, negative wealth effects have become more intense, coupled with the increasingly tense credit situation and the high interest rate of private loans, the enjoyment of residents And the desire to improve consumption is strongly suppressed.

"From the sales of 7-8 months, the sales situation in the second half of the year is definitely not optimistic." A person in charge of a mainstream car manufacturer told "Global Entrepreneur" that the entire automotive industry is now more worried about whether it can complete 1000 this year. With the production and sales of 10,000 cars, the decline in the growth rate of the auto industry is likely to last for a year or so. In 2007, the sales volume of the Chinese auto industry increased by 24%-25%, and in 2008 it remained at 12%-13%, which was a drop of almost half, and the worst in 2009. The result is that the growth rate has fallen below 10%.

Of course, he does not think that the current industry downturn will exceed 2004, and the overall sales of the auto industry are still growing. The most important thing is that the overall trend of cars entering the family will not change, but in the short term, due to the weakening of the macro economy, the development speed may slow down, which will cause pressure and crisis for many auto companies. Now every car company is aware of this, but it is not particularly nervous.

This mentality has a lot to do with the industry’s tragic experience in 2004. At that time, the situation was very similar to the current situation. Sales volume declined, inventory was overstocked, dealers' survival was difficult, and enthusiasm was low. However, today's auto companies have undergone fundamental changes, especially the relative maturity of self-owned brand companies. In such circumstances, they will not be at a loss. Everyone knows that shrinking production, sales, and selling prices, and lowering expectations, will be very effective.

However, whether this type of coping is effective is worth considering. At present, the main cause of poor sales is self-owned brand companies. Toyota, Ford and other multinational companies have maintained rapid growth in their joint ventures in China, indicating that the decline caused by the macro economy is a structural decline. The joint venture products have been adjusted. It has already been relatively competitive in terms of price, and its own brand has still not been able to make major breakthroughs in high-end and high-end products. As a result, it has gradually lost its effective means of competition.

The only thing that is commendable is Geely Automobile. This company has actively stopped production of low-end products. The painful experience of transitioning to the mid-to-high end has won time for itself. In this round of industry adjustment, Geely Automobile is a rare self-owned brand company that has not been greatly affected. Geely's sales in July 2008 increased by 40.5% year-on-year, which is the best off-season month in history.

However, for these "winners", the future is equally difficult. The rise in costs caused by inflation has not been eliminated, and the industry’s profits have been declining. The new round of competition that highlights the encirclement will inevitably lead to a new round of price wars, and the price reduction of cars in the second half of the year will be even more tragic. This will surely come from production. , Procurement, R&D, finance, and many other aspects have changed the auto companies themselves.

For them, the spring may not come until 2010. In this winter, automakers must prepare enough cotton for themselves and maintain their strength for the sprints two years later.

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