As the finale of the "Eleventh Five-Year Plan", the 8th China (Guangzhou) International Automobile Exhibition in 2010 has gathered all large and small automobile companies from all over the country.
Facing the upcoming "Twelfth Five-Year Plan", auto companies that enjoy the bullish "Eleventh Five-Year Plan" are still ambitious, intending to influence the structure of the auto industry in the next five years, such as corporate restructuring, new energy vehicles, and independent brand strategies. Show your skills on key points.
⊙Reporter Wu Qiong, Huan Lu ○Editor Wang Xiaohua
Automobile companies go to the countryside for the second time
"Go to second- and third-tier cities!" This is already a new trend in the layout of auto companies' sales network. In an interview with reporters, many senior executives of the joint venture also stated that in the future, they will follow the route of "urban surrounding the countryside", and more new sales networks will be located in second, third, and fourth-tier cities.
A big change in ten years! Recall that during the "Tenth Five-Year Plan" period, the newly born self-owned brand car companies chose the rural market where competition was not fierce, and the auto network went to the countryside. What caused the second wave of going to the countryside in China? What caused those joint ventures to target low-end markets that were once considered insufficient consumption power?
Car companies compete for low-end cities
According to the reporter's understanding, the dealers who sell the most cars each year are not necessarily in the first-tier cities. For example, Mitsubishi imported cars, Chongqing Wanbo 4S store ranked third in Mitsubishi's national sales in 2009, and this year may become the champion. FAW Toyota's largest sales dealer is in Cixi, Zhejiang.
Faced with dealers with such explosive sales, major auto companies have to re-examine the channel layout issues. Many car companies have already regarded low-end cities as important battlefields in the future. Taking imported Mitsubishi cars as an example, Mitsubishi Motors (China) General Manager Iida Kenji said that Mitsubishi Motors will vigorously expand its sales network, and strive to increase the number of dealers to 100 by the end of this year, with low-end cities as the new marketing focus.
Tian Congming, executive deputy general manager of FAW Toyota, pointed out, “At present, FAW Toyota has about 400 outlets opened. Due to the rapid start of the low-end city market, the company has focused on the development of outlets in low-end cities. In smaller markets In third-tier cities, FAW Toyota adopts the model of setting up branches to reduce the operating costs of dealers. The branches are small stores built with'mainly after-sales service and supplemented by sales'."
Shanghai GM is also planning a low-end city layout. Next year, Chevrolet will increase its dealerships from about 400 to more than 500. It plans to cover all first- and second-tier cities and most of the third- and fourth-tier cities in China. About 200 of the 500 dealership stores are satellite stores, mainly responsible for new car sales, daily vehicle maintenance and maintenance for consumers in third- and fourth-tier cities.
First-line consumption is becoming saturated
Car companies have set up sales outlets in "rural areas" because they are optimistic about the growth of consumption in these cities.
As the per capita household income in low-end cities has increased to a certain level, cars in these cities have begun to enter a private car consumption boom. First, low-end cities account for 87% of China's total population, and first-tier cities account for 8% of the country's total population. Beijing, Shanghai and other first-tier cities have more than 200 vehicles per 1,000 people, while the number of second- and third-tier cities is less than 100. This shows the consumption potential of low-end cities. Second, according to historical experience, when the average household income of urban residents exceeds RMB 6,000, the consumer demand for modern consumer goods such as air conditioners, refrigerators, computers and automobiles will show explosive growth. The average annual income of families in third-tier and fourth-tier cities reached 11,782 yuan and 8,416 yuan, respectively. McKinsey believes that now Beijing, Shanghai, Shenzhen, Guangzhou and other cities have concentrated about 30% of the country's wealthy people, but in 2015, 75% of the wealthy will live in second- and third-tier cities and some non-coastal cities.
Self-owned brand structure adjustment
On December 20th, four heavyweight models of Changan Taurus (equipped with Gallery Word of Mouth), Changan Star 2, Changan Star S460 and Changan Star 4500, made their debut on the same stage for the first time. Gong Bing, vice president of Changan Automobile Co., Ltd., told reporters that the release of these high-end mini-cars shows that Changan is actively moving up and improving its core competitiveness through product structural adjustments.
In 2011, there may be a round of fluctuations in the Chinese auto market. Luo Zhilong, executive vice president of Changan Automobile Sales Company, said, “With the expiration of preferential measures such as purchase tax, sales in the auto market next year are likely to decline steadily. Independent brands have upgraded from the original product competition to brand competition.” In this situation, Changan Automobiles will launch more cost-effective, higher-end products, and more new products to enhance the brand and expand market share.
Similarly, at the Guangzhou Auto Show, Chery Automobile also brought high-end models: Riich G5 (equipped with Gallery Word of Mouth Forum 4S shop) 2.0T automatic transmission models, of which the luxury model is priced at 152,800 yuan and the flagship model is priced at 179,800 yuan.
The question now is whether these high-end models of independent brands can be favored by the market? Can the self-owned brand car companies focus their efforts on the high-end auto market and challenge the price "ceiling" while enhancing brand image and profitability.
In this regard, according to a person from Chery Sales Company, during the "Twelfth Five-Year Plan" period, Chery's plan to build a high-end brand will not change. After the Riich brand is recognized in the domestic market, it will also go overseas. At the same time, Xie Baoxin, president of Chery Automobile Research Institute, told reporters that according to Chery Automobile’s “Twelfth Five-Year Plan”, it will take two to three years to further improve the performance and quality of Riich, so that the brand will achieve annual sales within two to three years. 100,000 vehicles. On this basis, in the next four to five years, Chery will have the opportunity to compete fully with the joint venture brand on the brand.
In addition to adjusting its product structure, Chery's overseas strategy is also actively adjusting. Jin Yibo, deputy general manager of Chery Automobile, introduced that before 2010, Chery mainly adopted a "going out" strategy, and after 2010, Chery's overseas market will mainly adopt a "going in" strategy.
In the Egyptian market that has realized its "walking in" strategy, Chery first imported through local agents, and then signed a strategic cooperation agreement with its partners to jointly produce Chery cars locally. As of now, Chery has ranked in the top three sales in Egypt, second only to GM Chevrolet and Hyundai.
Since Chery Automobile went abroad for the first time in 2001, in the first 11 months of this year, Chery’s overseas sales exceeded 83,000. It is estimated that by March next year, the total export volume will reach 500,000.
Car companies are busy overseas
With the booming sales of Chinese cars in 2010, China will be the number one player in the world for two consecutive years. After becoming the world's number one automobile consumer market, the Chinese authorities and the automobile industry have turned their attention to overseas markets. "Going global and becoming a globally influential brand" has become the "Twelfth Five-Year" goal of many auto companies such as Geely Automobile, SAIC Motor, and Jianghuai Automobile.
Chinese cars go to sea for a small test
When overseas auto giants are eager to enter the Chinese market, Chinese auto companies have already tested the overseas market
Jianghuai Automobile stated that it has formally signed an agreement with SHC, the largest car dealer in Brazil. From November 2010 to 2020, Jianghuai Automobile will sell a total of 620,000 vehicles of various types to the Brazilian market. The main products are JAC cars, MPVs, and SUVs, as well as light commercial vehicles and light trucks. According to the plan, Jianghuai will export 2,000 vehicles to Brazil's SHC in 2010, and the export volume will increase to 45,750 by 2011; by 2020, the contract expires, Jianghuai will export 72,000 vehicles to Brazil each year.
Jiang Jun, deputy general manager of SAIC Motor Passenger Vehicle Company, said, “The MG brand shoulders the important task of expanding overseas markets. Steadily advance the export plan.” It is reported that MG6 (Configuration Gallery Word of Mouth Forum) will be put into mass production in the UK in the first half of 2011; currently the MG UK plant in the UK is undergoing trial production of MG6, including the overall renovation of the factory and the increase of production equipment. .
It is not all self-owned brand car companies that are going to export. Ding Lei, general manager of Shanghai GM, said that this year, Shanghai GM's exports have achieved a leap, from exporting GM products in the past to exporting our self-developed and self-produced products, achieving a big leap from China's manufacturing export to China's R&D export. Such as the new sail (configuration gallery word of mouth forum), GL8, luxury commercial vehicles and so on. In the future, we will develop more products for export. It is reported that after the new Sail exports to Chile, it will continue to enter Latin America, North Africa and the Middle East.
Two push hands help export
What is driving China's auto export boom? According to the reporter's understanding, there are two reasons.
First, China's production capacity and low-cost advantages. According to the current plant expansion plans formulated by major auto companies, China's auto production capacity will exceed 30 million in 2015. The industry is generally worried that once China's auto demand suddenly cools down, huge production capacity will be emptied. Taking into account the high-level and low-cost competitive advantages of China's automobile production technology, the competent authorities and enterprises have considered exporting this way to reduce the risk of excessive dependence on the single market in the future.
Second, as global funds flowed to China, the competent authorities began to consider the issue of excessive foreign exchange reserves. From the competent authorities to the economics community, it has been proposed that when China's total savings are greater than the total domestic investment needs, the excess money should encourage companies to invest internationally. For the automotive industry, setting up factories overseas is an important part of international investment. Senior officials of the Ministry of Commerce have pointed out that the Ministry of Commerce will vigorously promote the facilitation of foreign investment, improve financial and taxation policies, actively participate in the formulation of international investment and cooperation rules, and promote Chinese enterprises to "go global" as soon as possible.
Although the export seems to have a bright future, there are also many difficulties. Jiang Jun pointed out, “At present, European countries have created many technical barriers, including heavy metal content standards, carbon dioxide emissions, etc. Although the overall standards (such as fuel consumption and speed) of the Chinese auto industry are not inferior to those of European and American countries, the start is still a bit late. By two years. We need to quickly complete the technical requirements that meet the product level."
The booming automotive aftermarket
If you are not on the market, you are on the way to go public; if you are not on an acquisition, you are on the way to being a shareholder. This seems to be a portrayal of China's automotive aftermarket. As China has become the world's largest automobile consumer market, the after-sales service market has opened up. Automobile dealers and the used car market have become hot spots for investment. In 2010, many auto companies went to Hong Kong and the United States to go public, and Soros also bet on China's Zhengtong Auto.
Car dealers scramble to go public
In 2010, Chinese auto dealers went to follow-up overseas IPOs. From Dalian Zhongsheng to Zhengtong Automobile to Beijing Liantuo Group. Luo Lei, deputy secretary general of the China Automobile Dealers Association, said that many car dealers are already preparing to go public, and more car dealers will be listed at home and abroad in the future.
Like BYD Auto, the vehicle company that Buffett’s gold finger pointed out, George Soros, the financial crocodile, has taken a fancy to Chinese car dealers. On December 10, China Zhengtong Automobile was listed in Hong Kong with an issue price of HK$7.3. It is reported that the fund managed by Soros invested US$50 million to participate in Zhengtong Auto. Soros's favor has made Zhengtong Auto very popular. KGI Securities pointed out that the issue price of Zhengtong Auto is equivalent to about 45 times the 2010 P/E ratio, which is higher than similar stocks.
Also listed on December 10 is Beijing's Liantuo Group. Liantuo Group became the first auto dealer group to be listed on the New York Stock Exchange. Although Liantuo Group ranks inconspicuously in China and only ranks first in Beijing, this does not affect its financing. According to relevant information of Liantuo Group, the fundraising exceeded 300 million US dollars.
The concept of auto dealership is sought after by the securities market, partly benefiting from the demonstration effect of Dalian Zhongsheng. On March 26 this year, Dalian Zhongshengdian made the first shot of dealers' listing. According to the plan, Dalian Zhongsheng will issue 286 million shares, about 89.3% of which will be placed internationally and 10.7% will be offered for public offering at an issue price of HK$10. But eight months later, Dalian Zhongsheng's share price rose to HK$22.2, an increase of 122%.
The corps to be listed is huge. Dingsheng Tiangong's announcement shows that China Jinqi Auto Trading intends to backdoor Dingsheng Tiangong to land in the A-share market. Zhongjin Automobile Trade is the largest imported automobile dealer in China, and it has 18 wholly-owned or controlling automobile 4S stores. In addition, Pangda Group, Guanghui Automobile and Yanbao Group have all entered the countdown to listing. The sales revenue of Pangda Group and Guanghui Automobile in 2009 was 35.5 billion yuan and 32.5 billion yuan respectively.
It is reported that the enthusiasm for auto dealers to go public comes from future financial pressures. As the main battlefield will shift from Beijing, Shanghai, Guangzhou and Shenzhen to second- and third-tier cities in the future, opening new dealerships will require huge amounts of capital. In second- and third-tier cities, not only the cost of land rental, but also labor costs and shop building costs are also rising. If only relying on the rolling accumulation of sales of cars, it is difficult to quickly seize the hilltops of second- and third-tier cities. Luo Lei said that with the advent of auto dealers’ rush to market, auto dealerships will also enter a large-scale era, and small and incapable dealers will be annexed.
Vehicle companies intervene in second-hand car competition
Tian Congming, executive deputy general manager of FAW Toyota, said that the second-hand car market is promising in the future, and FAW Toyota is paying attention to this market opportunity. Many auto companies have already moved into the second-hand car business. SAIC Motor even regards second-hand cars as an important business in the field of automobile services, and Shanghai GM is also aggressively advancing into the second-hand car business. A second-hand car battle involving OEMs seems to be about to start.
It is understood that the involvement of OEMs in the used car market is divided into two types. The first is to establish a used car business company. For example, Shanghai General Motors established Chengxin Second-hand Car Management Co., Ltd. with a registered capital of 35 million yuan. In 2011, it plans to build 4 stores in China; a network of about 20 used car stores will be formed in the next 5 years. SAIC Sales launched the Anji second-hand car brand, which integrates auto sales, brokerage, replacement, auction, and evaluation. The second type is to establish a used car brand and conduct the used car business of this brand in a traditional 4S store. Such as FAW Toyota. Tian Congming said, "We are very optimistic about second-hand cars. At present, we mainly do basic second-hand car work. FAW Toyota has more than 280 second-hand car marketing stores, and the construction speed will be accelerated in the future."
When talking about the prospects, Tian Congming said, “In the United States, second-hand cars have become the third largest revenue pillar of dealerships. Last year, second-hand car sales in US dealerships accounted for approximately 30%. The same is true in Japan. Getting started. The situation of second-hand cars in the United States and Japan may be our tomorrow." Luo Lei pointed out that the "Twelfth Five-Year Plan" will be a period of rapid development of second-hand cars. The ratio of China's second-hand car transaction volume to new car sales is 1:4, which is far lower than that in mature foreign markets. In the latter, the ratio of used cars to new cars is 2:1 or 3:1. With the growth of China's car ownership, the second-hand car market transaction volume will directly point to tens of millions of vehicles.