Continue to collect idle production capacity, and the new "takeover man" Great Wall Motors is preparing for 4 million vehicles

Economic Observer reporter Zhou Jujili won the title of the strongest "receiver" in 2020 for restructuring marginal enterprises and consolidating idle production capacity. In 2021, this title may be "robbed" by Great Wall Motors.

The latest news shows that Great Wall Motors is taking over Hanlong Automobile, a subsidiary of Zotye. Public information shows that the recruitment work of Great Wall Motor in Hubei Daye, where Hanlong Automobile is located, has been started, and the transformation projects of Great Wall Motor's Daye Plant, Factory 1 and Factory 2 are being tendered, which is regarded as a signal for the "restart" of the Dazhi Hanlong Factory. At the end of 2020, the red-headed document marked "Hanlong Zhengfa" on the Internet showed that Hanlong Automobile stopped work and production due to serious operational difficulties.

On December 29, 2021, the Economic Observer reporter interviewed the public relations person of Great Wall Motor on the relevant matters of the Great Wall's revitalization of Hanlong Automobile, but did not receive a reply as of press time.

In fact, as early as October 2021, the Great Wall and the Daye People's Government signed a low-key "Vehicle and Parts Project Cooperation Framework Agreement", according to the agreement, the Great Wall will use the former Hanlong Automobile Plant as a base, integrate existing resources, revitalize existing assets, and is expected to be reloaded and put into production in January 2022, and the first vehicle will officially roll off the production line in May.

It is worth noting that if it were not for the intervention of Great Wall Motors, Hanlong Automobile, which has a weak sense of existence, may not have received attention. According to the data, Hubei Daye Hanlong Automobile was established in January 2016, registered assets of 1 billion yuan, as a branch factory of Zotye Automobile, once produced Zotye models. In 2019, Hanlong Automobile spun off from the Zotye system with capital chain problems and launched its first model, Hanlong Kuangshi, but the car sold very little due to the appearance of "cottage" and quality issues.

In addition to Hanlong Automobile, there are also a number of factories that have been discontinued or are on the verge of stopping production, which have been acquired by Great Wall Motors. Before taking over the Hanlong plant, Great Wall Motors had already reorganized the Cheetah Jingmen Factory and the Hanteng Shangrao No. 2 Factory. The Great Wall has become the main force in cleaning up the domestic inefficient automobile production capacity.

Before taking over these spare capacities, Great Wall Motors already had multiple production bases. According to public statistics, Great Wall Motors' current production capacity has reached about 2.5 million units. In 2020, great wall sales will be 1.1 million vehicles per year. In 2021, the Great Wall has set a target of 4 million vehicles per year in 2025, which has become the most reasonable explanation for its frequent purchase of factories. However, how to quickly absorb and utilize these newly acquired production capacities will become a problem facing the Great Wall.

Frequently take over idle factories

Before Hanlong Automobile, Great Wall Motors had already laid out production capacity in Hubei. At the end of 2020, Great Wall Motor announced that it had officially acquired Jingmen vehicle production base, that is, Cheetah's Jingmen plant. Cheetah Motors has fallen into an operational crisis in recent years, and the factory has also begun to be disposed of, of which the Changsha factory was entrusted to Geely's custody and the Jingmen factory was handed over to the local government. Later, great wall cooperated with the local government to take over the cheetah Jingmen factory.

After being taken under the command of the Great Wall, the Cheetah Jingmen Factory has been revitalized. According to the data, after the transformation of the Jingmen factory, the Great Wall put into production its hot product Tank 500. The latest data shows that the number of valid orders on the first day of the tank 500 pre-sale exceeded 22,000, and as of November 30, 2021, the cumulative number of orders exceeded 40,000. In addition to the tank 500, the Jingmen factory also produces P04 and P05 pickups, as well as two MPV and the yet-to-be-launched tanks 700 and 800. The production capacity of 120,000 units may be insufficient.

In Daye, 350 kilometers away from Jingmen, Great Wall Motors reached a cooperation with the Daye Municipal Government to pocket Hanlong Automobile's production capacity. According to the data, the Hanlong factory has four major processes of stamping, welding, painting and assembly, and there is also an engine factory with a planned production capacity of 100,000 units, which can be further improved after transformation and upgrading. For the Daye Municipal Government, it also hopes to have the entry of large automakers, revitalize the hanlong automobile that has been discontinued, and enhance the local automobile industry.

According to relevant media reports, Great Wall Motors only acquired production capacity for the Hanlong plant this time, and will not participate in the company's deeper level. In this cooperation, Great Wall Motors chose to sign a contract with the Daye Municipal Government instead of directly signing a contract with Hanlong Automobile, one of the reasons is that Great Wall Motors does not want to involve subsequent debt repayment problems, that is, only buy factories and do not take over debts. Previously, Hanlong Automobile has been exposed to problems such as arrears of employee wages, and the specific amount is unknown. Zotye Automobile, the parent company of Hanlong Automobile, is in the stage of bankruptcy and restructuring.

According to official sources, since December 2021, Great Wall Motors has conducted four rounds of interviews at the Dazhi City Public Employment Service Center, employing a total of 224 people. The recruiting companies are Great Wall Seiko, Honeycomb Power and Ant Logistics, and the three subsidiaries are responsible for the body, power system and logistics of Great Wall Motors. Among them, the employees hired by Great Wall Seiko will go to The Jingmen factory for 4-6 months of technical training after entering the company. According to the media quoted the recruitment department as saying, the recruitment of the Great Wall vehicle business is about to start, and the talent gap is about 2000-3000 people.

First Jingmen, then Daye, frequent production capacity layout in Hubei, it is believed that Great Wall Motors has taken a fancy to Hubei's automobile supporting capabilities. As the fourth largest automobile production base in China, Hubei not only has a number of companies under dongfeng group, SAIC-GM plant, but also many parts companies. In addition, Hubei has a unique location advantage, logistics and transportation is very developed. Some media quoted sources as saying that Great Wall Motor's Chongqing Yongchuan base also intends to transfer some products to Hubei production.

In addition, in June 2021, Great Wall also signed a contract with Jiangxi Shangrao Economic and Technological Development Zone to incorporate the second phase of Hanteng Automobile's factory into its production layout. Due to poor operating conditions, Hanteng Automobile has previously stopped production. It is reported that based on the production base of Shangrao Economic Development Zone, Great Wall Motors will mainly produce Haval brand SUV models, and will form a production capacity of 120,000 SUV vehicles per year in the future, and invest in the construction of supporting projects such as interior and exterior trim, seats, chassis and 150,000 units / year engine.

Private autonomy "one brother" dispute

If the production capacity of Hanlong Automobile is added this time, Great Wall Motors will form 11 major production bases in China, which are located in Baoding, Hebei, Xushui, Tianjin, Shandong Rizhao, Jiangsu Taizhou, Jiangsu Zhangjiagang, Zhejiang Pinghu, Chongqing Yongchuan, Hubei Jingmen, Hubei Daye and Jiangxi Shangrao. According to available data, the total production capacity of these bases has exceeded 2.5 million vehicles. This is not counting the production capacity of the Zhangjiagang base of the "beam car" joint venture between Great Wall and BMW.

In 2013, Wei Jianjun, chairman of Great Wall Motors, said that Great Wall Motors would base itself on Baoding and Tianjin in terms of production expansion, and would not build new factories in other regions. However, in recent years, Great Wall Motor's production capacity layout strategy has changed significantly, and in addition to Baoding and Tianjin, it has extensively involved in the central and eastern regions and the southern region.

Great Wall Motors is obviously laying out production capacity ahead of schedule. In 2020, Great Wall Vehicles sold a total of 1.11 million units, and in this figure, the capacity utilization rate of its reserves is less than half. In this case, the series of moves by the Great Wall is considered to be preparing for the sales target.

In June 2021, the Great Wall announced its strategic goal for 2025, that is, to achieve annual global sales of 4 million vehicles by 2025, of which 80% will be new energy vehicles, with operating income of more than 600 billion yuan.

This target is considered more radical. If Great Wall Motor's sales and revenue in 2020 are taken as the benchmark, in order to achieve the strategic goal of 2025, Great Wall Motor's annual compound growth rate of automobile sales from 2020 to 2025 needs to reach 29.09%, and the compound annual growth rate of revenue should reach 42.17%.

In order to achieve the strategic goal of 2025, Wei Jianjun has said that Great Wall Motors will adhere to "excessive investment" and is expected to invest a total of 100 billion yuan in research and development in the next five years. Nowadays, it seems that the Great Wall has increased investment in production capacity and needs to continue to expand.

From the overall horizontal perspective of the industry, Great Wall Motor's expansion of production capacity is also to meet the needs of market competition. Before 2014, Great Wall Motors stabilized the throne of its own brand car companies (Note: Changan Automobile was also the sales champion for a period of time, but Changan belonged to the central enterprises), but since Geely's annual sales exceeded the Great Wall in 2017, Geely's monthly sales have overpowered the Great Wall for a long time. Since then, the Great Wall and Geely have gone up and down in single-month sales, which has made the "one brother" dispute between Geely and the Great Wall become the focus of continuous attention in the industry.

Based on this, it is considered more necessary for the Great Wall to prepare early in production capacity. In fact, Geely Automobile is still expanding its production capacity through restructuring and acquisition with a total domestic production capacity of about 3 million units. In addition to the Great Wall and Geely, a number of independent brands are accelerating reserve production capacity, such as BYD also took over the production base of Mahayana Automobile in Fuzhou this year, and the production capacity armament race of "Wei Xiaoli" in new car manufacturers is also continuing.

In the case of overall overcapacity in the automobile industry, as the concentration continues to increase, production capacity is also concentrated in the head enterprises represented by the Great Wall and Geely. On the one hand, this is in line with the policy of encouraging the automotive industry to solve backward idle production capacity through mergers and acquisitions, thereby improving the overall utilization rate of the industry, and at the same time helping head enterprises to quickly achieve production capacity landing. It can be expected that the competition of the head enterprises marked by the production capacity reserve armament race may become more intense.