The restriction on the joint venture share ratio is officially released from today to take stock of the independent brands of the six major car companies

Recently, the National Development and Reform Commission and the Ministry of Commerce issued the Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition), which, in accordance with the regulations, from January 1, 2022, will abolish the restriction on foreign ownership in passenger car manufacturing and the restriction that the same foreign investor can establish two or less joint ventures in China to produce similar vehicle products. This means that the red line of the joint venture that has lasted for more than 20 years with a foreign equity ratio of no more than 50% has disappeared, and foreign investment in automobiles will be fully opened.

"Almost all foreign companies are 'ready to move', including ours." An executive of a joint venture luxury car company told reporters. The reporter learned that multinational companies, including Volkswagen, BMW, Kia, Ford, Audi, and Stellantis, have begun or completed negotiations on the adjustment of the share ratio.

In the past 20 years, under the industrial policy of market for technology, foreign car companies have entered the Chinese market through the establishment of 50:50 joint ventures with large domestic automobile groups. The profit feed of the joint venture has enabled the domestic automobile company to get rid of losses, have funds to invest in autonomous passenger cars, and bear the continuous losses of the autonomous passenger car business.

However, the autonomous passenger car business of large automobile groups has not fully blossomed, and some automobile groups enjoy huge profits from joint ventures to maximize market benefits, but they have not focused on the independent development ability of enterprises. The independent passenger car business is a "unable to support Adou", with a strategy that continues to swing, low sales, and long-term losses.

With the rapid erosion of the market share of fuel vehicles by smart electric vehicles, how should those automobile groups that have lost joint venture profits and have weaker independent businesses respond to the post-joint venture era of equity ratio liberalization?

At this historical time node, the first financial reporter sorted out the composition of the independent and joint venture sales, revenue and profit of the six major automobile groups. It should be noted that due to the difference in the statistical caliber and time node disclosed by each company, and the fact that some companies are not listed as a whole, it is impossible to calculate the revenue and profit data in detail, this article will focus on the statistics and analysis of the structural proportion of the independent and joint venture business, rather than the specific sales volume or profit figures.

FAW Group: Self-owned sales accounted for 24.18%

According to the China Automobile Association, in the first 11 months of this year, FAW Group's Sales of Chinese brand vehicles was 757,000 units, of which 332,000 were self-owned passenger cars, while FAW Group's overall sales volume was 3.131 million units in the same period, and Chinese brand car sales accounted for 24.18%.

Since Xu Liuping took up the presidency of FAW Group, FAW Group's autonomous passenger car business has made rapid progress, and in 2021, Hongqi's sales exceeded 300,000 vehicles, an increase of more than 50% year-on-year, and Hongqi's sales in the past four years have increased by 63 times.

In terms of joint ventures, Volkswagen has frequently moved and attracted much attention. In 2014, Volkswagen tried to increase its stake in FAW-Volkswagen. In December 2020, Volkswagen took a different approach, increasing its stake in JAC Volkswagen to 75%, and the joint venture was officially renamed "Volkswagen Anhui", which is also the highest proportion of Volkswagen's three vehicle joint ventures in China.

On January 18, 2021, Audi, Volkswagen and FAW Group jointly announced that the Audi FAW BJEV joint venture will settle in Changchun, and Audi and Volkswagen will hold 60% of the shares of Audi FAW. Audi FAW will be responsible for the production of pure electric models on the Audi PPE platform in China, and the PPE platform is a high-end electric platform jointly developed by Audi and Porsche. The Audi FAW BJEV joint venture became the second foreign-controlled new energy vehicle joint venture.

SAIC Motor: 52.6% of its own sales

According to the data independently disclosed by SAIC Motor, SAIC Motor sold 4.8024 million vehicles in the first 11 months of this year, and with the addition of the Wuling brand, the sales volume of its own brand cars was 2.5261 million units, accounting for 52.6%.

According to SAIC's 2021 semi-annual report, sachinia's total operating income in the first half of last year was 366.09 billion yuan, of which SAIC Volkswagen was 65.922 billion yuan and SAIC-GM was 79.292 billion yuan, and the operating income of the two joint ventures accounted for 38.76% of SAIC's total operating income. In addition, in the first half of last year, saic motor group net profit was 13.314 billion yuan, and saic volkswagen and SAIC-GM two companies net profit was 5.206 billion yuan, accounting for 39.3%.

Among the state-owned car companies, SAIC Motor's autonomous passenger car business is generally in the forefront, with saic passenger car companies' cumulative sales of 695,500 units in the first 11 months of this year, an increase of 25.45% year-on-year. In the field of intelligent electric vehicles, SAIC Motor, Alibaba Group and Zhangjiang Hi-Tech jointly established SAIC Zhiji. In addition, SAIC motor also invested in the establishment of Feifan Automobile Technology Co., Ltd. to enter the high-end intelligent electric vehicle market.

Dongfeng Motor: Self-owned sales accounted for 30.68%

A few days ago, Dongfeng Motor Group held a working meeting in advance for 2022, disclosing that the total sales volume in 2021 is estimated to be 3.4 million units, according to the sales performance of its disclosed subsidiaries. In 2021, Dongfeng Motor Group sold 525,000 autonomous passenger cars and 518,000 commercial vehicles.

It is worth noting that Dongfeng Motor Group has also counted the passenger car performance of Chongqing Xiaokang Company, which holds a shareholding ratio of 27%, to the group. If this part is excluded, Dongfeng Motor's sales of autonomous passenger cars are about 400,000 units.

Among the three major automobile central enterprises, Dongfeng Motor's autonomous passenger car business has lagged behind Changan Automobile and FAW Group significantly. Although the total number of Dongfeng autonomous passenger cars seems to exceed 500,000, no single company has sold more than 150,000 vehicles, and the layout of autonomous passenger cars is scattered and weak as a whole. Its core autonomous passenger car unit, Dongfeng Fengshen, sold more than 120,000 units in its 14th year of existence.

Changan Automobile: Self-owned sales accounted for 76.86%

According to the data independently disclosed by Changan Automobile, in the first 11 months of this year, Changan Automobile's overall sales reached 2.1225 million units, of which more than 1.63 million Chinese brand cars and more than 1.12 million independent passenger cars were sold, accounting for 76.86% of independent sales. In the same period, the cumulative sales of the two major joint ventures of Changan Ford (including domestic Lincoln) and Changan Mazda were 392,000 units, accounting for 18.47%.

According to Changan Automobile's semi-annual report, Changan Automobile's net profit in the first half of last year was 1.73 billion yuan, and the total net profit of the two joint venture passenger car companies was 643 million yuan, accounting for 37.16%.

Among several state-owned car companies, Changan Automobile is not only the only state-owned car company that has sold more than one million independent passenger cars, but also the only large state-owned automobile group with a continuous positive net profit for its own business in the past few years, and the profit contribution of its own business has exceeded that of the joint venture sector in some years.

Changan Automobile's shortcomings lie in new energy vehicles, in the first 11 months of this year, Changan new energy vehicle sales of 93,500 units, although the year-on-year increase of 249%, but its business volume in the overall industry trend is in a relatively backward position. In addition, Changan Automobile's high-end intelligent electric vehicle business is still blank, and Avita Technology's first car will be delivered by the second half of 2022.

In 2022, Changan Automobile will launch three new energy vehicle products, some of which come from the CHN architecture jointly developed by Changan, Huawei and CATL.

BAIC Group: 5% of its own sales

BAIC Group did not disclose the group's sales, revenue and profit data as a whole. According to BAIC Motor Group's listed company, Baic Motor Co., Ltd. (hereinafter referred to as "BAIC Motor"), the sales volume and profit contribution of the joint venture company are about 95%. BEIJING MOTOR includes three major segments: Beijing Hyundai, Beijing Benz, Fujian Benz and its own brands.

According to the financial report for the first half of 2021, BAIC Motor's revenue in the first half of the year reached 90.38 billion yuan, an increase of 16.1% year-on-year, and the net profit was 2.76 billion yuan, an increase of 163.5% year-on-year. Among them, the revenue of Beijing Benz reached 88.06 billion yuan, accounting for 97.4%, and the revenue of independent brands was only 2.32 billion yuan, down 21.0% year-on-year.

In terms of sales, Beijing Benz sold 316,000 units in the first half of the year, an increase of 17.0% year-on-year, while Beijing brand sales were only 28,000 units, down about 20% year-on-year. In addition, Beijing Hyundai's wholesale sales were 194,000 units, and Fujian Benz's sales were 19,000 units, accounting for about 95% of the joint venture's sales.

GAC Group: 20.82% of its own sales

According to the data independently disclosed by GAC Group, the group's total sales in the first 11 months were 1.9107 million units, of which 1.5091 million units in the joint venture sector, accounting for 78.98% of sales, and the sales of autonomous passenger cars were 397,800 units, accounting for 20.82%.

In the first half of last year, the total revenue of GAC Group was 204.282 billion yuan, and the total revenue of 6 joint ventures, including GAC Toyota, GAC Honda, GAC Mitsubishi, GAC FCA, GAC Toyota Engine, etc., was 132.595 billion yuan, and the revenue of major joint ventures accounted for 64.9% of the group.

Among several state-owned enterprises, although the total number of independent passenger cars of GAC Group is not high, the performance of a single company is relatively impressive. In the first 11 months, GAC Motor Passenger Vehicle Company sold 292,100 units. In the new energy sector, GAC Aean sold 105,700 units in the first 11 months, an increase of 102.26% year-on-year, ranking high among local car companies.

In terms of mixed reform, the pace of GAC Group is also relatively fast. At the end of last year, GAC Ae's mixed reform project was publicized, and Feng Xingya, general manager of GAC Group, said in an interview with the media that GAC Aeon's plan for employee shareholding has been done, and it is expected that employee shareholding can be completed before the end of 2021, and in 2022, it may complete the mixed reform and choose the opportunity to go public. At present, the state-owned shareholding ratio of GAC Aean is about 50%, and it may drop to 20% to 30% after the mixed reform.

"In the new energy automobile industry, capital and talent are two major factors interrelated. If there is no mixed reform, the interests of employees, especially the interests of backbone employees, are difficult to combine with the development of enterprises, and it is not enough to rely on salary incentives alone. Feng Xingya said.