Author: Zhang Dayan
Looking at the global auto market, China's auto market has always had a very big charm.
With a huge market size, it not only firmly occupies the throne of the world's largest car market, but also walks in the forefront of the world in electrification transformation in recent years, attracting major car giants to launch their most advanced new energy models.
However, since the second half of 2018, the domestic auto market has suddenly lost its double-digit growth rate in the past, and the overall auto market has entered the "new normal" like our economy. The next most distinctive feature of the "new normal" is that the continuously high capacity vacancy rate in China has become the sword of Damocles hanging over the head of China's auto industry.
In 2021, on the one hand, although the domestic automobile market has basically got rid of the impact of the epidemic, the chip crisis throughout the year has led to the loss of a lot of production capacity by many OEMs; on the other hand, a large number of previously planned production capacity has begun to be put into operation, and the domestic automobile market has not ushered in the expected recovery growth in the post-epidemic era. Therefore, in 2022, the contradiction of vacancy capacity in the domestic automobile market will be more prominent, and this will also force the main engine factory to completely solve this problem.
The problem of overcapacity is getting worse
According to the relevant data, we found that the domestic automobile capacity utilization rate has decreased from 65.5% in 2017 year by year, and the problem of overcapacity continues to show signs of deterioration.
Capacity utilization rate is an important indicator to determine whether a car company can make a profit, the construction of an oem containing four major processes investment is often billions or even tens of billions, and this later period is needed to gradually dilute or even recover the initial investment through the annual production capacity of hundreds of thousands of vehicles.
We take the 122 passenger car companies included in the statistical scope of the Association as an example to get a glimpse of the severity of the current domestic automobile production capacity vacancy rate problem.
According to the report, there are 16 companies with sales of more than 600,000 vehicles in 2020, with a total sales volume of 16.2805 million vehicles, accounting for 80% of the total sales; the total production capacity is 20.39 million vehicles, accounting for nearly 50% of the total production capacity. The average capacity utilization rate of these 16 enterprises is 79.85%, which is in a reasonable range. At the same time, 47 companies will sell less than 50,000 vehicles in 2020, accounting for 20% of the total production capacity, while sales account for only 3.11% of the total sales volume of the automobile market in 2020, and the average capacity utilization rate is only 7.53%.
With the Continuous Emergence of the Matthew Effect in the Domestic Auto Market and the Rapid Growth of China's Auto Market, we can predict that the problem of the high vacancy rate of the domestic auto market will be further worsened in 2022.
In fact, in China, there are only a few companies that have a relatively good control of the current capacity vacancy rate, mainly Toyota and Honda in Japan. The Japanese are more conservative in the domestic car market, so that the sudden increase in the domestic car market from the second half of 2018 has not affected these companies much, and Honda, which pursues a boutique car strategy, and Toyota models that are just in time for the TNGA platform to be renovated have also greatly enhanced the influence of these two Japanese brands in China.
As for the higher capacity utilization rate of BMW and Mercedes-Benz, it is due to the trend of domestic automobile consumption upgrading, so that consumers in first- and second-tier cities with strong purchasing power have switched to luxury brands.
In addition, even others such as Volkswagen and GM are facing the pressure of high vacancy rates. The sinking of luxury brands and the upward movement of independent brands have made the pressure on mainstream joint venture brands in China continue to rise.
Another problem that cannot be ignored is that the problem of overcapacity of new energy vehicles is more than that of traditional fuel vehicles.
Although the sales of domestic new energy vehicles have grown rapidly, but its total volume is relatively small, the domestic new energy vehicle sales in 2020 are only 1.367 million units, and according to the ccid research institute under the Ministry of Industry and Information Technology, the total production capacity of domestic new energy vehicles in 2020 has reached 26.69 million, the capacity utilization rate is only about 5.1%, and the idle production capacity exceeds 25 million. Even if the sales of new energy vehicles increase significantly again in 2022, it will be difficult to fill the 25 million production capacity.
It is difficult for the new forces to become a takeover man
For many new forces, it is not cost-effective to build a production base containing four major processes at the beginning of the brand.com. Buying a traditional car company's factory to update it is actually a shortcut.
In 2021, whether it is Ideal Automobile's acquisition of Beijing Hyundai's first factory or Gaohe's first plant using Dongfeng Yueda Kia, it will not only help it quickly expand its production capacity, but also alleviate the overcapacity problem of traditional OEMs to some extent.
At present, the development momentum of domestic new force car companies is relatively fierce, and "Wei Xiaoli" has basically reached the scale of annual sales of 100,000 vehicles. With the continuous launch of new models and the improvement of the network layout, the time it will take to hit 200,000 vehicles in the next step should be much shorter than the first 100,000 vehicles.
In addition, the performance of Nezha and Zero Run in 2021 is also good, and the terminal sales are also rising rapidly, so for these car companies, expansion is something that needs to be put on the agenda.
If they can effectively connect their demand with the excess domestic automobile production capacity, as far as possible to guide these new forces to use the old automobile production capacity, it will undoubtedly form a win-win situation.
But in general, the sales volume of the new power brand is effective after all, and compared with the huge domestic car vacancy production capacity, it is undoubtedly a dime.
The joint venture equity ratio was liberalized and exports became profitable
Before the domestic is more of a 50:50 joint venture, which means that foreign brands are not willing to hand over the task of export to the domestic joint venture car companies to complete. On the one hand, at that time, the domestic automobile market was in a state of rapid development, and the joint venture car companies themselves were slightly nervous to meet the domestic production capacity; on the other hand, the main thing was that it was necessary to share more manufacturing profits to domestic joint venture partners.
But with the liberalization of the shareholding ratio of domestic car companies and the bid farewell to the rapid growth of the domestic car market, it is becoming a profitable thing to use the rich production capacity of Chinese factories to support the global market.
Especially in the era of electric vehicles, transforming an electric vehicle factory is a big investment, and the sales of electric vehicles themselves are not very high for many brands. In this case, exporting Chinese-made electric vehicles to many smaller markets is a better option.
At present, the supply chain of the domestic automobile market is very complete, and in terms of processing technology and quality assurance, it can meet the requirements of export. In addition, domestic skilled workers are still competitive in terms of labor wages compared with developed countries in Europe and the United States.
Taking BMW as an example, after obtaining 75% of the equity of BMW Brilliance, it not only localized models such as BMW X5 and further improved its domestic model matrix, but also BMW also intended to use BMW Brilliance as an important production base for its radiation throughout the Asia-Pacific region and even the global market. As for Volkswagen, it is also intended to build JAC Volkswagen into an export base for exporting ID.2 or even smaller economic models.
In fact, the model of domestic electric vehicle exports is certainly not the Tesla project in Shanghai. As Tesla's second factory outside the United States, the Shanghai Tesla Lingang plant has become an important base for Tesla to radiate the global market, especially in the Berlin factory and the Texas factory have not yet been officially put into production, and its production of Model 3 and Model Y has become the most critical cornerstone of Tesla's stable terminal delivery. One of the most important reasons to convince Tesla to open a factory in China is that it has a 100% stake in the Shanghai Lingang factory.
When we introduced Tesla, we did not see the new domestic car companies fall in pieces, on the contrary, "Wei Xiaoli" and BYD are constantly growing. The high output of Tesla's Shanghai factory not only drives Shanghai's GDP and earns considerable foreign exchange, but also continues to improve the supporting supply capacity of China's electric vehicle-related parts and components enterprises.
Independent brands should also accelerate their going out
For independent brands, in the era of electric vehicles, not only "Wei Xiaoli", but also many independent brands, including SAIC, Geely, ANDD, have a high degree of achievement in electric vehicles with the advantage of starting earlier.
At present, carbon neutrality and carbon peaking in the world have made many large countries more open to the import of electric vehicles. Our own brand can take advantage of the gap period when foreign car companies have not yet released a large number of electric vehicles to export electric vehicles to overseas markets.
At present, Weilai and Xiaopeng have entered Europe, and they not only export their own vehicle products, but also bring the leading power exchange mode to Europe. On the other hand, volkswagen's MEB products, whether it is the "three electricity" system or the intelligent network connection, are actually a little worse than the new domestic forces, if we can bring customer operation and maintenance and power exchange mode to Europe, our independent brand is not completely unwinnable in Europe.
In the field of fuel vehicles, we are now moving from exporting complete vehicles overseas to further building factories and exporting technology in the local area.
Taking Great Wall Motor as an example, it has acquired a number of automobile plants in Central and Eastern Europe, India and Thailand, and used its production of complete vehicles to radiate the surrounding market. If it were not for the sudden outbreak of the Sino-US trade war in the late stages of the Trump administration, including Lynk & Co and GAC, they would still plan to drive automobile factories to the United States.
In addition, Geely also acquired the equity of Proton Malaysia, and imported its own vehicle technology and system capabilities into Proton Automobile, helping Proton not only regain its glory in the Malaysian market with new models, but also using Malaysia as a bridgehead to further expand its influence in the entire Southeast Asian market. This new model not only dilutes the R&D investment for Geely and earns a lot of benefits, but also greatly enhances the brand's influence in the local area, which can be described as killing three birds with one stone.
For car companies, in fact, like real estate, we must break the thinking of being big and not falling. For those car companies that do not have core competitiveness, in the case of not causing local financial risks, they must insist on using the means of market economy to force them to withdraw. It is resolute to avoid local governments from surviving through various forms of blood transfusions, because the cost of related blood transfusions is ultimately paid for by the whole society.
Through the data of these years, we can find that the rise of electric vehicles has not led to a significant increase in the sales of the entire car, but more of a replacement for the share of traditional fuel vehicles. Therefore, when approving new automobile projects, our government departments must focus on their future profitability, and at the same time actively guide the use of existing production capacity to avoid new automobile production capacity to the greatest extent.
Hoping that in the future, the domestic auto market will continue to grow at a high rate year-on-year, and the scale of China's auto market will jump from the existing 20 million per year to 30 million or even 40 million.
In the foreseeable future, there will inevitably be a number of car brands and many car factories in China that fade out of our sight, just like the United States also evolved from hundreds of car brands to only three giants before.