Contributing author | Cai Jie
Edited by | Tian Miao
The past 2021 has been a bit different for Daimler, which has been in China for many years, because Beijing Benz sales have fallen by a rare 8.2%. In the past January, the retail sales of Beijing Benz once again fell by 13.1% year-on-year, and the situation seems to be somewhat serious. But in fact, fortunately, the reason for the decline, the official has made an explanation, mainly caused by the shortage of chips, and the good fundamentals of China's economy will always be the support point for the growth of luxury brands' business in China, and it is still optimistic in the long run.
The miracle that Beijing Benz brought to Daimler
Before August 2005, Mercedes-Benz, as a representative of global luxury brands, entered China mainly imported. Since then, Daimler has jointly invested in a joint venture with Beijing Motor, allowing it to occupy the Chinese market more quickly with better cost performance, while also ensuring a higher gross profit margin.
In the year of the birth of Beijing Benz, the sales of Mercedes-Benz cars in the world were 1.078 million units, of which the Chinese market sales were 11,500 units, accounting for only 1.07%; in 2021, the sales volume of Mercedes-Benz in China still reached 758,863 units, which doubled 66 times in 1 few years, and the Proportion of the Chinese market in its global sales also reached 36%. Its sales structure in the Chinese market has also undergone earth-shaking changes. Mercedes-Benz cars produced in China have increased sales from 0% to 74% to 561,008 units in 2021.
Objectively speaking, Beijing Benz has been working hard for the Chinese market for many years, regardless of brand or channel, which has given Mercedes-Benz a great role in promoting the sales of imported models. This also makes Daimler's sales in China surpass Audi and approach BMW. Before 2005, Mercedes-Benz sold about 5% of BMW and 20% of Audi in mainland China. Today, they are able to go hand in hand, and Beijing Benz has played a crucial role in this.
BAIC is the biggest beneficiary of Beijing Benz
Of course, in the past 17 years, it is not only Daimler that has benefited from the joint venture, BAIC should have gained greater benefits. Beijing Benz's sales account for about 26% of Mercedes-Benz's (including Smart) global sales, but it accounts for more than 95% of BAIC's revenue. Therefore, some people believe that without the shares of Baiqi of Beijing Benz, it is basically "nothing".
According to Daimler's financial report and its share ratio with Beijing Benz, the net profit of Beijing Benz in 2020 is about 22 billion yuan, of which the profit attributable to BAIC is about 11.4 billion, and according to the financial report of BAIC in that year, its annual net profit is 12.96 billion yuan, which also means that 88% of the net profit of BAIC is given by Beijing Benz. Over the years, the independent technologies, products and brands in the BAIC system have been able to continuously invest in development, which is inseparable from the huge profit contribution created by Beijing Benz. The profits handed over layer by layer will be allocated again, and even in the restructuring and capital increase of Beiqi Blue Valley, which has suffered huge losses for consecutive years, there may be a profit shadow of Beijing Benz. Therefore, it is not an exaggeration to describe Beijing Benz, which has been established for 17 years, as the "granary" of BAIC's development, "profit cow", or the "cornerstone fund" of various businesses. Especially in recent years, the development of BAIC's own brands, especially BAIC New Energy, has not been smooth, and the huge loss has brought great challenges to BAIC, and it coincides with the continuous downturn of Beijing Hyundai in recent years, and Beijing Benz has almost carried everything alone.
The man who lifted the Beijing Mercedes
If it is Beijing Benz that supports BAIC, then the person who supports Beijing Benz should be Chen Wei, who has increased the proportion of Beijing Benz in baic's revenue from 73% to more than 95% in 5 years. Almost at this point in time 5 years ago, Chen Wei succeeded Chen Hongliang as senior executive vice president of Beijing Benz, opening a new era for each other.
Chen Wei's resume shows that he is a leader in the field of production management, who has served as the director of the automotive engineering and manufacturing department and the manager of the assembly workshop, the production director, the general manager of manufacturing, etc., and was the vice president of production and manufacturing of Beijing Benz before serving as the "number one" of Beijing Benz. Production leaders often strive for excellence in affairs, and it may be this "craftsman" pursuit that allows Chen Wei to double the sales of Beijing Benz in 5 years. In the same period, the growth rate of FAW-Audi was only about 2%, which shows the significance of Chen Wei to Beijing Benz and the value of BAIC.
Of course, the person in charge of Beijing Benz who has made great contributions to baicchi group is not only Chen Wei, whether it is his predecessor Chen Hongliang or his former predecessor Cai Suping, he has also been very outstanding during his term of office, so after the expiration of the term, he has been given a bigger stage. After leaving Beijing Benz, Chen Hongliang became the president of BAIC, while Cai Suping rose to deputy general manager of BAIC Group after leaving office in 2014. Now that 5 years have expired, if the term is changed, Chen Wei will be like his predecessor, "Gaosheng" Group, with its contribution to BAIC, to become the deputy general manager should not be a problem. However, there has been no movement so far, and there is also speculation from the outside world that due to the decline in the performance of Beijing Benz last year, if Chen Wei's post adjustment after the expiration of the term, there may be some variables. However, the author believes that this possibility is relatively small, after all, the decline caused by the chip shortage is a "natural disaster", even Daimler "recognizes", BAIC has no reason to blame a person of its own.
In January this year, BAIC Group promoted two deputy general managers, namely the former baiqi bjeving first-in-command and the former baiqi foton first-in-command. The former ignores its poor performance in Beijing Hyundai, only counts the Beiqi Blue Valley under its leadership, which lost 10 billion yuan in two years, the business has not improved, and the curve of accelerated decline in market share is quite embarrassing; the latter's financial report is not ideal. However, Chen Wei, who earns more than 10 billion yuan a year and provides for everyone to support his family, was not selected, which surprised the outside world. Of course, there is also another speculation, Chen Wei will not necessarily take cai suping's route, promoted to deputy general manager of BAIC Group, may also take Chen Hongliang's route in BAIC shares.
Although there is no conclusion yet, but no matter what, according to the convention should be relatively quick to reveal, and for the talent of some "withered" BAIC, the construction of the echelon has always been inferior to the outside world, or even not as good as GAC, so how to maximize the value of Chen Wei, is the fundamental development. As for Beijing Benz, and Chen Wei's future, the author continues to be optimistic.
This article is the original of "Car Review Network", which belongs to one of the "2022 Outlook Series", special author: Cai Jie, editor: Tian Miao, and may not be reproduced without permission. Pay attention to the "car review network" and focus on in-depth reporting of the automotive industry.