Wang Fengying, President of Great Wall Motor: Suggestions on promoting the capacity utilization rate of China's automobile industry

On March 5, 2022, the Fifth Session of the 13th National People's Congress will be held in Beijing. As a deputy to the 11th, 12th and 13th National People's Congress and president of Great Wall Motor, Wang Fengying will attend the 15th meeting.

Based on the in-depth research and practice of the automotive industry, at this conference, Deputy Wang Fengying put forward three proposals and suggestions on the high-quality development of China's automobile industry, namely: "Suggestions on Promoting the Utilization Rate of China's Automotive Industry", "Suggestions on Promoting the Application of Thermal Runaway Protection Technology for Power Batteries", and "Suggestions on Promoting the Rapid Development of China's Automotive Grade Chip Industry".

Proposals to promote the utilization rate of china's automotive industry

summary

Driven by a new round of global scientific and technological revolution and industrial change, the transformation of the automobile industry has accelerated, and many places have set off a boom in investment in automobile industry projects, car companies have accelerated their layout in China, a number of projects under construction and new construction will be put into production during the "14th Five-Year Plan" period, and the existing production capacity of the mainland automobile industry has been further expanded.

At the same time, under the new track of new energy and intelligence, the market competition in the automobile industry is also becoming more intense, and the utilization of production capacity shows a development trend of stronger and weaker, and the production capacity of advantageous industrial agglomeration areas is facing insufficient, but a large number of idle production capacity has also appeared in many places. The recovery of global automobile consumption has opened up international and domestic markets, formed a new development pattern in which domestic and international dual cycles promote each other, and provided new momentum for the overall capacity utilization of the automobile industry.

However, there are still some unavoidable problems in the development of China's automobile industry, such as low overall capacity utilization, increased scale of idle capacity, and intensified overcapacity of new energy vehicles, which will not be conducive to the high-quality development of the automobile industry. It is therefore recommended that:

First, give full play to the advantages of regional agglomeration to make full use of existing production capacity, bigger and stronger national automobile industry; second, the overall development of idle production capacity, encourage mergers and acquisitions, accelerate the construction of smart factories; third, strengthen supervision, establish an exit mechanism to avoid waste of resources; fourth, promote domestic and international double circulation, encourage Chinese car companies to "go out" to open up overseas markets.

background

A new round of scientific and technological revolution in the world

And the scale of automobile production capacity has expanded under industrial change

(I) Major changes in the automobile industry in the past century There has been a boom in investment in automobile industry projects in many places

At present, the domestic macroeconomic operation is generally stable, and the resilience of the automotive industry continues to be maintained. Driven by a new round of global scientific and technological revolution and industrial change, the mainland automobile industry is accelerating its transformation to electrification, intelligence and networking, and many places have set off a boom in investment in automobile industry projects, car companies have accelerated the layout of the automobile industry in China, the industrial ecosystem is more mature and perfect, and the production capacity of China's automobile industry has been further expanded. Relevant data show that at present, enterprises that have production qualifications are expected to have tens of millions of vehicles under construction capacity will be built and put into operation, and most of these production capacities under construction are new energy vehicles.

(2) Fierce competition under the new track of new energy and intelligence There is a phenomenon of idle production capacity in many places

At present, the mainland automobile industry is in a critical period of technological change and ecological reshaping, and new energy vehicles and intelligent vehicles have become a new engine for the development of the automobile industry and the main direction of industry transformation and upgrading. Under the new track, the mainland's automobile industry has entered the stage of survival of the fittest and stock competition, industry mergers and acquisitions, resource integration are becoming more normalized, advantageous enterprises are accelerating to seize industry resources and markets, competition is becoming more intense, industrial concentration is increasing, while utilizing production capacity shows a development trend of stronger and weaker, and the production capacity of advantageous industries gathering areas is facing insufficient, but there are also a large number of idle production capacity in many places.

According to data from the China Association of Automobile Manufacturers, among the 98 automobile manufacturers in 2021, more than 50 enterprises produce less than 1,000 vehicles per month, of which nearly 20 are in a state of suspension and produce 0 vehicles per month. The sales volume of the top ten enterprise groups in automobile sales accounts for about 90% of the total automobile sales, and the production capacity utilization efficiency is much higher than the industry average, and even reach 100%.

(III) The recovery of global automobile consumption provides new momentum for domestic automobile consumption and capacity utilization

With the normalization of global epidemic prevention and control, the world economy continues to recover, and global automobile consumption is also recovering. In the process of transformation and upgrading, Chinese brands have formed advantages in the field of new energy and intelligence and the supply chain is relatively complete, which can provide overseas consumers with competitive international products in a timely manner; the promotion of new energy vehicles in countries represented by Europe and the United States has gradually increased, providing opportunities for the export of new energy vehicles in the mainland. Jointly exploring the international and domestic markets and forming a new development pattern in which domestic and international dual cycles promote each other not only provides new ideas for broadening the automobile consumption market, but also provides new momentum for domestic production capacity utilization.

According to the statistics of the China Association of Automobile Manufacturers, in 2021, the mainland exported 2.015 million vehicles, an increase of 1 times year-on-year, accounting for 7.7% of the total automobile sales. In particular, the export performance of new energy vehicles is outstanding, with new energy vehicle exports of 310,000 units, an increase of 3 times year-on-year, and it is expected that the growth rate of mainland automobile exports will be about 20% in 2022.

issue

High-quality development of automobiles

It is necessary to face up to the problem of overcapacity in China's automotive industry

(1) The production capacity layout of the automobile industry is scattered and the utilization rate is low, and it is difficult to promote the coordinated development of the industrial chain

High-quality development is the theme of the mainland's economic and social development in the "14th Five-Year Plan" and even longer, and high-quality development is not only an economic requirement, but a general requirement for all aspects of economic and social development. On the whole, there are outstanding problems in the high-quality development of the mainland automobile industry with low overall capacity utilization rate and large idle capacity scale, coupled with the scattered overall layout of the automobile industry, which has not formed a gathering advantage and scale effect, and it is difficult to promote the coordinated development of the whole vehicle and parts supporting industrial chain.

According to the International Association of Automobile Manufacturers (OICA), in 2020, China's automobile factories (light vehicles) have a production capacity of 48.0493 million units, with a capacity utilization rate of 52%, far lower than the capacity utilization rate of South Korea's 75%, the United States' 73%, Japan's 68%, and Europe's 62%, and the overcapacity is relatively serious. During the "14th Five-Year Plan" period, considering a new round of capacity expansion, the mainland automobile industry will still face the risk of overcapacity, and some car companies with weak competitiveness may be eliminated by the market. At present, many industry personnel have put forward early warnings: while solving the problem of overcapacity of traditional automobiles, the automotive industry must also prevent the overcapacity of new energy vehicles.

(2) Large-scale idleness of high-quality production capacity hinders the high-quality development of the automobile industry

Reasonable capacity utilization rate is an important indicator of the high-quality development of the automobile industry. Overcapacity will bring about the loss of funds, land, talents and other resources, and have a certain impact on local employment, taxation, industrial structure adjustment and upgrading, which not only hinders the local economic development, but also hinders the high-quality development of the automobile industry.

In recent years, some places have "emphasized the attraction and light supervision" of investment projects in the automobile industry, and a number of high-quality production capacity has been idle on a large scale. While the relevant departments attach great importance to this phenomenon, they are also actively taking effective countermeasures to resolve risks. The in-depth promotion of the transformation and upgrading of the automobile industry mergers and acquisitions has become an effective means to promote the high-quality development of the automobile industry, and it is urgent to revitalize and reuse some high-quality idle production capacity with a high degree of industrial agglomeration and open development to improve the overall capacity utilization rate, improve the quality of enterprise operation, and stabilize the advantages of industrial development.

(3) The problem of overcapacity of new energy vehicles has intensified

The development of new energy vehicles is the only way for the mainland to move from an automobile power to an automobile power, and it is a strategic measure to cope with climate change, achieve carbon neutrality and reach the peak of carbon neutrality, and promote green development. During the "14th Five-Year Plan" period, under the regulation of energy-saving and emission reduction policies such as "carbon peaking and carbon neutrality", the market demand for some fuel vehicles began to shift to new energy vehicles, and although the market demand has expanded, the overall scale still has a large room for improvement compared with traditional fuel vehicles, and obviously lags behind the expansion of the production capacity of new energy vehicles.

At the end of the "13th Five-Year Plan", there has been overcapacity of new energy vehicles in the mainland. According to the data, by the end of 2020, the total production capacity of new energy vehicles in mainland China has reached 26.69 million units, and the market sales volume is only 1.367 million units. If the new energy vehicle planning projects in various places during the "14th Five-Year Plan" period are landed, the problem of overcapacity will be further aggravated on the basis of the "13th Five-Year Plan", which will not only cause idle and wasted resources, but also may even bring vicious competition at the market level, which is not conducive to the healthy and sustainable development of the automobile industry.

Suggested & measures

Give full play to the advantages of regional aggregation

Revitalize idle resources

(1) Give full play to the advantages of regional agglomeration and make full use of existing production capacity to expand and strengthen the national automobile industry

In accordance with the principle of strictly following the national policy of "regional agglomeration and enterprise concentration", we will promote the automobile industry to gather in areas with sufficient capacity utilization and perfect supporting systems, and cultivate a number of advanced manufacturing clusters in the world. It is recommended to focus on building an internationally competitive automobile industry cluster in the Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta and other regions, and lay out a number of characteristic industrial clusters in emerging subdivisions such as power batteries, semiconductors, and lidar. At the same time, we will actively guide and encourage automobile enterprises with production capacity expansion needs to gather in advantageous areas to make China's national automobile industry bigger and stronger.

(II) Coordinate the development of idle production capacity Encourage mergers and acquisitions and accelerate the construction of smart factories

Guide the development of the automobile industry based on existing production capacity, encourage traditional fuel vehicle enterprises to actively adjust the product structure, increase investment in research and development of pure electric technology, encourage qualified advantageous enterprises to merge and reorganize enterprises with low capacity utilization or special publicity, and fully develop and utilize existing production capacity through upgrading and transformation into smart factories. For production projects with idle resources, low capacity utilization, but with a certain market foundation, transformation and upgrading conditions and outstanding cluster advantages, it is recommended that the local government take the lead, take the initiative to introduce powerful car companies to settle down and tilt resources in terms of funds and policies, so as to revitalize production capacity and drive the economy.

(III) Strengthen supervision and control Establish an exit mechanism to avoid waste of resources

In view of the "chimneys" and uneven quality of automobile projects in various places, it is recommended that the regulatory authorities conduct a thorough investigation of new automobile projects nationwide during the "14th Five-Year Plan" period, increase the supervision of overcapacity enterprises, strictly control the new vehicle production capacity, curb blind investment, avoid inefficient duplicate construction, and establish an exit mechanism. At the same time, it is also necessary to strengthen the safety review of foreign investment, strengthen research and demonstration of foreign-funded new construction, mergers and acquisitions, capital increase and other automobile projects, and recommend that relevant local departments conduct scientific assessments and stop projects with slow construction progress or enterprises with low capacity utilization rates to avoid the waste of resources caused by blind expansion of projects.

(IV) Promote domestic and international dual circulation Encourage Chinese car companies to "go out" to open up overseas markets

Focusing on the construction of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other, it is recommended that the government and relevant departments give priority to and focus on encouraging a group of Chinese car companies with independent innovation strength to "go global", improve the dual adjustment mechanism of the government and the market, guide Chinese local enterprises to take the initiative to dock with the markets of countries along the "Belt and Road", further expand the international automobile market, and increase support for a number of Chinese car companies with global leading advantages in the field of new energy and intelligence. Advancing into the international high-potential energy market with great potential for the development of electric vehicle markets such as Europe and the United States will drive the overall export scale of Chinese automobiles and digest domestic production capacity.