Observation chamber
Written by | Liu Jihao
Once Pandora's box is opened, it is difficult to cover it again. Just as the joint venture car company stock ratio let go of this matter, once someone tastes the benefits, the follow-up will continue to flow.
In February this year, BMW got 75% of the equity in BMW Brilliance's new joint venture contract, becoming the first profiteer of the liberalization policy of the equity ratio of joint venture car companies. This change is accompanied by BMW's further progress in the Chinese market, because it has just forced Mercedes-Benz to sit at the top of the luxury brand.
Absolute discourse, more dividends, consolidated financial statements and other multiple favorable superpositions, BMW's move will undoubtedly make small partners red - in fact, there are already more and more joint venture car companies following suit.
Can the former SUV king save himself by equity?
As a "young man" in the domestic joint venture car circle, the development process of Guangfiq can be called a twist and turn. The Fiat introduced in the early days has been broken on the battlefield because of the dry double clutch; after the JEEP, which is ready to do a big job, has had a brief highlight moment, but after four consecutive years of decline, the sales volume in February this year is only more than 100 units, and there is no sense of existence.
Gac Motor Group's public financial report shows that Guangfik was already insolvent at the time of the 2020 annual inventory, with a cumulative loss of nearly 5 billion yuan in three years, and the net asset value at the end of 2020 was -331 million yuan (because the annual report of 2021 is not released until March 31, the new loss data is not known).
▲ Guangfeik sales trend in recent years, unit: 10,000 vehicles. (*Source: GAC Group)
On the one hand, the sales volume has fallen without falling, on the other hand, the huge losses have intensified year by year, and the former SUV king has not seen any substantive action on the issue of where to go in the Chinese market, and now he is tireless in the matter of competing for equity.
In January this year, Stellantis Group announced that it would increase its shareholding in GAC FCA, a joint venture with GAC Group, from 50% to 75%. However, this statement was not recognized by GAC Group, and it "deeply regrets" Stellantis's unilateral statement. Subsequently, Carlos Tavares, CEO of Stellantis Group, once again claimed that "there has been a consensus with GAC Group on increasing the shareholding of Guangfeik and is waiting for the approval of relevant government departments."
It looks like things are moving in the direction That Stellantis was looking forward to.
In this regard, when the author recently visited the market, he also made a special understanding, and the statement of the 4S store is that "the specific operation is currently decided by the Americans." It is said that Guangfeik's current Guangzhou plant is in a state of suspension, and will only retain the Changsha plant in the future. Moreover, at present, in addition to imported models (big cuts, wranglers) and domestic commanders in the 4S store, other cars have not been supplied for a long time, and the guides and free men on sale belong to the previous inventory, and many free light stores have no cars.
"Nowadays, Americans have no requirements for sales, only look at bicycle profits." The 4S store revealed, "So, although we sell fewer cars now, there is no pressure." ”
The 4S store claim is not unfounded, because in the previous "Dare Forward 2030" strategic plan, Stellantis has stated that it will increase its efforts in the import business of JEEP and Maserati in China to achieve higher profits. Specific to the JEEP brand, Stellantis is implementing a "one JEEP" strategy for local and import businesses, specifically involving the competition for the equity of Guangfik - and this is the only "wholly-owned factory with suitable production capacity" that Tang Weishi said would be retained.
However, it is curious that even if Stellantis finally gets 75% control of Guangfic and strengthens the import car business, will it be able to recreate the highlight of its original annual sales of 200,000 vehicles? You know, today's domestic SUV market has undergone great changes, the low-end is dominated by domestic brands, the high-end is multi-point blossoming, and the hardcore SUV plate has the emergence of tank brands, leaving jeep with little time and space.
Korean cars continue to slump, and the equity dispute has also failed
Compared with the already negligible Sales of Guangfik, hyundai and Kia, the Korean car brothers, Hyundai and Kia, do not seem to have fallen to that point, after all, the total number of vehicles in the past year has exceeded 500,000 (385,000 for Beijing Hyundai and 158,000 for Dongfeng Yueda Kia).
▲ Beijing Hyundai sales trend in the past ten years, unit: 10,000 vehicles. (*Source: CAAM)
▲Dongfeng Yueda Kia sales trend in the past ten years, unit: 10,000 vehicles. (*Source: CAAM)
However, looking back at the past decade, it will be found that Korean cars have fallen in China for 5 consecutive years, and today's sales level is less than 30% of the peak. Under consecutive years of losses (Beijing Hyundai has lost 6.28 billion yuan and 5 billion yuan respectively in the past two years, and Dongfeng Yueda Kia's cumulative loss in the past 5 years is also around 10 billion yuan), Beijing Hyundai has begun to sell factories to survive (in 2021, its capacity utilization rate is less than 30%, the first factory in Beijing Shunyi has been sold to Ideal, and the Chongqing factory is in a state of suspension), and Dongfeng has chosen to withdraw from Dongfeng Yueda Kia to stop losses.
Speaking of Dongfeng Yueda Kia, after The withdrawal of Dongfeng at the end of last year, Kia, Yueda Investment, and Yueda Automobile originally planned to increase the capital by 900 million US dollars to form a new joint venture, and unexpectedly, Yueda Investment chose to give up the capital increase - which gave people the reverie that Kia would take the opportunity to increase its equity. However, the announcement at the beginning of this month shows that in the end, It is the Yueda Automobile Group that invests and still maintains the 50:50 peer-to-peer ratio of the joint venture company Kia and Yueda.
Coincidentally, as the protagonist of hyundai-Kia Group, Hyundai also had ideas about its right to speak in Beijing Hyundai, but BAIC, which has Beijing Benz as a profit cow, refused to easily comply, so in January this year, Cui Dongyou, general manager of Beijing Hyundai, came forward to refute the rumors, saying that "Hyundai has no plans to adjust the equity ratio of Beijing Hyundai". Until recently, the latest news on March 18 showed that BAIC Group and Hyundai Group intend to jointly increase the capital of Beijing Hyundai by US$942 million according to their respective shareholding ratios, maintaining the original 50:50 share ratio unchanged.
Unlike the approval of relevant departments such as Stellantis Tang Weishi, the two Brothers of Korean Cars have unsuccessfully sought a controlling stake in the joint venture company, and they do not know how to feel behind their backs.
But strictly speaking, as far as the current serious losses of Beijing Hyundai and Dongfeng Yueda Kia are concerned, it is not a good thing not to seek absolute control of the joint venture, because these two brands have almost fallen to the point of grabbing food with their own brands in the Chinese market, not to mention that Chinese partners can also help them share cash pressure and reduce many operational risks. Therefore, first stabilize the sales and then say, and then fall, it is not a fight for equity, but to consider whether to play or not.
Seeing BMW overtaking, Mercedes-Benz is also holding back a big move
Unlike the previous "difficult households", Mercedes-Benz is an undisputed big man no matter where it is, and its joint venture in China, Beijing Benz, is also one of the few most profitable players in the circle.
How much money does Beijing Benz really make? In the past 2021, Beijing Benz's revenue reached 148.550 billion yuan, of which the profit was 22.376 billion yuan.
What does this set of figures mean for BAIC, which controls 51%? BAIC's revenue in 2021 is 159.246 billion yuan, that is to say, Beijing Benz contributed 95.96% of the total revenue. Looking at profits, BAIC's operating profit in 2021 is 13.042 billion yuan, which means that if there is no Beijing Benz's 22.376 billion yuan of profit to fill the pit, BAIC will have a net loss of 9.335 billion yuan.
Beijing's modern rivers are declining, BAIC's own brand is struggling, and the significance of Beijing Benz's big thick leg to BAIC is self-evident.
Seeing that such a huge profit has been taken 51% by the partner, and has been taken for so many years, you say that The German Mercedes-Benz has no idea, which is self-deception. In fact, as early as 2018, after the national wind was about to release the equity ratio of joint venture car companies, Mercedes-Benz could not hold back, planning to increase its share ratio of Beijing Benz from 49% to 65%, and then even rumored to be 75%. Until the middle of this month, it was reported that the negotiations between Mercedes-Benz and BAIC on the former's proposed increase in the share ratio of Beijing Benz had been basically completed, and it was planned to be announced to the public within this year.
And regardless of whether Mercedes-Benz finally got 65% or 75% of the equity, it reflects the urgency of Mercedes-Benz in this matter, because the chasing soldiers are no longer behind, but have exceeded their own half position - in 2021, Mercedes-Benz sold a total of 2.093 million vehicles, down 5% year-on-year, and sales in the Chinese market were 759,000 units, down 2% year-on-year; while BMW (excluding MINI and Rolls-Royce) sold 2.214 million vehicles worldwide in the same period, an increase of 9.1% year-on-year. The Chinese market contributed 816,000 units, up 9% year-on-year.
Bmw seized the opportunity to overtake, can Mercedes-Benz not be in a hurry? What's more, BMW has been able to take 75% of its profits from BMW Brilliance.
However, in the face of Mercedes-Benz's eagerness to hold the idea, BAIC obviously does not intend to lie flat on this, on the contrary, BAIC began to make preparations a few years ago, and constantly increased its holdings in Mercedes-Benz's parent company, which has increased from 5% in 2019 to 9.98% at the end of last year, and the future does not even rule out the possibility of further improvement - its purpose is obvious, the loss of the embankment is made up outside the embankment, if you have to give up a part of the equity of Beijing Benz, then at least try to find it back at the profit level.
In addition, the practice of deep binding of Mercedes-Benz and BAIC to hold each other's shares is still milder than the "simple and rough" road number of BMW to BMW Brilliance, and may become the object of emulation by later generations, so as to indirectly achieve their respective goals. However, for Beijing Benz, can it win the lead of BMW in the market by adjusting the share ratio, who can have that certainty?
『 Write at the end 』
Before BMW, there is actually a precedent for foreign parties to dominate the joint venture car companies in China, that is, Jianghuai Volkswagen, a car company established in 2017, was increased from 50% to 75% by Volkswagen at a cost of 1 billion euros in 2020, and the name also became "Volkswagen Anhui", but his products have not yet entered the market, and the average person has little understanding.
Nowadays, whether Stellantis, Kia, Hyundai and Mercedes-Benz can achieve their wishes, it is foreseeable that with Volkswagen and BMW drinking the soup, the joint venture car circle will usher in a new round of "enclosure movement". Even, a few years later, as the term of the joint venture gradually expires, no shortage of car companies will follow Tesla's example and become a wholly foreign-owned enterprise, making the word joint venture a thing of the past.
As the world's largest car market, the chinese market's attractiveness needless to say, no one does not want to nibble on a piece of meat here. Nowadays, the country has relaxed the restrictions on the stock ratio, marking the degree of openness of this market officially entering the deep water area, but if anyone still holds the previous kind of thinking, thinking that the timely introduction of their new products can be successful, it will definitely learn a lesson - because consumers are changing, the market is also changing, and the problems brought by the popular intelligence in the Chinese market in recent years to joint venture car companies are an obvious signal.
Even if someone gets the control of the joint venture company after many negotiations, but with the future joint venture car companies becoming a situation dominated by foreign parties, everyone will actually return to the same running line. After all, whether the car is good to sell or not, and the profitability of the enterprise, in addition to the product power itself, it also depends on the distance between you and the consumer, your system strength, and your speed.
So, if someone just wants to turn a profit by increasing their holdings, or make more than three or five buckets, it is a bit idealized, a little careless, more shares also means a bigger loss. The most urgent thing at the moment is to think about how to stand on your feet and not become the next Dongfeng Renault.
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