How much profit do those multinational giants, Toyota, Volkswagen, BMW and Mercedes-Benz make from the Chinese market in a year? Why is the domestic automotive joint venture model undergoing qualitative changes? What is the impact on the purchase of joint venture cars by ordinary people?
Today, let's talk about the changes in the joint venture model of China's auto industry, and why are multinational giants seeking cooperation from Chinese brands in the future?
Part 1: How much do Volkswagen, Toyota, and the BBA make from China?
In April 2018, the leadership made up its mind and announced that by 2022, the joint venture share ratio of new energy vehicles, commercial vehicles and passenger cars will be released in an orderly manner. Immediately, domestic auto stocks fell collectively: Beijing Motor surged 15%, brilliance China fell by more than 10%. Some even shouted "Here comes the wolf"!
But, I would say, the market panic, or the "wolf coming" view, is simply wrong.
On the face of it, we really should panic. The three major pieces of traditional fuel vehicles, mentioning the chassis or platform, we first think of Volkswagen MQB, Toyota TNGA, the engine first thinks of honda earth dream, Toyota hybrid, Volkswagen TSI; the gearbox, but also by AISIN / ZF 6AT, 8AT, Volkswagen DSG monopoly. In the car sales rankings released by the China Automobile Association and the China Automobile Association, the joint venture models such as Volkswagen, Toyota, Honda, BMW, and Mercedes-Benz absolutely dominate the list. In front of these giants, Chinese brands are just a younger brother.
So, it is confusing why it is only given a short period of 4 years to fully relax the restrictions?
When I looked through the financial reports of many car companies and saw the large profits they made from China, my doubts were even greater. Because the liberalization of the equity ratio means that foreign capital will take more profits. In turn, for domestic auto groups, losing the "profit cow" means that the living environment is more difficult.
According to the financial report data, in 2018, when the german Volkswagen decided to liberalize the share ratio, the profit taken by the German Volkswagen from the Chinese joint venture was 4.627 billion euros, which was about 36.2 billion yuan at the exchange rate at that time. It is equivalent to the annual profit of the entire SAIC Group, the annual profit of half of China Merchants Bank, the annual profit of 6.5 Great Wall Motors, or the annual profit of 11.6 BYD.
In 2018, the two joint ventures of North and South Volkswagen sold a total of 4.1 million new cars, close to 20% of the domestic passenger car market share, which is roughly equivalent to the total sales of Geely + Great Wall + Changan + BYD.
Toyota cars are just as tough. In 2018, Toyota's operating profit in China (including the Lexus brand) was 150.6 billion yen, equivalent to about 1/4 of Volkswagen's profit in China, and new car sales were 1.487 million units, which is roughly equivalent to 1/3 of Volkswagen China.
In terms of domestic automobile groups, bmw contributed 6.2 billion yuan in net profit to Brilliance Group in 2018, while Brilliance China Group's net profit was only 5.8 billion yuan, that is to say, after deducting BMW's profit contribution, Brilliance China actually had a net loss of 400 million yuan.
Beijing Motor faces the same embarrassment. The annual gross profit was 37 billion yuan, of which Beijing Benz contributed 40.5 billion yuan, which means that if there is no Beijing Benz, the other three sectors of BAIC (Beijing brand, Beijing Hyundai, Fujian Benz) are totally loss-making, and the majority of Beijing brands have a loss of 3.5 billion yuan for the whole year.
Seeing this, I believe that you have felt the importance of the joint venture share ratio from the comparison of data. The market panic is conceivable, and the relaxation of the shareholding limit at this time is tantamount to a big gamble. So, what exactly are we betting on? Can we win?
Part 2: 30 years of joint venture, a reincarnation of a dream
3 months after the stock ratio was released, the wolf really came. This is a bunch.
In July, Tesla entered China, and then a world-class gigafactory rose at Chinese speed. An excited Musk affectionately praised China, "China's professionalism and the huge number of hard-working and intelligent people are amazing." This makes people admire at the same time, but also a little fear. ”
What makes lao ma more amazed and afraid is the power of the flood released by the Chinese automobile consumer market. In the first year of operation of the Shanghai plant in 2020, nearly 140,000 Model 3s were delivered, accounting for 30% of Tesla's global total, and in 2021, this number quickly climbed to 480,000 units, accounting for a staggering 51.7%.
The other wolf, BMW, bmw. This European horse with noble pedigree no longer has to hide its desire to attack, becoming the first beneficiary after China relaxed the restrictions on the share ratio of the automotive industry. It single-handedly pocketed 25% of BMW Brilliance and increased its stake in the joint venture to 75% for only 3.6 billion euros. The other hand skillfully embraced Great Wall Motors, the representative of China's private enterprises, into its arms and established a new joint venture with it to promote the implementation of MINI's globalization strategy.
It is estimated that Chiptzer (currently chairman of the BMW Group) will wake up laughing in his sleep. When BMW Brilliance is fully integrated into the financial statements of the BMW Group in 2022, it will have a positive impact of 7-8 billion euros. What concept? That's twice the profit Volkswagen took from China.
Scumbag Volkswagen stepped into its third boat, set up a joint venture with Jianghuai Automobile in China, firmly locked in 75% of the equity, and renamed the joint venture company "Volkswagen (Anhui) Co., Ltd. " two years later.
It seems that Chinese brands have reached the most dangerous moment. Lost profits, lost the right to reciprocal discourse, achieved a world's highest market value of the United States car company, and achieved an American world's richest man.
But the really subtle layout also began at the same time.
Do we work so hard to make a beautiful wedding dress for others? Shanghai certainly did not agree. According to the requirements of the Shanghai Municipal Government, Tesla must sign a VAM agreement to settle down. I can provide a 10% discount on the land price of the factory building, an ultra-low interest rate of 3.9%, and a 10 billion Chinese bank loan. However, you must also commit to investing $14 billion over the next 5 years, paying $2.23 billion in taxes per year from 2023 onwards, and returning land if not.
On the surface, the Shanghai municipal government is asking for GDP, taxes, and jobs, which is understandable. But there are bigger ambitions behind it.
Tesla's "giant catfish" has stirred up a spring in the automotive industry, impacting and rebuilding the inherent ecology of China's auto industry. The Yangtze River Delta region, centered on Shanghai, has formed the world's most complete new energy vehicle supply chain system. According to the research report of BOC Securities, the localization rate of Model 3 has increased from 30% to nearly 100%. Powertrain, electronic controls, body, chassis, interior, safety and many other aspects are almost all provided by Chinese suppliers.
At this time, we see that Shanghai, where the long-term line has caught big fish, holds the sachinko SAIC Group with its left hand and the lone wolf of Tesla with its right hand, occupying a new round of urban games centered on new energy vehicles and automatic driving.
The Great Wall BMW next door is not idle. In the face of the equally strong Great Wall Motors, BMW had to cede 50% of its stake. Wei Jianjun, chairman of Great Wall Motor, describes the union of the two parties with free love, and summarizes their love process with "trust" and "identity".
Great Wall BMW cooperation is different from the past joint venture method. The new joint venture method integrates R&D, production, supply and marketing, abandons the passive model of "foreign technology, Chinese side pays for power", and avoids the embarrassment of our side becoming a foundry. Note that this is a combination based on an equal relationship, and it is the "Diamond King Old Five" who marries to a noble family in Europe, and no one is attached to anyone.
This dramatic change in the joint venture model is like a qualitative change from arranged marriage to free love. There is no kidnapping of family will, no pressure to marry, no cumbersome process, no excessive bondage, just admiration and freedom.
What is Joint Venture Dependency? Why is it said that in the future, foreign brands will seek Chinese brands to engage in joint ventures? In the future, ordinary people buy cars, do they still want to buy joint venture cars?
Part 3: What is joint venture dependence and should I buy a joint venture car?
I'm not trying to deny the significance of the joint venture over the past few decades, and no one can deny it. In the 1980s, when There was nothing in China's auto industry, the joint venture allowed China's auto industry to get started quickly; after joining the WTO, the joint venture method largely offset the impact of imported products, and at the same time, the joint venture brought production equipment, manufacturing technology, management experience, professionals, economic benefits and a complete automotive industry chain to the Chinese auto industry.
The disadvantage of the traditional joint venture model is that it cannot obtain the core technology. What is more serious is that some state-owned enterprises suffer from joint venture dependence and lose their original intention in the days of lying and winning. There is no point in criticizing anyone here, it is human nature. If the vast majority of employees in your company hold 20-30 months of year-end bonuses, note that it is a 20-30 months of year-end awards, not salaries, how many people are willing to go to scientific research and make technological breakthroughs?
The great revolutionary teacher Marx said that when the relations of production no longer adapt to the development of the productive forces, when the existing model touches the ceiling of the development of the industry, change will begin. Marx also said that internal factors are fundamental, external factors are conditions, in 2018, when Wang Chuan jianguo wantonly wielded the trade stick, when anti-globalization rises, it is obvious that the liberalization of the stock ratio is an objective requirement for creating a better business environment.
Luckily, we were right. It turns out that the impact of the full liberalization of the stock ratio is not as great as imagined 4 years ago. At present, China's auto industry has opened up the innovation chain from upstream and downstream, and after years of baptism, we have the ability to cope with this change.
While Brilliance and BAIC retreated again and again, BYD and Geely completed the role change in cooperation with foreign capital in Chinese car companies.
This time the output technology is a Chinese brand.
In April 2020, BYD Toyota Electric Vehicle Technology Co., Ltd. was officially established. The business content of the two sides involves electric vehicles, platforms, research and development, etc., and there are even unconfirmed rumors that Toyota brand pure electric new cars will be equipped with BYD's three-electric system, blade batteries, and toyota to do is acceptance and OEM.
In August 2021, Geely/Renault signed a Memorandum of Understanding to establish an innovative partnership. Geely is responsible for providing CMA architecture technology, Renault has rich experience in international cooperation, and the two sides holding hands are regarded as a complementary win-win situation of multinational car companies' technologies, brands, systems and channels. Behind the cooperation, it reflects the strength of Chinese auto brands that cannot be ignored in the era of new energy and intelligence.
New energy vehicles are growing at a speed that most people expect. From January to February this year, the penetration rate of Chinese brand new energy passenger cars has reached 33.8%, and it will climb to a new high on the basis of 26.3% in 2021. Economist Ren Zeping believes that the "golden 15 years" of the new energy vehicle market is coming, and gives a bold estimate that by 2035, China's new energy vehicle sales will have 6-8 times the growth space. In other words, based on 3.5 million units in 2021, Ren Zeping expects that in 2035, the sales of new energy vehicles will exceed 20 million.
At present, Chinese car companies have come up with Chinese solutions in electrification, bicycle intelligence, and vehicle networking, and run out of China's speed, and every visionary foreign entrepreneur will not miss the opportunities brought by the Chinese market, take the initiative to adjust their posture, and seek cooperation.