The global auto market landscape will undergo great changes: the window period for reshuffling is coming, and Chinese car companies are the protagonists of this round of global reshuffle. This is a phenomenon that has never been seen in the history of the world's automobile development, and Chinese car companies should seize the new strategic opportunities of this round of global development.
After a long period of accumulated strength, China's auto industry and enterprises have begun to enter a new stage of global development. The new stage means that the comprehensive conditions of globalization are gradually maturing, so Chinese car companies will shift from the previous "testing the waters" to the "starting point". This is an inevitable development trend for the continuous enhancement of the comprehensive strength of Chinese car companies, and it has also created a new strategic window period for the global development of car companies. Why? Let's look at what new changes have taken place in China's auto industry and companies in recent years.
Export doubling: quantitative change is positive to qualitative transformation
On March 11, 2022, the China Association of Automobile Manufacturers released export data: from January to February, automobile companies exported 412,000 units, an increase of 75.0% year-on-year, of which 104,000 new energy vehicles were exported, an increase of 381.7% year-on-year. In 2021, automobile exports reached 2.015 million units, an increase of 101.1% year-on-year, accounting for 7.7% of total automobile sales. In the past decade, China's automobile export volume has been hovering around 1 million vehicles, and in 2021, it exceeded 2 million for the first time, achieving a historic leap. In particular, in 2021, the export of new energy vehicles will increase explosively, reaching 310,000 units, an increase of 3 times year-on-year.
Export areas are also wider. According to the statistics of the General Administration of Customs, the top ten countries in China's vehicle export volume in 2021 are Chile, Saudi Arabia, the Russian Federation, Belgium, Australia, Mexico, Egypt, Bangladesh, the United Kingdom and the Philippines. Exports of new energy vehicles are concentrated in developed countries such as Belgium, the United Kingdom, Germany, France and Norway.
Looking back at the export situation in the past 10 years, we can also see the relevant trajectory of change. According to the statistics of the China Association of Automobile Manufacturers, in the 10 years from 2012 to 2021, there are two changes in the export volume of Chinese automobile manufacturers (see Table 1): First, the export volume has almost doubled. Exports of 1056091 vehicles in 2012 and 2015220 vehicles in 2021; second, the export volume by 2021 hovers around 1 million vehicles, of which 900,000 vehicles are still less than 900,000 vehicles in 2015-2017.
From 2012 to 2021, in the span of 10 years, there are also two major changes in the top ten manufacturers of China's automobile export volume (see Table 2 and Table 3):
First, 10 years ago, in 2012, only 2 enterprises exported more than 100,000 vehicles a year, namely Chery Automobile Co., Ltd. and Zhejiang Geely Holding Group Co., Ltd.; 10 years later, in 2021, 7 companies exported more than 100,000 vehicles a year, of which 2 companies exported more than 200,000 vehicles, namely SAIC Motor Group Co., Ltd. and Chery Automobile Co., Ltd., especially SAIC Motor Group Co., Ltd. Export volume of nearly 600,000 vehicles.
Second, in the 10 years from 2012 to 2021, the top ten automobile manufacturers in terms of export volume are basically stable, 8 of which are still on the list, but the ranking has changed, of which 2 companies are out of place and 2 companies are in place, namely Chongqing Lifan Passenger Vehicle Co., Ltd. and Guangzhou Automobile Industry Group Co., Ltd., Tesla (Shanghai) Co., Ltd. and China Heavy Duty Truck Group Co., Ltd.
From the perspective of exports alone, the volume of exports is shifting from quantitative to qualitative changes. Behind this is the change in the connotation of the global development of China's automobile industry.
However, last year, automobile exports accounted for only 7.7% of total automobile sales. Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, said in an exclusive interview with Auto Vertical: "China's domestic market is very large, and it is more reasonable to account for about 30% of overseas annual sales. We are more like the situation in the US market, where sales abroad account for about 30%, or 30% of production is sold abroad. "If this is the standard, the global development space of Chinese car companies is very huge." Obviously, this is also a development opportunity for Chinese car companies.
Changing tracks: a new impetus for globalization to reshuffle the cards
From the changes in automobile exports, it can also be seen that the global automobile market pattern will undergo great changes: the window period for reshuffling is coming, and Chinese car companies are the protagonists of this round of global reshuffle. This is a phenomenon that has never been seen in the history of the world's automobile development, and Chinese car companies should seize the new strategic opportunities of this round of global development.
The reason why Chinese car companies can become the protagonists of this round of global reshuffle, we believe, is mainly because we have seized the direction of electrification, intelligence and networked vehicle transformation in a timely manner and seized the opportunity. This is the direct driving force for this round of reshaping the global structure of automobiles.
There is no doubt that in the structure of the global automobile market, the current traditional fuel vehicles still dominate, and will remain so in the future, but we must also see that new energy and intelligent networking are subverting traditional functional vehicles, which is the general trend of development. In this change, China's auto industry changed lanes and overtook, and achieved a first-mover effect.
In 2012, China officially took the lead in the industrialization process of new energy vehicles in the world. According to Miao Wei, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, the development of new energy vehicles in China has gone through three stages: the demonstration operation stage of ten cities and thousands of vehicles from 2009 to 2012, the popularization and promotion stage from 2013 to 2015, and the rapid growth stage from 2016 to 2022. At present, The production and sales of new energy vehicles in China have ranked first in the world for 7 consecutive years. Among the world's top 20 new energy vehicle companies in 2021, China accounted for 8, Europe 7, the United States 2, South Korea 2 and Japan 1. Obviously, in the new energy vehicle track, we have an advantage. However, Xu Changming, deputy director of the State Information Center, reminded: "New energy vehicles will have a period of rapid development in the future, but it is a competitive relationship rather than a replacement relationship between it and traditional vehicles." ”
Electrification ushered in the automotive revolution, followed by further changes brought about by intelligence and networking. In fact, intelligent and networked transformation has brought new impetus to the development of electrification. Therefore, the industry will take new energy vehicles as the first half of this change, and intelligent networked vehicles will be the second half. Miao Wei said: "China's automotive industry achieved great results in the first half, but the real decision was still in the second half. ”
The boundaries of the car are changing. Zhu Huarong, chairman of Changan Automobile, said that automotive products are being transformed into intelligent platform products, and the automotive industry is accelerating the transformation from traditional manufacturing to high-tech platform industry, and accelerating cross-border integration with energy, transportation, communications, and technology. Digital electric vehicles will be the main battleground for the next generation of cars. Its core values will shift from mechanical hardware to software capabilities.
In the field of new energy vehicles and intelligent networked vehicles, China is generally at the leading level in the world. At present, China's passenger car L2 automatic driving has achieved large-scale commercial applications, such as 22.2% of full-caliber passenger cars installed L2 automatic driving systems in 2021; highly automated driving technology L3 and above in specific scenarios and limited areas, China is also the first to apply. Zhu Huarong said: "China will become the innovation fulcrum of the global automotive industry. ”
Therefore, Chinese car companies will take electrification, intelligence and networking as a new starting point, and will surely stand out in the new round of global competition.
Endogenous force: the hard foundation of Chinese car companies' globalization
At the same time, the globalization of Chinese car companies has accumulated strong endogenous forces. Endogenous forces come from many aspects, such as products, supply chains, brands and business operating models.
At the product level, Chinese enterprises have solved the difficult problems of the original product quality, and the product quality even exceeds the level of some international brands. For example, the failure rate of thousands of cars, most of the international brands are about 8-10, and now some Chinese brands have reached 5-7, exceeding the industry average. In the new round of competition, Chinese brands can move forward and compete on the same stage in parallel with international big brands. As Zhu Huarong said: "It's not that it's similar to you, but it's already better than you." ”
Xu Haidong also believes that the competitiveness of our products has approached or reached the level of joint venture car companies. Our forward development capabilities have been relatively close to the level of the world's well-known car companies; the design ability or the ability to understand the appearance concept has been greatly improved; the product experience has been recognized by consumers and has been very close to the level of international car companies; the quality control ability has reached the international level; the speed of innovation, reaction speed and even exceed many multinational car companies. He said: "In terms of new energy vehicles, pure electric and hybrid models can compete with or compete with foreign countries. Now our new energy vehicles have been exported in large quantities to developed countries such as Europe, which shows that our models are competitive. But he reminded: "Automotive products should also do a good job of life cycle management." ”
In fact, Chinese car companies have successively set up R&D centers overseas, and comprehensive technology development has gradually kept pace with foreign car companies. For example, Chery Automobile has established a global R&D system that "the sun never sets" including six major R&D centers in North America, Europe, and Shanghai, China. Up to now, Chery Automobile has applied for more than 23,000 patents and authorized more than 14,000 patents, including nearly 1/3 of the invention patents, ranking the forefront of the automotive industry. Chery Automobile has applied for more than 500 foreign patents in more than 10 overseas countries and regions such as the United States, Europe, Japan, Russia, Brazil and Chile. At the same time, the production base adopts the "Chery Production Method (CPS)". It is the sixth largest global co-production system after Toyota TPS, Volkswagen KPS, GMS, etc., and the first global production management system of its own brand. This has laid a solid foundation for Chery Automobile's global development.
At the supply chain level, Xu Haidong said: "Our supply chain management capabilities are close to or have reached the level of internationally renowned car companies. "Looking around the world, we will find that the supply chain of China's automotive industry chain is relatively complete and generally controllable, although there are still some shortcomings and even "card neck" problems, such as chips and operating systems. Chen Qingtai, chairman of the China Electric Vehicle 100 Association, said: "The subversion of future cars to traditional cars will make more than 50% of the traditional parts system face restructuring. Therefore, we must work those shortcomings and card neck links, and seize the strategic opportunity of global automotive supply chain and value chain reconstruction. Before the technical barriers and system barriers of auto parts in the future are formed, we must accelerate the strengthening of the industrial chain supply chain.
At the brand level, Chinese car companies are changing from product exports to brands going global. Xu Haidong said: "In the competition of similar products, now our exports are not won by low-price competition alone, which is a relatively big change. "In addition to the excellent quality of the product itself, the value of the brand is gradually emerging." The globalization path of Chinese car companies is basically similar to chery Automobile. Chery Automobile's globalization strategy is divided into three steps: first trade "going out", then "going in", and then "going up" to the brand. Chinese auto brands are accelerating their strategic transformation or re-capabilities to enter the mid-to-high-end market. Zhu Huarong said: "Chinese brands should seize historical opportunities, especially to seize the opportunity period of development in the next 3-5 years and seize the international market. "World-class Chinese brands will be born in the next 10 years."
At the level of business operation model, Chinese car companies now have more and more flexible choices in the process of globalization. In the past, Chinese car companies mainly relied on trade to sell products overseas, but now in addition to trade, they can also take direct investment in factory building, brand acquisition, joint venture cooperation and other ways. For example, Great Wall Motor has established vehicle production bases in Russia, Thailand, Brazil and other places. Sun Guang, deputy general manager of Great Wall Motor's international business, said in an interview with Auto Vertical: "Great Wall Motor has changed from a single export type to a localized deep-plowing model, from a trade-oriented to a deep-rooted localization, to achieve a true sense of globalization. Another example is Geely's acquisition of 100% of Volvo Cars' equity and related assets; in 2018, Geely acquired a stake in Daimler Group and acquired 9.69% of its shares. In addition, Chinese car companies have also begun to try to exchange technology and management for overseas markets, which is the opposite of China's use of market for technology earlier, thus opening up a new path for the globalization of Chinese car companies.
Of course, the endogenous force of the globalization of Chinese car companies still has shortcomings such as the output of management models, which need to be continuously strengthened. Xu Haidong said: "When we go overseas to develop, if we want to tell a good story, we need to export management models and values. This is a lesson that Chinese car companies must do well. ”
Note: This article was first published in the "Cover Story" section of the April 2022 issue of Auto Magazine, so stay tuned.