Car giants "compete" for idle production capacity And many places rekindle the dream of the automobile industry

After experiencing rapid capacity expansion, the approval of mainland automobile production capacity may be further tightened.

Recently, the relevant person in charge of the National Development and Reform Commission said that vehicle enterprises should highlight the key layout, rely on the existing production base to continue to develop, and no longer add new production capacity distribution points before the existing base reaches a reasonable scale. As early as 2021, the relevant person in charge of the Ministry of Industry and Information Technology also said that it is necessary to give full play to the role of the market, encourage enterprise mergers and acquisitions to become bigger and stronger, and further improve industrial concentration.

According to the "Analysis of Mainland Passenger Vehicle Production Capacity in 2021" released by the Federation of Passenger Vehicles, by the end of 2021, the total production capacity of passenger cars nationwide will be 40.89 million units, and the capacity utilization rate will be 52.47%. Although it is 4% higher than 48.45% in 2020, it is still in the range of serious overcapacity. In 2021, 3.326 million new energy passenger cars were sold, while the dedicated production capacity of new energy passenger cars was already 5.695 million units, and the capacity utilization rate was 58.4%.

Driven by favorable policies and markets, many idle production bases and production capacities that have been "neglected" are becoming new choices for car companies to expand their production scale, such as Geely Automobile "taking over" Chongqing Lifan, And Great Wall Motors "holding hands" Cheetah Motors.

A number of industry insiders said in an interview with the "China Business Daily" reporter that with the rapid development of new energy vehicles, the mainland automobile industry is accelerating the reconstruction, and the idle production base and production capacity previously formed are becoming the "optional targets" for the head enterprises to expand production capacity, while promoting the automotive industry to the era of "qualitative change", it can also further promote the development of the local economy and the automobile industry by revitalizing idle production capacity.

Increased sales targets

After experiencing a substantial increase in sales in 2021, the sales of new energy vehicles still show a continuous upward trend.

Zhongtai Securities Research Report statistics show that in the domestic "new car-making forces", the top five sales in March this year are Xiaopeng, Nezha, Ideal, Zero Run and Weilai, with sales of 15414 vehicles, 12026 vehicles, 11034 vehicles, 10059 vehicles and 9985 vehicles, with a year-on-year growth rate of 202%, 270%, 125%, 909% and 38% respectively.

In addition to a number of "new car-making forces" released sales results, on April 7, Geely Automobile released information that in March, pure electric vehicle sales were 11,900 units, an increase of 538% year-on-year, and BYD also announced that it would stop the production of fuel vehicles at the same time as releasing the March production and sales express, thus becoming the world's first traditional car company to officially announce the suspension of fuel vehicles.

According to data from the China Association of Automobile Manufacturers (hereinafter referred to as "CAAM"), from January to February this year, the cumulative sales of mainland vehicles reached 4.268 million units, up 7.5% year-on-year. Among them, the cumulative sales of new energy vehicles were 765,000 units, up 154.7% year-on-year.

On April 7, the China Automobile Association estimated that the sales volume of the automotive industry in March 2022 is expected to reach 2.249 million units, an increase of 29.5% month-on-month and 11% year-on-year, based on the weekly reports reported by 13 key enterprises, and the cumulative completion of 6.517 million units from January to March 2022, an increase of 0.5% year-on-year.

It is worth noting that although it is still plagued by problems such as chip shortages and rising raw material prices, the momentum of sales growth in the new energy automobile industry has not been greatly affected. In this case, industry research institutions and car companies have also raised their sales targets for 2022 or the next few years.

"The original sales of new energy passenger vehicles in 2022 were expected to be 4.8 million units, but now it should be adjusted to more than 5.5 million units, and the penetration rate of new energy passenger cars has reached about 25%. In 2022, the sales volume of new energy vehicles is expected to exceed 6 million, and the penetration rate of new energy vehicles is about 22%. The multiplication association said.

Many car companies have also significantly raised their sales targets for 2022 on the basis of sales in 2021. According to the financial report data, Geely Automobile's total sales in 2021 will reach 1.328 million units, and the delivery target for the whole year of 2022 will be 1.65 million units, and a number of new energy models including hybrid will be launched.

Geely Automobile CEO Gan Jiayue said that in 2022, it will continue to increase investment in research and development of new energy products, and make full efforts in pure electricity, super mixing, alcohol-electric hybridization and power exchange.

According to reports, by 2025, Geely Automobile's new energy vehicle sales will reach 900,000 vehicles, accounting for 30%, coupled with the Extreme Kr automobile brand, Geely Automobile's overall sales of new energy vehicles will account for more than 40%.

In addition to Geely Automobile, Chery Group has set its sales target for 2022 as "ensuring annual sales of 1.5 million vehicles and striving for 2 million vehicles", according to the plan, by the end of the "14th Five-Year Plan", Chery Group's products will achieve 100% new energy and 100% networking. Great Wall Motors has set a goal of "achieving annual global sales of 4 million vehicles by 2025, of which 80% are new energy vehicles".

Revitalize spare capacity

Although the sales of new energy vehicles have maintained a significant growth momentum, the automotive industry is also facing problems such as idle production capacity.

"In the traditional automotive industry, including the new energy automobile industry, many companies have previously 'raced' to arrange production capacity, which has caused the overall utilization rate of production capacity is not high or even overcapacity." Relevant departments are now adjusting by strengthening macro-control, pressure drop capacity, optimizing layout, etc., which is actually good information. The relevant person in charge of the competent department of the automobile industry in a certain place in East China told reporters.

"During the '14th Five-Year Plan' period, in the face of the gradual opening up of foreign investment and increasingly fierce market competition, the elimination of domestic car companies intensified." ACCORDING TOID Consulting Automotive Industry Research Center, the dominant enterprises are bigger and stronger through mergers and acquisitions, while increasing brand competitiveness through global layout; car companies with weak R&D capabilities and product competitiveness will gradually withdraw from the market stage.

In this case, the head car company is setting off a round of "consolidation" of idle production capacity. For example, Geely Automobile, as the head car company, has successively "held hands" with Chongqing Lifan and Cheetah Motors.

On April 27, 2020, Geely Holding Group and the hunan provincial and Changsha municipal governments officially signed a strategic cooperation agreement to host the Changsha plant of Cheetah Automobile under the State-owned Enterprise Changfeng Group in Hunan Province, engaged in the production and sales of new energy vehicles.

The reporter further combed and found that in addition to Geely Automobile, Great Wall Motors had taken over the Hanlong Automobile Factory in Daye City, Hubei Province, and merged and reorganized the Jingmen Factory of Cheetah Automobile and the Linyi Zotye Automobile Base. In March this year, the market also reported that Chery Commercial Vehicle will cooperate with Southeast Automobile.

In addition, in addition to the idle production capacity of weak brand car companies being "absorbed", in recent years, the idle production capacity of joint venture brands has also been absorbed by many car companies. For example, the second plant of Dongfeng Honda has been officially taken over by Dongfeng Honda and will be transformed into a pure electric vehicle production plant.

"The idle capacity of traditional fuel vehicles can be utilized through the transformation of production lines, so the problem of idle production capacity of fuel vehicles can be solved and investment waste can be avoided." Bai Yiyang, manager of the international research department of CMB, told reporters, "As far as the current relevant policies are concerned, it is a very good exit channel for 'zombie enterprises' with idle production capacity, which can be withdrawn at one time through transfer and other means, and can also earn long-term foundry fees through foundry and other means." ”

Some auto industry experts also told reporters that for the head car companies with funds, technical strength, and products that are more popular with the market, revitalizing idle production capacity through mergers and acquisitions can not only compress the time for investment and construction, meet the demand for capacity expansion, but also avoid the waste of resources such as original plant equipment and land, while improving the capacity utilization rate of the industry and achieving a win-win situation.

Drive the development of the industrial chain

While the head car companies have become "white knights" and expanded their market share by "absorbing" idle production capacity, many places have also been able to "rekindle" the dream of the automobile industry.

"Dongfeng, FAW, GAC, SAIC, BYD, Geely, as well as Weilai, Xiaopeng and other 'new car-making forces', everything that can be thought of has been looked for, but the other party either can't see it, or the price is too high." There are also low asking prices, but high risks. According to Hubei Daily, for the bumpy search for the idle production capacity of the Cheetah Automobile Jingmen Factory to "take over the party", Guo Jiacang, director of the Auto Industry Investment Branch of Jingmen High-tech Zone, said.

In February 2018, the Jingmen plant of Cheetah Automobile was officially put into operation, but after only producing and assembling more than 2,000 vehicles, it entered bankruptcy liquidation procedures in May 2019 and was "taken over" by Great Wall Motors. Hubei Daily reported that the move re-ignited the dream of Jingmen car building.

Coincidentally, in Daye City, Hubei Province, Hanlong Automobile has also been "taken over" by the head car company. The reporter noted that the revitalization of idle automobile stock resources was written into the "2021 Daye Municipal People's Government Work Report": "On the basis of existing industrial policies, revitalize existing idle assets, land and other resources, turn burdens into assets, and turn disadvantages into advantages." Focus on revitalizing Hanlong Automobile and drive automobile and parts enterprises to resume work and production. ”

In a province in East China, where a number of "new car-making forces" were gathered, a local government official also told reporters that the province has begun to coordinate and promote the revitalization of the original idle production capacity from the provincial level, and "several projects are being promoted" at present.

The relevant person in charge of the automobile department of a city in East China told reporters that for the production capacity of idle cars, it is best to use the production capacity, qualifications and equipment under the overall planning of "one game of chess in the whole country and one game in the whole province", otherwise it is really a pity to waste it. "However, in the process of integration, there may still be some policy obstacles, which require national or provincial level to jointly study and solve problems, through the revitalization of idle production capacity, drive the development of the local automobile industry chain, and further activate the local economy."