Jiwei Network News, on April 18, the Ministry of Industry and Information Technology took action immediately after the national video conference on ensuring the smooth flow of goods and promoting the stability of the industrial chain supply chain, refining and implementing various measures to ensure the stability and smoothness of the key industrial chain supply chain and the normal production and operation of enterprises.
Among them, regarding the resumption of work and production of the industrial chain, the Ministry of Industry and Information Technology pointed out that it is necessary to grasp the "white list" system of the supply chain of the key industrial chain, establish a daily scheduling mechanism for leading enterprises in the key industrial chain such as automobiles, integrated circuits, consumer electronics, equipment manufacturing, agricultural materials, food, and medicine, give play to the role of the smooth coordination platform of the industrial chain supply chain, strengthen the coordination between the front and the rear, the upstream and downstream connections, strengthen the linkage between the ministry and the province, and ensure the stable production of key enterprises and the smooth operation of the key industrial chain.
The epidemic in Shanghai was unexpected, and the impact on the industrial chain has become more and more serious over time, and even triggered the risk of national shutdown. From the global level, this kind of situation that involves the whole body is even more so, the Russian-Ukrainian conflict has led to the rise of raw materials, the structural shortage of chip production capacity has formed an impact on most enterprises, in the face of more unknown risks in the post-epidemic era, the strategy of car companies may change, where will the automobile market go?
Global risks continue, car companies strategy or adjustment
The China Automobile Association recently released the domestic automobile production and sales data in March and the first quarter, and pointed out in the report that in March, the domestic epidemic situation has recently occurred, the difficulties of market players have increased significantly, the smooth economic cycle has encountered some restrictions, and the new downward pressure has further increased. From the perspective of automobile supply, the shortage of chips has not been significantly alleviated, the price of raw materials for power batteries has risen rapidly, further pushing up the manufacturing costs of enterprise products, the production and operation activities of automobile companies have been affected to a certain extent, and the overall situation is less than expected; from the perspective of automobile consumption, the consumption momentum is obviously insufficient, and compared with the same period, it shows a certain decline.
Since the end of March, Shanghai has been in a state of near-shutdown, and He Xiaopeng, chairman of Xiaopeng Motors, said that if Shanghai and its surrounding supply chain companies cannot find a way to dynamically resume work and production, all Chinese automakers may have to stop work and production in May. Combined with the current situation of resuming work and production, the year-on-year data of China's automobile production and sales market in April will not be optimistic.
Looking at the world, whether it is Chinese or overseas companies are still suffering from headaches for lack of cores and rising raw material prices, their performance has also suffered a certain degree of impact.
Jianghuai Automobile announced that it is expected to lose about 307 million yuan in the first quarter of this year, affected by the epidemic and chip shortage, the company sold 129,400 vehicles and chassis of various types of vehicles and chassis in January-March 2022, down 11.67% year-on-year, while the price of raw materials such as chips and batteries rose due to the increase in import costs, and the gross profit of the main business in January-March 2022 decreased by about 418 million yuan compared with the same period last year. In terms of automobile production and sales, the total sales of automobiles in March 2022 were 42,700 units, down 21.64% year-on-year; in the first quarter of 2022, the company's automobile sales totaled 129,400 units, down 11.67% year-on-year.
Volvo said car sales fell 22 percent to 58,677 units in March due to specific semiconductor shortages, while the shortage is expected to affect production in the second quarter.
The South Korean auto industry pointed out that kia motors owe South Korea "outstanding orders" from 100,000 units at the beginning of last year to 400,000 units at the beginning of the year, and increased to 500,000 units in March, including the number of Hyundai cars, a total of more than 1 million units, equivalent to 15% of Hyundai/Kia's global sales of 6.66 million units last year.
The structural shortage of chip production capacity continues, the price of raw materials caused by the conflict between Russia and Ukraine has risen, and the repeated epidemic situation in some regions has exposed the global market and supply chain to unpredictable risks and pressures. A recent report by AutoForecast Solutions (AFS) notes that estimated global car sales have shrunk by about 1.4 million units year-to-date due to chip shortages, with full-year forecasts showing that car sales in Europe will be well below 1 million.
The report notes that as traditional manufacturers begin to signal a retreat, auto sales forecasts for the European region remain particularly bleak. Volkswagen Group, for example, recently announced that it will prioritize producing cars in the U.S. and China over the European Union.
While Asia is actually the region least affected by the semiconductor shortage, especially in the Chinese market, sales are less affected, but China will be caused by a sudden localized decline in productivity, such as the severe outbreak in Shanghai.
The report stresses that these decisions have upended global trade and are likely to do so again – potentially making an already bad situation worse. If the plant is not allowed to operate normally, it can have a serious impact on the global supply chain.
Car companies are facing a dilemma, neither in nor out, they need to find new ideas, in order to ensure a certain profit when sales and manufacturing are in a dilemma, and the change of car strategy may make the car "go back to the past".
Focus on high-end models, cars back to "luxury"?
In an interview with the Financial Times, Volkswagen Chief Financial Officer Arno Antlitz revealed that Volkswagen's key goal now is not sales growth, but profits. Volkswagen said it hopes to discontinue 60% of its internal combustion engine vehicles in the next eight years, and after simplification, it can focus more on these fewer models.
Volkswagen's strategy is running counter to the past, from the past to fight with various Haojie sales to the present, what Volkswagen wants to do is to focus on selling high-end cars of brands such as Audi and Porsche, and really pay attention to high-end users. Behind this is actually a by-product of the epidemic, car companies from the beginning of the epidemic experienced inability to produce, demand weakened to China's epidemic has been effectively controlled, demand rebounded sharply, began to catch up, subvert the original business model, to create more advanced, more innovative products. But now some car companies want to prioritize limited chips on high-end models because they find that although sales will decrease, they will make more money.
This forced approach due to the impact of the epidemic has made car companies have some eyebrows, perhaps to change the past to use quantity as a source of revenue and profits, and to change to quality. But doing so, the car may return to the days before the Ford Model T.
The Ford Model T is considered the most important automobile invention of the 20th century, because it is the world's first automobile assembled on the production line, it is cheap, it is known as the "historic civilian car", so the car can be regarded as a real ordinary people's home.
From this point of view, in the various decisions to deal with the post-epidemic era such as "first delivery and then reload", Volkswagen's strategy of change is quite radical, if it is boldly focused on high-end models, then Volkswagen will no longer be "Volkswagen" but become a "luxury" in the eyes of ordinary people.
As the leader of the global automotive market, Volkswagen's approach can be described as survival in the cracks, after just announcing the transfer of production positions, China is facing the dilemma of the Shanghai epidemic, and the resumption of work and production in Shanghai is still advancing.
When Shanghai enterprises resume work
The Ministry of Industry and Information Technology recently sent a working group to Shanghai to concentrate resources on promoting the resumption of work and production of 666 enterprises in key industries such as integrated circuits and automobiles. The Shanghai Municipal Commission of Economy and Information Technology announced the first batch of key enterprises "white list" on the 16th, of which more than 250 are related to automobiles, such as Tesla, SAIC Volkswagen, SAIC-GM and so on.
SAIC Motor issued guidelines for the prevention and control of the epidemic situation for resuming work and production, and opened a stress test on the 18th, and the core component factories driven by SAIC Automakers will gradually enter the stress test to discover and solve possible risks and problems in a timely manner. It is understood that more than 1,000 automotive industry chain enterprises in Shanghai have been affected by the operation in order to ensure production, SAIC Motor is preparing for the resumption of work and production, and will conduct investigation and preparation for the resumption of work, employees returning to work, commuting, service capabilities, supply chain capabilities, safe production, indoor and outdoor transportation, etc.
However, at present, there is still a lot of resistance to the resumption of work and production of enterprises, and the difficulty of employees returning to work has become a major problem. An employee of a medical equipment manufacturing enterprise told Jiwei Network that the company is preparing to resume work and production recently, and is still communicating with the district government, the street and the neighborhood committee to approve the pass, and there is no clear date for resuming work.
"The requirements of each community neighborhood committee are different, and some neighborhood committees only give permits for the same day to enter and exit, which is not feasible for enterprises to resume work." The employee said that the pass approval process is cumbersome, involving multiple departments, and Shanghai is currently divided into three control areas, of which the strictest sealing area is almost impossible to release.
It can be seen that whether it is equipment manufacturing or the automobile industry, it will take a little time for the first batch of key enterprises to successfully resume work and production, and this depends on the implementation of various departments, especially the implementation of community neighborhood committees and properties, if the final arrival rate of employees is obviously insufficient, the resumption of enterprise production will be delayed.
The sequelae of the epidemic have sounded the alarm bell for the automotive industry chain, whether it is the current round of Shanghai epidemic or the Russian-Ukrainian conflict, there are many unpredictable risks in the future, and these risks will easily hit the market and consumer sentiment, and it is understandable that enterprises try different strategies and business models, but whether Volkswagen's aggressive strategy will become a vane of the global automotive market cannot be conclusive. Analogous to the mobile phone market, the public's strategy is close to Apple, but outside of Apple, there are Android brands that include all price ranges, and now Apple is looking down, Android is going up, behind which is driven by consumer willingness.
(Proofreading/Sharon)
![Insiders interpret SAIC's resumption of work: there is little hope of recovery in batches in April[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)