SAIC Motor Group "Behind Closed Doors"

Text/Leju Finance Jin Wenyu

The sudden rebound of the epidemic has made the "myth" of the whole vehicle king constantly being broken.

Recently, due to the outbreak of the epidemic in Jilin, Shanghai, Jiangsu and other places, most local auto parts companies have temporarily stopped work and stopped production, which directly affected the production of vehicle enterprises.

As an important automobile town, Shanghai's automobile industry chain has been tested in this round of epidemic. According to the data, in 2021, the national automobile production will be 26.528 million units, of which Shanghai Automobile will produce 2.833 million vehicles, accounting for 10.7% of the country. In 2021, Shanghai's cumulative new car sales reached 736,700 units, an increase of 11.5% year-on-year.

As the largest local car company in Shanghai, SAIC Motor (600104. SH) is also facing the crisis of parts supply and shutdown under the impact of this round of the epidemic.

It is understood that the main vehicle enterprises affiliated to SAIC Motor Include SAIC Passenger Vehicle Branch, SAIC Maxus, Zhiji Automobile, Feifan Automobile, SAIC Volkswagen, SAIC-GM, SAIC-GM-Wuling, Nanjing Iveco, SAIC Hongyan, Shanghai Shenwo, etc.

In 2021, SAIC Motor sold 5.464 million vehicles and delivered more than 5.81 million vehicles at the terminal, an increase of 5.5% year-on-year, maintaining the first place in China for 16 consecutive years. SAIC's own brands sold 2.857 million vehicles, accounting for 52.3% of total sales, exceeding 50% for the first time. Sales of new energy vehicles reached 733,000 units in the same period, an increase of 128.9% year-on-year, ranking first in China and second in the world.

Now, affected by the epidemic and other factors, it is roughly estimated that SAIC Motor's production stopped production for one month, and its production capacity loss is expected to reach nearly 100 billion.

"Behind closed doors"

Since the rebound of the epidemic, many automotive supply chain enterprises in Shanghai have prepared plans before the sealing management to ensure that production is maintained during the sealing period.

It is understood that SAIC Began to close some plants in mid-to-late March. In order to grab back the original delayed work progress, SAIC Motor group in addition to the automakers, engine plant employees, outsourced logistics personnel, suppliers, as well as security chefs and other thousands of people to eat and live in the factory.

Since March 24, the SAIC Design Center in Anting Town has begun closed management and production, and 62 employees have completed the phased model review of more than a dozen models of Roewe, Extraordinary and MG brands in three weeks.

In addition, SAIC Passenger Car Company and SAIC Group Innovation and R&D Institute also call on employees to settle in the company's life and production according to Shanghai's epidemic prevention regulations, and employees work during the day and sleep on the spot at night, taking the factory as their home.

In order to ensure the smooth operation of the work, the general manager office of the passenger car company prepared bunks, sleeping bags and toiletries for the employees before the closed management. Although all kinds of material support are available, they can only sit on the ground every day, and the living conditions are very difficult.

The 28 employees of the front line of Zhiji Automobile formed a "commando team" of production and supply, and they packed up their luggage and returned to the Lingang factory before the implementation of closed management in their own community. To ensure smooth delivery, they began working from 8 a.m. to 2 or 3 a.m., sometimes without rest for 18 hours.

"Eating and living in the factory has regained production capacity to a certain extent, but the follow-up supply chain problems cannot be guaranteed, which directly leads to factory production reduction or partial shutdown." Some people related to the automotive industry said.

The automotive industry is a complex category involving raw materials such as steel, metallurgy, ceramics, as well as electronics, electrical appliances and other industrial sectors, and the industrial chain is extremely long. The inventory cycle of raw materials and spare parts used by SAIC Volkswagen for production is usually 2 weeks, and after these stocks are consumed, SAIC Motor group is forced to stop production at the critical stage of sealing and control due to insufficient inventory of parts in the factory.

Production and sales declined

In fact, the impact of the epidemic has been reflected in the production of automobiles. According to the statistics of the Association of Passenger Vehicles, in March this year, domestic automobile production and sales have declined to varying degrees, and the retail sales of the narrow passenger car market in March were 1.579 million units, down 10.5% year-on-year.

According to the latest production and sales data released by SAIC Motor a few days ago, SAIC Motor produced a total of 419,700 vehicles in March, down about 16% from 499,200 units in the same period last year; and the total vehicle sales in March were 443,000 units, down about 10.11% from 492,900 units in the same period last year.

In the first quarter of this year, SAIC Motor's total vehicle sales reached 1.2206 million units, an increase of 6.8% year-on-year. The reason for the 6.8% increase is mainly due to the large sales growth in the first two months, especially in February, SAIC Motor Achieved a single month sales growth of more than 30%.

From January to February this year, although there were sporadic outbreaks of epidemics in China, they were far from reaching the level of lockdown, which also provided a relatively stable environment for the steady production of most car companies. However, since March this year, due to the impact of the epidemic and other factors, the sales volume of the domestic automobile market has fallen by about 15% year-on-year, and the production and sales of SAIC Volkswagen have also been affected.

According to the data, SAIC Volkswagen sold about 110,000 vehicles in March, a slight decrease of 2.21% year-on-year. It is reported that SAIC Volkswagen's Shanghai plant has a total of one plant, two plants, three plants and new energy vehicle plants, all located in Anting Town, Jiading District, Shanghai headquarters. In the prevention and control of the epidemic, these factories have suffered a huge impact on production and sales.

It is reported that before the closed-loop management, SAIC Volkswagen Anting No. 1 Factory produced more than 320 vehicles per day, while during the closed-loop management period, it produced 200 vehicles per day. Although production has been stabilized, the production capacity has been directly reduced by nearly 50%.

In addition, SAIC-GM, whose main plant is located in Shanghai, was also affected in this round of the epidemic.

According to the data, in the first quarter of this year, SAIC-GM's cumulative automobile production was 273,900 units, down 19.83% year-on-year; in the first quarter, sales were 274,500 units, down 18.24% year-on-year. Judging from the performance in March, its monthly production and sales were only 88,700 units and 88,500 units, respectively, down 31.30% and 31.42% year-on-year.

Signals for resuming work and production

For car companies, the supply chain management of automobiles is a problem. It is necessary to comprehensively consider the quality, brand, cost, efficiency and logistics of the parts, and to consider the matching degree of its own products and brands. Under the impact of the epidemic, the automotive supply chain system, which already had some blockages and difficulties, quickly lit up red lights.

Due to the contradiction between supply and demand caused by the suspension of work, suspension of production or logistics obstruction of parts enterprises, it is urgent for the competent government departments to carry out macro adjustment to help relevant parts and components enterprises and vehicle enterprises bail out.

On April 15, SAIC Motor issued guidelines for resuming work and production. The guide pointed out that before the full unsealing of Shanghai, the Group uniformly reported the "white list" of enterprises that applied for the resumption of work and production in advance for its subsidiaries, requiring that in the early stage of resuming work and production, all units need to do a good job in the resumption of work, service capabilities, supply chains and other work, and prepare for the resumption of work and production.

Three days later, SAIC Motor officially launched the stress test for resuming work and production, mapping out the difficulties and blockages of the resumption of work, and preparing for the subsequent official resumption of work and production. This is undoubtedly a good signal for SAIC and its surrounding parts companies.

This time, not only will the automakers under saic motor brands carry out stress tests for resuming work and production, but also will drive some core parts factories such as Huayu Automobile and transportation enterprises such as Anji Logistics to enter the stress tests and do a good job in supply chain guarantee, logistics guarantee, closed production management and epidemic prevention measures.

SAIC staff said: "In the short term, the possibility of enterprises fully resuming work is still relatively low. In the future, SAIC Motor will also comprehensively consider the trend of the epidemic situation, stress test results, etc., and then formulate a further dynamic plan for the resumption of work and production. ”

Annual Report Series Review

Sinotruk: Tan Xuguang's first "double drop"丨 Annual Report (101)

Ganfeng Lithium Industry: Lithium Mine "Two Eats" | Annual Report (95)

Ankai Bus "Hanging Upside Down" 丨 Annual Report (87)

Yutong Bus: Breaking a Trend丨 Annual Report(84)

Jianghuai Automobile: Relying on subsidies to "turn around losses" | annual reports (78)

GAC Group: Spending money on the "crown"丨 Annual Report (74)

Jiangling Motors: "Bankruptcy" Dividend Sequelae | Annual Report (69)

For it, BYD has raised prices丨 annual report storm (63)

Ideal cars are not "ideal" | Annual Report(56)

The copyright of this article belongs to Leju Finance and may not be reproduced without permission

Source: Automotive V-line