Going to sea has become an essential issue for Chinese auto brands.
Great Wall Motor, Geely Automobile, SAIC Motor, Chery Automobile... None of them want to go into the world. Changan Automobile is the same, even now that the domestic epidemic is making a comeback, it still insists on promoting its plan to go to sea.
At the 2022 Global Partnership Conference held recently, Changan Automobile released seven key actions, including the promotion of the international market, and set development goals for 2025 and 2030. According to the plan, by 2025, it is planned to build 2-3 overseas manufacturing bases; in 2030, The sales volume of the Changan brand will reach 4.5 million vehicles, of which overseas sales will account for 30%, that is, 1.35 million vehicles.
In order to achieve this goal, Changan Automobile revealed that when the international business environment improves, it will establish European headquarters and North American headquarters in Europe and North America in due course.
On the one hand, it is necessary to grab food from the mouth of global car giants such as Volkswagen and Toyota, and on the other hand, it is necessary to fight with other Chinese car brands such as Great Wall and Geely to lay out the speed. In addition, repeated epidemics and chip shortages are also affecting the development of the entire automotive industry.
In such a situation, Changan Automobile's plan to accelerate its going to sea may not be easy to implement.
In 9 years, sales increased fivefold
Last year, Changan Automobile's own brand export sales for the whole year were 114,000 units. If we want to achieve the export target of 1.35 million units by 2030, we need to achieve a compound annual growth rate of 31.6%, at least five times more than last year's sales. In the view of senior analysts at the Gaz Automotive Research Institute, Changan Automobile's export target for 2030 is more aggressive and difficult to complete.
According to the data, as early as 1991, Changan Automobile has begun its overseas business layout, and it is one of the earliest independent brands exported to overseas markets in China. At present, Changan Automobile products are exported to more than 70 countries and regions, including Russia, Asia-Pacific, the Middle East, North Africa and other markets, and the number of exportable products has risen after a long 30 years, until last year, when it exceeded 100,000 vehicles.
Image source: Changan Automobile
In the same period, Chery Automobile's exports have broken the 200,000-vehicle mark and are moving towards 300,000 vehicles. Latecomers, such as Great Wall Motors and Geely Automobile, will also export more than 100,000 units in 2021. SAIC Motor ranked first in the export of domestic car companies in 2021 with the total export volume of 697249 vehicles.
According to the previous plan, Changan Automobile's export sales target this year is 150,000 vehicles, and the relevant person in charge of Changan Automobile revealed to Gaz Automobile that the export performance in the first quarter of this year was good, and the annual trend was good.
However, it is worth noting that Changan Automobile's monthly production and sales reports do not disclose the export volume, the specific export development trend is still difficult to observe, and in the case of repeated epidemics in March and April, Changan Automobile's export sales may be difficult to be optimistic in the short term.
It is understood that Changan Automobile's vehicle exports are mainly two major ports: Tianjin Port and Shanghai Port. The two major ports have successively experienced epidemics, especially Shanghai Port, which is restricted by local control policies, and most of the imports and exports of goods are transferred to Ningbo Port, which in turn has a certain impact on Changan Automobile's export business. The relevant person in charge of Changan Automobile also admitted that it does have an impact.
Image source: Changan Automobile
Although the outbreak since March has gradually stabilized, the resulting tight supply of auto parts will take time to improve.
The areas where the epidemic has recently erupted are mainly the core areas of China's automotive industry, involving three major regions, such as Jilin, Shanghai and Guangdong. According to the statistics of the Gaz Automobile Research Institute, the total output of light vehicles in the three regions in 2021 is 6.02 million units, accounting for nearly 30% of the total output of light vehicles in the mainland, and there are a number of international and local parts and components enterprises densely distributed here, including Bosch, Continental, ZF, Faurecia, etc., and the supporting customers involve Volkswagen, GM, Ford, SAIC, FAW and the vast majority of vehicle companies. A number of car companies, including Changan Automobile, have said that the shortage of parts caused by the epidemic has made production capacity tight or even stopped production.
Image source: Changan Automobile
At the same time, since the epidemic, the price of raw materials, lack of core, less electricity and other industrial dilemmas linger, more and more vehicle companies can not bear the cost pressure brought by it, have announced price increases, and the current price increase tide has also spread rapidly from new energy vehicles to fuel vehicles.
In this context, Changan Automobile wants to achieve export planning as scheduled, which is probably becoming more and more difficult. But even so, Changan Automobile still has no plans to adjust its export business targets this year. In Changan Automobile's view, the recurrence of the epidemic in the short term will bring certain fluctuations to the export business, but such fluctuations are only temporary. It said it would make every effort to achieve this year's business goals in accordance with the established business rhythm and planning.
Is it time to speed up the sea?
From the perspective of the general environment trend, the epidemic will not affect Changan Automobile's long-term export planning, and the superimposed policy supports the car companies going to sea, and in the view of Chinese auto brands such as Changan Automobile, this stage is the best time to accelerate the layout of overseas markets.
As China's auto market enters an incremental era and the growth rate gradually slows down, Chinese auto brands need to open up new markets to ensure the rapid development of enterprises. The China Automobile Association predicts that the sales volume of China's automobile market is expected to reach 30 million vehicles in 2025, with a compound annual growth rate of 3.6%. In the new five-year plan released by more than a dozen car companies such as SAIC Motor and Changan Automobile last year, the total sales target for 2025 has exceeded 40 million vehicles, completely exceeding the estimated domestic market capacity of the China Automobile Association.
Image source: Changan Automobile
By 2025, Changan Automobile's sales target is 4 million vehicles, of which 3 million are under the Changan brand and 1.05 million new energy vehicles, accounting for 35%; the sales target for 2030 is 5.5 million units, which is half of Toyota's current global sales. Relying solely on the domestic market may not guarantee the achievement of the target.
At the same time, new energy and intelligence have increased the weight of China's auto brand layout in the global market. "The new generation of intelligent vehicles based on clean energy will constitute a new pattern for the development of the future automobile industry, and Chinese automobiles are ushering in the best era!" Wei Jianjun, chairman of Great Wall Motor, has publicly stated that in the next three to five years, it will be the only opportunity for Chinese auto brands to surpass and lead the new track of new energy and intelligent networking.
Changan Navy C385, image source: Changan Automobile
Analysts at the Gaz Automotive Research Institute believe that at present, China's high-end new energy products have a certain competitiveness in the global market, and such models have obvious advantages in intelligence and can meet the needs of consumers in the European and American markets. Local vehicle companies have not yet built advantages in the exploration of electrification and intelligence. In addition, in recent years, the epidemic situation in the European and American markets has seriously superimposed on the slow development of the industrial chain, the delay in relevant laws and policies, etc., resulting in insufficient supply of local automobile production capacity, which has also given Chinese vehicle companies the opportunity to quickly enter the relevant market.
The data shows that in 2021, the export volume of new energy vehicles increased by 3 times year-on-year to 310,000 units, and the export countries include the United Kingdom, Germany, France, Norway and other new energy vehicle countries.
Changan Automobile believes that the rapid development of new energy and intelligent networked vehicles is an opportunity for Chinese auto brands to rise and participate in global competition. In the next ten years, we must seize the opportunity to complete the upward transformation and become a global car company.
How can I shorten the gap?
Time is running out, and Chinese auto brands with a competitive force are accelerating their layout in overseas markets. Among them, Chery Automobile, Great Wall Motor, Geely Automobile and SAIC Motor have all achieved the latecomers to catch up. What Changan Automobile needs to consider is how to change the decline and return to the mainstream camp.
It is reported that Changan Automobile's product exports at this stage mainly use KD (bulk assembly) mode to reduce costs. Its overseas production base is under planning, and the location has not yet been announced.
In contrast, Great Wall Motors has built a production base in Russia and has rapidly realized localization production through the acquisition of GM's factories in India and Thailand; SAIC Motor has gradually opened its popularity in overseas markets with the help of its MG brand of British descent; Geely has accelerated its global layout through and acquired a number of overseas car companies, such as Volvo in Sweden in Europe, and Proton Automobile in Southeast Asia; Chery Automobile has always attached importance to export trade, and has caught up with export dividends in recent years, with rapid sales growth.
Image source: Changan Automobile
Among them, Geely's Lynk & Co brand has built several experience stores in the European market by taking advantage of Volvo's technology and channels, and achieved sales of more than 10,000 last year.
From this point of view, Changan Automobile is slightly inferior in terms of layout speed and market performance.
It should be known that Changan Automobile's layout of overseas markets, its competitors are not only Great Wall, Geely and other car companies that are also Chinese automobile brands, but also face competition with international auto giants such as Volkswagen and Toyota. Compared with the accumulation of host car companies such as Volkswagen in overseas markets, Chinese auto brands represented by Changan Automobile need to start from scratch.
However, as mentioned earlier, accelerating the global layout is a necessary part of every Chinese car brand or even a local auto industry enterprise to conquer the new track, so it is imperative to narrow the gap with competitors as much as possible and quickly integrate into the local market.
The key to this is the localization strategy.
Industry insiders believe that Changan Automobile must first be familiar with local policies, regulations and market demand, adapt to local conditions, and then decide whether to adopt the KD model for export or build a factory and put into production locally. In terms of sales channels, it is possible to cooperate with local distributors, which is also a shortcut to quickly enter the local market.
Taking the european and American markets as an example, changan automobile chooses which brand and which product to open the situation is extremely critical. Senior analysts at the Gaz Automotive Research Institute believe that the European and American markets are more exuberant for high-end new energy vehicles, and Changan Automobile can focus on new brand new energy vehicles - deep blue; in the face of Russia, Southeast Asia and other markets with similar needs to Chinese consumers, it can focus on cost performance, and sell UNI series, CS75 and other main models in the local area.
Image source: Changan Automobile
In addition, in terms of global model development, Changan Automobile said that it will improve the global product synchronous development system, focus on classic products, create high-end products, and form a variety of 10,000-vehicle products.
Based on the above, although Changan Automobile lags behind Great Wall Motors and other car companies in the rhythm of the overseas layout, it is believed that after Changan Automobile continues to increase its layout for the future and launch products that adapt to the local market, this gap is not impossible to narrow.
Grasping the new energy and intelligent development of China's automobiles, completing the brand upwards, accelerating the layout of overseas markets, and realizing the transformation of globalization are what Changan Automobile is doing.
However, the road of global transformation is difficult to achieve overnight, and it may not be an absolutely impossible goal to achieve overseas export sales in nine years, but for Changan Automobile, if it wants to stand on the international stage and compete with Volkswagen, Toyota and other brands, it is necessary to be more down-to-earth in action and take every step.