How multinational car companies respond to the crisis in the car market is worth learning.
Text/Song Shuanghui
Since the outbreak of the new crown, the global auto market has begun to take the back, and the unfavorable factors are still increasing, chip shortages, supply chain crises, raw material price increases, the situation in Russia and Ukraine...
Looking at the financial reports of domestic listed car companies in the first quarter, it is indeed quite miserable, some car companies have suffered blood losses, most car companies have seriously declined in profits, and a small number of profits have increased, and the profit situation is not very optimistic.
However, looking at the first quarter financial report released by multinational car companies, it is a different scene. Although everyone also stressed that life is not good, the vast majority of car companies still have a sharp rise in profits, and their ability to make money has not weakened at all.
Why is there such a big gap in everyone's performance, and what is the problem?
Let's first look at the financial performance of independent brands, the net profit of the big brother SAIC Group in the first quarter fell by nearly 20%, the pressure resistance of Great Wall Motors was quite OK, and the net profit in the first quarter only fell slightly by 0.34% year-on-year.
Changan Automobile's net profit surge looks very good, but nearly 50% of it comes from non-operating profit and loss projects, and Avita Technology, which made a profit of 2.128 billion yuan through capital increase.
BYD's sales surged in the first quarter, net profit rose 240%, the performance can be described as firm, but the conversion into bicycle profits is only 2800 yuan, while Tesla bicycle profits of nearly 70,000 yuan, the gap is obvious.
Looking at the financial reports of multinational car companies on the other side, all except Ford have achieved revenue growth. In terms of profit, the operating profit of the Volkswagen Group rose by 75.7% year-on-year, and BMW, Mercedes-Benz and Hyundai Motor also achieved year-on-year profit growth.
The only loss-making Ford Motor Company is not because of the sluggish auto business, but mainly because of investment failures, and the market value of the Rivian held by it has shrunk significantly.
The performance of Japanese car companies that have not yet released their financial reports is also worth looking forward to.
According to a survey of 25 analysts conducted by Refinitiv, Toyota Motor's operating profit for the full year ended March 31, 2022, driven by strong demand and a weaker yen, is expected to increase operating profit by 37% to 3.02 trillion yen, Honda motor operating profit is expected to increase by 13% to 925 billion yen, and Nissan motor vehicle will increase by 50% to 318.5 billion yen.
The headwinds of the car market will not bypass any car company, and everyone is in the same fragile supply chain, enduring the impact of rising raw material, energy and freight costs.
So why is the pressure resistance of multinational car companies better?
Putting aside the foreign exchange environment such as the weakening of the yen, a better product mix, higher pricing, more effective cost control capabilities and the flexibility of global layout are the goggles for multinational car companies.
After the production capacity was under great pressure, multinational car companies adjusted their product layout in time, giving priority to the production of high-margin SUVs and luxury brand models, and cutting off those non-core products. Hyundai Motor said that the sharp profit surge in the first quarter was mainly due to strong sales of SUVs and Genises models.
The performance of the Volkswagen Group is more telling, the performance of Volkswagen, Skoda and Seat in the first quarter was average, but the profits of Audi, Lamborghini, Bentley and Porsche rose sharply, contributing a lot of profits to the entire group.
When production capacity is limited, car companies no longer use promotional means to attract consumers, but increase the price of new cars, and some of the pressure of rising costs is passed on to consumers, so even if sales have declined, revenue has increased.
Another ability, which is also the most lacking in independent brands at this stage, is the flexibility brought about by the global layout, in addition to helping car companies better coordinate the supply chain, but also so that they will not rely too much on the single market.
In the first quarter, when China, the world's largest automobile market, was affected by a new round of the epidemic, multinational car companies with layouts in North America and Europe were able to disperse the pressure well.
Commenting on the Group's performance in the first quarter, Volkswagen Group CEO Diess emphasized, "As a truly global company, we have extensive production capabilities in all major growth and sales markets around the world. Volkswagen's global presence mitigates the impact of many headwinds, so the Group remains firmly committed to expanding its global presence. ”
Turning the perspective back to China, the recurrence of the epidemic has not only led to the suspension of the domestic automobile supply chain, affecting automobile production, but also led to a decrease in consumer demand, and the purchasing power is seriously insufficient, so the impact on independent brands with domestic as the main position is very large.
Therefore, in the face of crisis, in addition to lamenting, we must learn to sum up experience. In recent years, independent brands led by Geely and Great Wall have accelerated the pace of globalization.
Just today, Geely Automobile just announced that it will enter the Korean market through its subsidiary Centurion Industries Limited, which holds a 34.02% stake in Renault Korea Motors.
Geely Holdings currently holds six brands, including Volvo Cars, Polestar, Lynk & Co, Geely Motors, London Electric Vehicles and Long-range Commercial Vehicles, and has strategically invested in Proton Motors, Lotus Motors and Taili Flying Cars, and is also the majority shareholder of Mercedes-Benz.
In the past two years, Great Wall Motors has successively acquired general plants in India and Thailand, Mercedes-Benz plants in Brazil, plus Tula plants in Russia, and achieved overseas market coverage for developing countries such as Asia and South America.
Of course, compared with multinational car companies, the overseas strategy of independent brands still has a long way to go, but only by cultivating internal skills can we truly achieve invincibility and invincibility in the car market.