As soon as it withdrew from China, multinational car companies stood up?

Produced by Tiger Sniff Car Group

Author|Li Wenbo

Edit|thoughtful

Head Image|Visual China

"There used to be 300,000 queues to buy, but now 100,000 people don't ask."

This is the arc of fate drawn in China by GAC Mitsubishi, a multinational joint venture automobile company founded in 2012.

On October 24, this arc finally crashed: GAC Group acquired 30% and 20% of the shares of GAC Mitsubishi Mitsubishi held by Mitsubishi Motor Industry Co., Ltd. and Mitsubishi Corporation respectively for a consideration of 1 yuan, and after the completion of the transfer, GAC Mitsubishi will become a wholly-owned subsidiary of GAC Group.

This means that after Suzuki and Acura, another Japanese joint venture brand has left the market from the Chinese car card table.

Like the two martyrs, Mitsubishi has also created its own "peak moment" in the Chinese market: between 2017 and 2019, GAC Mitsubishi sold 117,300 units, 144,000 units and 133,000 units respectively. Such results are already a burst performance for a medium-sized automaker that only produces SUVs.

However, since 2020, GAC-Mitsubishi has entered a downward channel, and its sales in China in the past three years have only been 75,000 units, 66,000 units, and 33,600 units, respectively. In the first half of this year, only 12,000 units were sold.

In stark contrast to the dismal performance in the Chinese market, Mitsubishi has achieved production growth in Asia, Europe and North America: in Asia excluding China, Mitsubishi produced 1.01 million units in 2022; Globally, Mitsubishi exported a total of 350,000 units in 2022. Combined, Mitsubishi produced nearly 1.4 million units worldwide last year.

From the data dimension alone, withdrawing from the Chinese market is a great blessing for Mitsubishi: in the future, there is no need to specially wrap dumplings for this vinegar.

And Mitsubishi does not want to make dumplings specifically for the Chinese market, and Skoda, headquartered in the Czech Republic and one of the four oldest car brands in the world.

In 2005, Skoda entered China. In 2007, the first domestically produced model, the Octavia, was launched. In less than half a year, this compact car, which starts at 124,900 yuan, sold 31,800 units. You know, the per capita disposable income of urban residents in China was only 13,800 yuan that year.

To buy the cheapest Octavia, a bachelor has to go 9 months without eating, drinking or consuming.

In those days, when a Octavia was opened, although it was not a serious "rich man", it "mixed well" and definitely did not run.

The Octavia gave Skoda a glimpse of Chinese's amazing spending power in cars. Soon, they moved the more expensive and larger mid-size sedan Superb (later Speed) into China. Good product power, reasonable pricing strategy, coupled with Jacky Cheung's appeal, made Skoda the limelight for a while.

In 2013, the millionth domestic Skoda rolled off the production line. From 2016 to 2018, Skoda sold more than 300,000 new cars in China for three consecutive years. The rapid expansion of the volume made Skoda busy counting money while further consolidating the public image of "public replacement".

But what no one expected was that Skoda's good days would soon come to an end.

From 2019, Skoda's popularity with Chinese began to enter a precipitous decline. In 2022, Skoda sold only 44,600 units in China, 13% of 2018 sales. China also fell from Skoda's largest single market in the world to sixth.

In the face of decline, Skoda CEO Klaus Zellmer could not sit still, he said that the Chinese market is too competitive, we will consider together with Chinese joint venture partners, only sell cars in China, not produce cars.

Translated into human words: In the past, Skoda in China was the "replacement" of the public. Now, the public itself is a "flat replacement", who will take a second look at the "flat replacement"?

Like Mitsubishi and Skoda, in the Chinese market, there are many multinational car brands that have fallen from the top to the bottom: Renault, Suzuki, Acura, Mazda, DS, Jeep, Fiat, Hyundai, Kia and so on.

According to incomplete statistics, in the five years from 2018 to 2022, 6 multinational automobile companies have completely withdrawn from the Chinese market. The remaining weak car companies that have not withdrawn are either half-dead or soulless.

Well-known multinational automobile companies, densely leaving the market from China, inevitably make people feel:

Are they really closing?

Actually, it's quite moist

In fact, for multinational car brands, whether they have withdrawn from China or survived in China, they are indeed experiencing serious injuries. But this wound will not let these multinational car companies die in an instant as many Chinese imagine.

Because, these brands of cars, Chinese don't like it, someone likes it.

Taking Skoda as an example, last year's global market sales were 731,300 units, down 500,000 units from the historical peak of 1,253,700 units.

But car companies that can sell more than 700,000 units a year are not linked to "bankruptcy". If this sales volume cannot continue to survive, the new Chinese car-making forces, which cannot even sell 200,000 units a year, should not be able to eat the turkey this Christmas.

For ŠKODA, India is the next China: in 2022, India contributed 51,900 new car sales to ŠKODA, the world's third-largest market after Germany and the Czech Republic. Skoda has also upgraded India to an important market for its internationalization strategy.

Another example is the "king of cars" Japan's Suzuki, after leaving the Chinese market in 2018, not only did not degenerate, but also flourished: the cumulative sales volume last year was 2.969 million units, ranking among the top ten global auto market share in 2022 with a score of 3.7%. In India, Suzuki is the god car, selling more than 1.6 million units a year, accounting for about 50% of the local market share.

This means that on the streets of India, one out of every two new cars is a Suzuki.

French Renault, which is about to fade from Chinese memory, still has a strong presence in the global market: in 2022, without the support of the Russian market, 1,466,700 new cars were sold. Among them, 230,000 are new energy vehicles, and in the European market, Renault's new energy vehicles are second only to Toyota and Tesla.

In the first half of this year, Renault sold 772,000 units worldwide, returning to the position of Europe's second-largest car brand.

Moreover, in the eyes of Chinese, these multinational car companies that are "almost finished" are not soft at all in earning money from people all over the world.

In 2022, the Renault Group generated cumulative revenues of EUR 41.7 billion and an operating margin of 5.6%, double the 2.8% recorded in 2021. Suzuki's net sales were $35.7 billion, $4 billion more than in 2021.

If you expand your vision to the global performance of brands such as Toyota, Honda, Volkswagen, General Motors, and Ford, which are increasingly weakening in the Chinese market, you will find that the blood they lost in the Chinese market has long been replenished by other markets.

Take the situation in the first half of this year as an example: Toyota is also the world's best-selling car brand, with a total result of 5.41 million units, leaving the gap of nearly 1 million units of Volkswagen in second place. Hyundai-Kia, Renault-Nissan-Mitsubishi, Stellantis, GM Group, Ford, Honda, and Suzuki ranked three to nine, and BYD entered the "world's top ten automakers" series for the first time with 1.26 million units, with a gap of 4.15 million units.

Not taking the Chinese market too seriously, it seems that it does not affect the Japanese, German, American and French automobile companies to live their small lives as hot as before.

Based on this background, a question immediately arises: how much weight does China still have in the global strategy of multinational car companies?

It's not that you don't report it, the time has not come

From the perspective of making money in your pocket, losing the Chinese market as a bowl of rice, multinational car companies will not starve to death at all, but will eat more and more fat.

For example, the Stellantis Group, which can only be used as a background board in China, achieved net revenue of 98.4 billion euros and net profit of 10.9 billion euros in the first half of the year, surpassing Volkswagen and Toyota, and is the world's most profitable car company.

For Stellantis, China is just a market, neither an important market, nor the only one.

Of course, the Stellantis Group is an isolated case and is not universal. For multinational car companies such as Toyota, Volkswagen, Honda and General Motors that have been in China for a long time and have relied on China for many years, China is still a very attractive key market, the only difference is that the core degree is not as high as before.

Because multinational car companies are completely unable to eat the dividends of China's new energy transformation in the case of comprehensive backward technology and Chinese brands, they can only continue to eat on the plate of traditional fuel vehicles while patiently waiting for the opportunity to turn over.

In the short term, the share snatched away by new energy vehicles will not shake the foundation of multinational car companies, which corresponds to their actual performance in the current slow transformation of new energy:

Since it doesn't affect making money, why bother yourself.

But once the time is extended, multinational car companies will find that they will soon experience the treatment that Chinese car companies have suffered in the Chinese market in the past two decades:

It is reversed and output by head.

We know that in the era of fuel vehicles, China's strategy is "market for technology", hoping that multinational car companies can simultaneously upgrade the technical level of China's overall automobile industry while making money. It is a pity that the big market has given it, but the core technology that has been exchanged back is pitiful.

However, in the era of new energy vehicles, the technical moat dug by multinational car companies in the field of fuel vehicles is basically a decoration and does not have any actual defense capabilities. If you want to catch up, you must take the global market and exchange Chinese technology.

You will see that in order to preserve the last dignity and decency, traditional automobile powers can be described as "tricks":

The EU officially launched a countervailing duty investigation into Chinese-made electric vehicles. In fact, before the investigation, the EU has successively introduced the "Net Zero Industry Act", "Key Raw Materials Act", "New Battery Law", "Foreign Subsidy Regulations" and carbon border adjustment mechanism, etc., and is waiting for Chinese car companies to enter the net.

French Minister of European Affairs Boone has publicly stated, "We will never allow excessive subsidies for electric vehicles to hit our market and threaten our companies, just like the solar panel industry." ”

French Finance and Economy Minister Le Maire has publicly expressed his welcome to von der Leyen's investigation into subsidies benefiting Chinese companies.

The United States formally passed the Inflation Reduction Act on August 16, requiring at least 50% of the components in electric vehicle batteries to come from North America in 2023 to receive tax credits. After 2028, this percentage will rise to 100%.

It is clear that this is targeting China, the world's largest producer of electric vehicle components and key materials.

As Feng Shiming, an automotive analyst at Shanghai-based consulting firm, points out, most of the terms of subsidies for automakers specify where new energy vehicles are assembled, but globally, it is rare to include the processing location of battery minerals and cells.

To a certain extent, these tricks can indeed effectively delay the speed of Chinese car companies relying on technical weapons to hit the door of a century-old automobile industry powerhouse. However, what cannot be changed is the fact that multinational car companies, if they want to continue to sell cars in China, must increase cooperation with local Chinese companies in the field of new energy vehicles.

Because in the field of key components of intelligent new energy vehicles, such as batteries, electronic and electrical architecture, intelligent driving, intelligent cockpits, intelligent driving chips, lidar, etc., Chinese enterprises have taken the lead in achieving technological breakthroughs, mass production of products and scale cost reduction. For example, the well-known "Ningwang" Ningde era, the horizon of edge artificial intelligence chips, and Hesai Technology, which is engaged in the research and development and manufacturing of lidar.

So you'll see, Toyota found Pony.ai; Volkswagen first looked for the horizon, and then pulled Xiaopeng; Stellantis took 1.5 billion euros into Zerorun and became a strategic shareholder; Audi once asked for help from BYD, but eventually found Zhiji.

The joint venture 1.0 model of "foreign-led product planning and technology research and development, and Chinese responsible for manufacturing, marketing, and channels" used by multinational car companies in the past is gradually shifting to the joint venture 2.0 model of "Chinese-led product definition and intelligent electric related technologies, and foreign parties providing brand styling and mechanical hardware development".

This means that the role of multinational car companies is changing from an active exporter of technology to a passive receiver.

After clarifying the reversal of roles, the question "how much weight does China still have in the global strategy of multinational car companies" is easy to answer:

At the sales level, multinational car companies can rely on the growth of fuel vehicle sales in other countries' markets to make up for the shrinkage of fuel vehicle sales in the Chinese market to a certain extent.

However, at the technical level, especially in terms of anchoring the future of new energy technology, multinational car companies can not bypass Chinese car companies at this stage of optional learning and cooperation objects.

In my opinion, instead of being bombarded with giant cannons by Chinese car companies in the future, multinational car companies should put down their arrogance as soon as possible, take the initiative to show goodwill, and find a way to live.

Write at the end

With the rapid growth of the penetration rate of new energy vehicles in the Chinese market, it is only a matter of time before those multinational car companies that have not caught up with the trip are driven off the stage of frontal competition by Chinese car companies.

Withdrawing from China is indeed a wound for these multinational car companies with a wide layout in the global market. But everyone is still far from closing the door. After all, the western wall removed from other markets can replace the eastern wall of the Chinese market.

However, when most of the new energy car manufacturing technology of multinational car companies comes from the reverse export of Chinese car companies, it is not so easy for them to leave China.

Because, at that time, multinational car companies will find that the east wall and west wall of technology have collapsed, and they don't even have a complete brick in their hands.