The joint venture car company that does not move and "lies" unevenly

The official account of Beijing Business Daily

2024-05-19 21:33Published on the official account of Beijing Business Daily in Beijing

Under the electrification and price war, independent brands are "overtaking in corners", and joint venture car companies are feeling the "chill". According to the latest statistics from the China Association of Automobile Manufacturers (hereinafter referred to as the "China Association of Automobile Manufacturers"), the market share of joint venture brand passenger cars in April this year was less than 40%. The market share of the joint venture and the independent "reversal" reflects the embarrassment of the joint venture brand in the domestic auto market, and with the news of FAW-Volkswagen's "last stand" and Guangqi Honda's "layoff", the outside world can see the "struggle" of the joint venture brand in the Chinese market. At present, domestic new energy vehicles have entered a period of rapid growth, and the price, technology, and marketing of independent brands have caught joint venture brands off guard.

Selling the crown "last stand"?

An internal letter that "we have no way out except to fight against the water, and we can only live with one heart to die" pushed the former domestic sales champion FAW-Volkswagen to the forefront. It is reported that the FAW-Volkswagen "last stand" involves the Volkswagen brand, FAW Audi and Jetta brands.

Previously, in the domestic auto market in the era of fuel vehicles, FAW-Volkswagen and SAIC Volkswagen took turns to "sit in the village" in the sales champion position, but now FAW-Volkswagen is facing "all of them are united and live to death". FAW-Volkswagen did not respond to the above internal letter, but it can be seen from the sales data in recent years. In 2022, BYD, which has made a comprehensive transformation to new energy, will surpass the "North and South" Volkswagen to win the sales championship of domestic car companies and has been sitting firmly. According to data from the Passenger Car Market Information Joint Branch of the China Automobile Dealers Association (hereinafter referred to as the "Passenger Car Association"), FAW-Volkswagen ranked second only to BYD in last year's ranking of car companies' wholesale volume. In the first four months of this year, FAW-Volkswagen's wholesale volume has fallen to fifth place, and in the retail sales ranking, although FAW-Volkswagen still ranks second, its sales advantage over the third place Geely Automobile has narrowed to 10,000 units, and the gap between the two car companies in the first four months of last year was more than 150,000 units.

At the same time, in the end market, the price of FAW-Volkswagen models has also repeatedly bottomed out. A FAW-Volkswagen 4S store salesperson took the Tanyue model with a guide price of 217,900 yuan as an example, saying that the current cash discount for the model is 50,000 yuan, and if consumers buy it with installment loans, the discount can reach 63,000 yuan. "At the same time of cash discounts, if consumers buy 4,980 yuan of vehicle decoration can be discounted by another 3,000 yuan, 2,200 yuan of new car depot fees can also be discounted by 2,000 yuan, the model discount has been the highest point in recent times." The salesperson told the Beijing Business Daily reporter that the current model with the highest comprehensive discount in the store is FAW-Volkswagen Lancun, and the discount has reached 90,000 yuan. Not only fuel vehicles, but also FAW-Volkswagen brand electric vehicles also offer a lot of discounts. It is understood that the FAW-Volkswagen ID.6 CROZZ cash discount can reach 60,000 yuan, and the 2024 ID.7 VIZZION, which will be on the market for a short time, will also give a discount of 30,000 yuan.

"FAW-Volkswagen's preferential strategy is very realistic." Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, believes that FAW-Volkswagen has made a lot of efforts in transformation in recent years, but in the fierce market competition environment, FAW-Volkswagen also feels the pressure from competitors.

Collective "wintering"

FAW-Volkswagen's "last stand" is also the epitome of the joint venture brand. For joint venture brands that rely on several fuel volume models to "stabilize the market", the painful period of transformation brought about by electrification has put pressure on many traditional joint venture brands.

Among them, Beijing Hyundai, which has been among the "million club" in annual sales, has "sold factories" to reduce its burden after its sales plummeted. In 2021, Beijing Hyundai sold the first factory in Shunyi, Beijing, and Li Auto eventually took over; Last year, Beijing Hyundai's Chongqing plant was also sold. At the beginning of 2022, DPCA sold its second plant to Dongfeng Honda, and last year DPCA launched a price reduction strategy, but sales still did not improve. At this year's Beijing Auto Show, Dongfeng Peugeot and Dongfeng Citroen, both of which are owned by DPCA, were also absent.

Not only Korean and French brands, but also Japanese brands in China are not optimistic. Previously, Guangqi Honda was exposed to the news of layoffs. In this regard, the relevant person in charge of Guangqi Honda told the Beijing Business Daily reporter that in order to ensure the company's sustainable operation and accelerate strategic transformation, Guangqi Honda will further improve personnel efficiency. Specific measures include non-renewal of the first labor contract of some employees in the production field, and voluntary negotiation to terminate the labor contract. If the employee voluntarily terminates the labor contract through negotiation, Guangqi Honda will provide economic compensation in a timely manner in accordance with laws and regulations, and the specific number will be determined according to the negotiation situation.

The pressure on joint venture brands is also transmitted to the end market. A reporter from Beijing Business Daily visited and found that in the case of the double "volume" of its own brand "oil and electricity", the joint venture brand that still takes fuel vehicles as the main sales force has basically bottomed out at the terminal price, and the person in charge of a number of joint venture brand dealers admitted that they have sold cars at a loss. Among them, a person in charge of a Dongfeng Honda dealer said that the Dongfeng Honda CR-V, which has the best sales, is currently losing 13,000 yuan per car. A person in charge of a FAW Toyota dealer said that now he has to pay 20,000 yuan for every Corolla sold.

In the interview, the Beijing Business Daily reporter found that the current car 4S shop sales staff in the sale of cars will strongly recommend the installment car purchase policy, a joint venture brand dealer salesperson said that in the past, the salesperson recommended to consumers to buy cars in installments, and eventually the dealer can earn the bank's rebates, but now for further promotion, the rebate is also subsidized in the new car discount.

However, despite the preferential bottoming, the market share of the joint venture brand is still declining again and again. According to data released by the China Association of Automobile Manufacturers, the market share of joint venture passenger cars in April this year was less than 40%. At the same time, according to the statistics of the Passenger Federation Branch, in April this year, the retail share of German brands decreased by 2.2 percentage points year-on-year, the retail share of Japanese brands decreased by 3.6 percentage points year-on-year, and the retail share of American brands decreased by 2.6 percentage points year-on-year.

Wayfinding "turns red"

In the past two years, the era of joint ventures and independent brands "eliminating the other's strengths", and joint venture car companies occupying "half of the country" is becoming a thing of the past.

The person in charge of many joint venture brand dealers told the Beijing Business Daily reporter that the "volume" of independent brands is diverting the sales of joint venture brands. The person in charge of the above-mentioned Dongfeng Honda dealer said that at present, while the independent brand "heap configuration", the price war will be pulled into the period of 100,000 yuan.

Cui Dongshu, Secretary-General of the Passenger Car Association, said that joint venture car companies have an important position in the development of China's passenger car market, and for a long time, they have been the representatives of advanced technology and high-quality industrial chain, and also provide important support for the development and growth of independent brands. However, with the electrification and intelligent transformation of the automotive industry, the original industrial advantages of joint venture brands are weakening, and the pressure on production capacity continues to increase.

At this year's Beijing Auto Show, a number of joint venture brands announced new energy vehicle brand and product planning, but in Yan Jinghui's view, it is no longer the early stage of the development of the new energy vehicle market, and the breakthrough is no longer a simple acceleration transformation, but to find a real breakthrough direction.

At present, Volkswagen, Toyota and other brands still have the ability to make money in the fuel vehicle market, but in the face of electrification and intelligent transformation, joint venture brands are continuing to accelerate the transformation. Last year, SAIC Volkswagen created four new VLE (Vehicle Line Executive Model Line Managers) positions, namely Volkswagen MEB, Volkswagen Medium/Large Cars, Volkswagen Small/Compact Cars and Audi brands, in charge of four different model lines. Jia Jianxu, general manager of SAIC Volkswagen, believes that the model line responsibility system can break the traditional line differentiation, pay more attention to the needs of Chinese consumers, and jointly define products with Chinese consumers.

Toyota Motor Co., Ltd. has also been further localized through structural adjustments. In August last year, engineers from the R&D centers of Toyota's three joint ventures in China (FAW Toyota, GAC Toyota, and BYD Toyota) joined the IEM by TOYOTA-led R&D project. Toyota will integrate the local R&D teams of its three joint venture R&D centers in China into Toyota's R&D centers in China, with the aim of strengthening the localization of all electric vehicles (pure electric, plug-in hybrid, and hybrid fuel cell) in terms of electrification. Tatsuro Ueda, General Manager of Toyota's China Headquarters, said that the Chinese auto market is developing at an unprecedented speed, and Toyota will go all out in the Chinese market to change the way of working and thinking.

The Volkswagen Group, which has formulated the strategy of "In China, For China", has also "overtaken" with the help of the technology of China's new car-making brands. In July last year, the Volkswagen Group announced that the Volkswagen brand had reached a technical framework agreement with Xpeng Motors. According to the agreement, the two companies plan to jointly develop electric models for the mid-size vehicle market in China, with the aim of starting mass production in 2026. In April this year, Xpeng Motors and Volkswagen Group signed a strategic cooperation framework agreement on electronic and electrical architecture technology. In this strategic partnership, Xpeng and Volkswagen Group will jointly develop and integrate Volkswagen's CMP platform in China based on Xpeng's latest generation of E/E architecture.

Beijing Business Daily reporter Liu Yang Liu Xiaomeng

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