Zhu Huarong of Changan Automobile: There is no point in competing for the first place in domestic sales, and the biggest opponent of independent brands is the joint venture brand

"The challenge for Chinese brands is still joint venture brands, with the price difference of 30% or even 40% for the same type of product, so brand transformation is a very difficult problem." Zhu Huarong, chairman of Changan Automobile, said recently.

Since the beginning of this year, the market share of independent brands has rebounded, and Changan Automobile's sales in the first half of this year reached 1.2 million vehicles, of which the sales volume of independent brands ranked first in China. Behind Changan Automobile, geely and Great Wall Motors' sales have also soared, and the competition between them is also fierce. Last week, Great Wall Motors set an aggressive goal of achieving global sales of 4 million vehicles by 2025. Zhu Huarong believes that it is of little significance for independent brands to compete for who is the first or second in domestic sales, because independent brands still cannot reach the high premium ability of joint venture brands, coupled with the continuous decline in the price of joint venture brand products, independent brands will face certain challenges.

Independent brands can develop rapidly, which to a large extent is to step on the development rhythm of the SUV market. From the current market performance, the product performance of independent brand SUVs is still better than that of cars. Especially in the field of compact SUVs, it is a piece of fat that its own brands have been eyeing for many years. According to the data of the Association, among the top 5 models in the sales of SUV models in the first five months of this year, independent brands occupied three seats, of which Haval H6 and Changan CS75 won the first and second places respectively. Wu Zhao, executive director of Roland Berger, pointed out that compact SUVs have always been the focus of competition for independent brands, and this level of models is very suitable for families, does not consume fuel like large-size models, and also gets rid of the too cramped space of small SUV cars. Although some joint venture brands are also launching compact SUV models, considering the customer needs, price expectations and model supply in this segment, the compact SUV segment will still be dominated by its own brands in the next few years.

According to the data of the Association of Passenger Transporters, the annual sales scale of the domestic SUV market exceeded 10 million in 2017, of which the share of autonomous SUVs reached a record high of 60%, fell to 59% in 2018, further fell to 53% in 2019, and 52% in 2020. The main reason why the joint venture brand SUV can swallow the market share of its own brand is that Japanese and German car companies continue to introduce replacement models in the field of SUVs and reduce the price threshold. According to the plan, by the end of 2021, the Volkswagen brand plans to expand its SUV lineup in China to at least 12 models. In addition, Japanese car companies are also expanding their SUV lineups.

From the perspective of the car field, the top 15 car models in the previous May sales as an example, the joint venture brand occupies the vast majority of seats, and the independent brands only include Hongguang MINI under SAIC-GM-Wuling, Emgrand under Geely and Yidong under Changan rushing into the list. In addition, Emgrand and Yidong are both ranked behind the 10th. "The relatively good performance of independent brands in the SUV field is because of their higher cost performance, which has impressed many consumers. However, in the field of cars, the price difference between independent brands and joint venture brands is relatively small. Especially in the field of A-class cars, it has long been firmly controlled by mainstream joint ventures, and the starting price of joint venture cars in this segment is not high, and the terminal price of many models has dropped to less than 100,000 yuan. In essence, it is because the brand power of independent brands is not enough. An auto industry source told reporters. In the field of middle and high-end cars, the price threshold of luxury cars has been continuously reduced in recent years, coupled with factors such as consumption upgrades and purchases, it is more difficult for independent brands to break in.

Overall, although independent brands have occupied a certain market share, the mid-to-high-end market is still dominated by joint venture brands, and the same is true in the SUV field. In the past, there were not many models for joint venture brands in the medium and large SUV segments, which provided opportunities for independent brands. In recent years, car companies such as Great Wall, Geely and Changan have all laid out in the field of medium and large SUVs. Compared with the mainstream joint venture medium and large SUVs, although the large SUV in the independent brand part exceeded 200,000 yuan, the price is still relatively low. Despite this, the performance of medium and large SUVs in independent brands is still relatively tortuous in terms of sales, such as Changan CS95, Trumpchi GS8, etc., all of which show a trend of high and low.

In recent years, independent brands have continued to soar, geely, Great Wall, Chery, Changan and other high-end products, and even launched independent high-end brands. They are trying to break the ceiling of 200,000 yuan, but from the perspective of market performance, most brands are not doing well. However, in the field of electrification, new car-making forces have won some of the high-end markets. In addition, it is worth noting that the anti-risk ability of independent brands is still weak, and under the epidemic last year, the impact of independent brands was relatively large, mainly because the consumption of the low-end market was greatly affected.

According to a research report recently released by CITIC Construction Investment, the market share of self-owned brands in the narrow sense of passenger cars showed an oscillating upward trend, with a historical peak of 41.2% (2016), and the proportion of independent brands in the first four months of 2021 was 41.7%, returning to a high of more than 40% and hitting a record high, an increase of 4.8 percentage points over 2020. Since the decline of the automobile market in 2018, independent brands have been challenged to a certain extent, especially in 2019 and 2020, the market share of independent brands has declined for many consecutive months, failing to reach the red line of 40% of the market share. Although the market share of independent brands has recovered since the beginning of this year, the new forces of car manufacturing have contributed part of the sales. In addition, the Matthew effect remains significant. Compared with developed countries, the proportion of independent brands still has a lot of room for improvement. From a steady-state point of view, the market share of independent brands in developed countries is usually more than 70%, of which Japan's market share of independent brands has remained above 80% for many years due to local protectionism. In contrast, the market share of China's independent products is only about 40%, and it still has a large room for improvement.