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By Yang Zhongyang, Tong Na & Chang Yanjun
The domestic self-owned brands move ahead in a cautious way
According to the data newly-released by China Association of Automobile Manufacturers, the sales volume of the passenger cars of the Chinese self-owned brands are 5.5235 million from January to November, decreasing by 2.34 percent year on year, accounting for 42.15 percent of the total sales volume of the passenger cars, with the market share falling by 3.28 points compared to the one in the same period of the last year.
Falling sales volume and shrinking market share is only one of external aspects of the difficulty. We see that with increasing seriousness of the market environment, the profitability of the self-owned-brand auto enterprises falls obviously, their market strategies are increasingly conservative and lack of support by backbone vehicle types; meanwhile, dismission of executives in enterprises including BAIC, Chery, BYD and Huatai, adjustment of personnel structure and reestablishment of the internal management process indicate that problems under cover due to high-speed development in previous years will emerge one by one during the period of development valley.
As for the external environment, the self-owned brands are facing with the adverse effect from the exit of industrial driving policy and issuance of the purchase restriction policy in some cities; at the same time, under the increasingly opening and fully competitive domestic market environment, the product range of the joint ventures extends downwards constantly, squeezing the advantageous market originally belonging to the self-owned brands; gradual rise of the joint-ventures owned brands also brings the domestic auto brands a strong helpless feeling for not strong enough.
At the beginning of the year, the industry made an estimate that this year would be "a difficult year for the self-owned brands". Now, a lot of enterprises make a more detailed comment for this estimation that "never thought it would be so difficult". Going due from "warm spring" to "cold winter", the deep adjustment becomes a common strategic choice for the self-owned brands this year.
On December 12, Chery announced to launch its G3, one of the few new products of Chery this year. "According to the previous standard and process, Riich G3 would have been sole 8 months ago. However, since we choose to promote it, we must try our best to make every product the finest one." Ma Deji, General Manager of Chery Sales Company describes the current attitude to promote every new product as "extremely cautious".
Cautiousness has become a common sense of market strategy presently for the self-owned-brand auto enterprises. Different from the previous extensive pattern of growth, i.e. dozens of products being promoted by one enterprise in one year, the domestic enterprises do not choose to promote new products in a large scale this year, but exert effort to better the brand and quality with different way.
Great Wall Motor, a domestic enterprise enjoying the quickest growth this year, makes a net profit up to RMB1.812 billion yuan in the first half of the year, increasing by 109 percent year on year, which is much spectacular among the self-owned-brand auto team generally with a weak growth. Great Wall 1.5T turbocharged engine, independently developed by Great Wall Engine Research Institute, successfully went into mass production in September. It is not only the first 1.5T exhaust turbocharged gasoline engine in China, but also the first turbocharged gasoline engine with aluminum-alloy cylinder. From being a "pickup master" to exerting much effort in "fine car" market, the strategic transformation course determined by Great Wall years ago meets its spring finally after years of "loneliness in the market".
Luxury brands speeds up the China strategy
When we stood in the building site of Brilliance BMW��s factory in Tiexi District, Shenyang at 3:30 PM on December 2, 2011, it was hard to imagine that it will become the most advanced BMW factory in the world in the next year. 95 percent of automation rate, flexible and effective production mode, introduction of global unified BMW production standard and process, and brand-new design concept for the whole workshop, tell all eyewitnesses that how important it is here for BMW.
Just several hours before, Brilliance BMW held a grand export ceremony for BMW 5 series LWB car in the factory in Dadong District of Shenyang. The first batch of exporting BMW 5 series LWB cars would be shipped to foreign countries through Tianjin Port only after all legal and customs procedures were completed. It also created a history that the luxury-brand cars produced in China were exported for the first time.
Obviously, these quick actions in succession are well prepared. Such an attitude of "speed contest in the Chinese market" of the luxury brands seems more obvious and intensive this year.
The reason for this is very simple. In spite of the general weak production and sales growth for the domestic auto industry, the luxury auto market including BMW, Benz and Audi outshine others. The domestic accumulative sales volume of BMW is 215,023 from January to November, increasing by as high as 40.7 percent year on year; FAW-Volkswagen Audi 280,704, increasing by 35 percent year on year; and Benz announced that the sales volume reached about 175,290 during the first 11 months this year, increasing by 35 percent year on year. More surprisingly, one will find difficult to purchase a car for many types of cars of the three luxury brands. If it was not because of the limited capacity, the sales volume would have been higher.
We find that after 10 years of high-speed development for the auto industry of China, the upgrading of the consumption structure brings a much satisfactory growth space for top-grade-brand cars. If we can say that these brands only begin to pay strategic attention to the Chinese market before 2011, it must be sure that tangible investment in the Chinese market from 2011 will decide their ranks in the industrial situation in the future.
Therefore, after opening next year, Tiexi Factory of Brilliance BMW, along with Dadong Factory, will form a flexible capacity of 150,000 to 300,000 cars. In July this year, the foundation of a new engine factory of Beijing Benz went into operation in Beijing; it will produce 4-cylinder and 6-cylinder engines in three displacements of 1.6L, 2.0L and 3.0L, and provide engine support for the domestic production of the whole series of Benz in the future.
Increase of capacity necessarily means to the accelerated introduction of new products. As for new products, what is mostly noteworthy is that GLK, the third type of Beijing Benz car, was produced finally, which means the problem of channel integration, troubling Beijing Benz for a long time, was solved effectively. Beijing Benz will promote a new type every year in the coming 4 years to increase the product pool, so as to catch up with the achievement in model localization made by BMW and Audi.
It is noteworthy that Nissan announced recently that Infiniti, its luxury auto brand, would move the headquarters from Japan to Hong Kong. Thus, the guess about domestic production of Infiniti becomes clearer. Though no definite schedule, the importance of the Chinese market is thus further proved.
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