AutoBeta(AutoBeta.net)02/22 Report--

China's car sales have declined for two years in a row, more and more automakers have fallen into loss-making operations, and the industry has accelerated its reshuffle. As a result, the problem of automobile overcapacity is becoming more and more serious. According to the latest statistics of the China Federation of passengers, the utilization rate of passenger car capacity in China has dropped from 66.55% in 2017 to 53.74% in 2019, and nearly half of the factory capacity is wasted. There are only 8 car companies whose market demand is greater than their factory capacity.

Data show that China's passenger car sales reached 21.4444 million in 2019, down 9.6% from the same period last year. At the same time, there are 128 car companies that are qualified to produce passenger cars by the Ministry of Industry and Information Technology. As of December 31, 2019, these companies have a total production capacity of 39.905 million vehicles. According to accounting, the utilization rate of passenger car capacity in China has dropped to 53.74%.

Judging from the situation of various car companies, there are only eight car companies whose capacity utilization rate is more than 100%, which means that the market demand of these eight car companies is greater than the factory capacity, resulting in a phenomenon that supply exceeds demand. There are seven car companies with a capacity utilization rate of 80% per cent and a capacity utilization rate of 80 per cent, while there are 10 companies with a capacity utilization rate of 60 per cent and 80 per cent. The capacity utilization rate of the remaining 103 car companies is less than 60%, which is in the range of serious overcapacity.

Eight car companies lack production capacity.

Hot brands or hot-selling models may have insufficient production capacity, which is often the result that manufacturers would like to see, which means that the market demand continues, and the design capacity can no longer meet the market demand. The design capacity of the factory is generally calculated on the basis of two shifts a day and 250 working days a year, but the actual total production capacity can exceed the design capacity by working overtime on three shifts or holidays.

Eight companies, including Guangzhou Auto Toyota, Dongfeng Honda, Guangzhou Automobile Honda, Tianjin FAW Toyota, Sichuan FAW Toyota, brilliance BMW, Beijing Mercedes-Benz and Dongfeng Nissan, have utilized more than 100% of their capacity, according to the report released by the CAC. The combined sales of these eight car companies accounted for 25% of total passenger car sales in 2019, which can be seen concentrated in Japanese and first-tier luxury brands.

In terms of specific sales, GAC Honda sold 770000 vehicles in 2019, an increase of 4% over the same period last year, including a total of 756000 Honda and concept brands and 14786 Acura brands. GAC Honda now has three plants in Guangzhou, with a total design capacity of 600000 vehicles and a capacity utilization rate of 128 per cent. To this end, GAC Honda plans to expand the 120000 capacity of the third plant to 240000 in 2020, creating a total capacity of 720000 vehicles.

GAC Toyota's plant in Guangzhou's Nansha district has three production lines with a total production capacity of 600000 units, while GAC Toyota sold 682000 vehicles in 2019, an increase of 18% over the same period last year, with a capacity utilization rate of 114%. According to internal documents, GAC Toyota has spent nearly 5 billion yuan on capacity expansion, and the fourth production line of this expansion is scheduled to be completed in September 2020 and put into production in March 2021, with an initial capacity of 200000 vehicles.

Others, including brilliance BMW and Beijing Mercedes-Benz, saw sales growth in 2019, with only Dongfeng Nissan falling slightly. Dongfeng Nissan's total sales reached 1.4362 million vehicles last year, down 1.8% from the same period last year. Dongfeng Nissan has selected a new manufacturing plant in Wuhan, Hubei province, and added 300000 vehicles after completion.

First-line joint venture / independent production capacity is normal

In the report, the capacity utilization rate of seven enterprises, including FAW-Volkswagen, SAIC-Volkswagen, SAIC-GM, is between 80% and 100%, which is in a reasonable range. Among them, SAIC-Volkswagen has a total sales of 2 million vehicles in 2019, and it has a number of factories in six regions in China. Among them, the three traditional fuel vehicle factories in Anting, Shanghai, have a total production capacity of 800000 vehicles per year. At present, the total national production capacity is about 2.5 million vehicles. In addition, the MEB plant that will be put into production in 2020 will increase by 300000 vehicles per year.

The car companies with a capacity utilization rate of 60% and 80% are mainly first-tier independent brands, including SAIC passenger cars, Geely Group, Great Wall Automobile, SAIC GM Wuling, Changan Mazda, GAC-Mitsubishi, Chery Automobile and other 10 enterprises. The combined sales of the 10 companies accounted for 24% of total passenger car sales in 2019.

According to specific sales figures, total Geely sales reached 1.362 million in 2019 and 1.5 million in 2018, down 9 per cent from a year earlier. The decline in sales has also sounded the alarm for Geely's remaining capacity problems. Great Wall Motor sold 1.06 million vehicles in 2019, an increase of 0.7 percent over the same period last year.

Finally, it is worth noting that there are 8 car companies with capacity utilization between 40% and 60%, and 95 companies with less than 40%. These car companies may have suffered a sharp decline in sales in 2019, and the situation they are facing is very grim.

Among them, 32 with less than 10% capacity utilization and 36 with no sales volume are likely to be eliminated by the market at any time.

"No matter how big the Chinese market is, there is no room for hundreds of vehicle factories, and now both independent, joint venture and foreign-funded car companies are facing the market test. Market elimination is fair, which is also conducive to the merger and reorganization of China's automobile industry, the most important thing at this stage is to change. In this context, car companies without brands, core technology and capital will all fall down one after another. "people in the automobile industry believe that the collapse of some brands is inevitable.

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