AutoBeta(AutoBeta.net)04/14 Report--

With the continuous decline of sales volume, China's automobile market has entered the stage of stock competition. under the influence of many unfavorable factors, it has become a common phenomenon for automobile companies to make a substantial reduction in profits or even losses, and the automobile market is facing a severe test. SAIC, which has lost more than $10 billion in profits, believes that "from the perspective of the industry pattern, the concentration of the market is increasing, and weak brands are facing elimination."

China's passenger car sales fell by as much as 9.3% in 2019 compared with the same period last year, falling into negative growth for two consecutive years. As the largest automobile group in China, SAIC recently released its 2019 performance report, which showed that it sold 6.238 million vehicles for the whole year, down 11.5% from the same period last year, and realized net profit of 25.603 billion yuan, down 28.90% from the same period last year, resulting in a loss of 10.4 billion yuan. the net profit excluding non-operating profit and loss was 21.58 billion yuan, a drop of 33.41%. This is the first decline in annual profits since SAIC went public as a whole in 10 years.

In the analysis of industry pattern and trend, SAIC believes that with the economic downturn and the gradual slowdown of market increment, China's automobile market is entering a new stage of stock competition. Due to the impact of COVID-19 's epidemic, China's macro-economy and automobile market will face severe tests in stages this year. Sales in the domestic automobile market are expected to be 2290-23.8 million units in 2020, down 8.1% from the same period last year. 11.6%. From the perspective of the industry pattern, the concentration of the market is increasing, and weak brands are facing elimination.

In addition, SAIC, which lowered its target to 6 million vehicles in 2020, said it was deeply challenged and under pressure in the face of a faster-than-expected decline in the domestic car market. SAIC sold a total of 679000 new cars in the first quarter of this year, down 55.71% from the same period last year. SAIC-Volkswagen, SAIC-GM and SAIC-GM Wuling, the three major joint ventures, all fell sharply.

According to the latest report released by the China Federation of passengers, during the extraordinary period, the "Matthew effect" of the car market is more prominent, and the concentration is getting higher and higher. For example, in March this year, the cumulative share of monthly sales of the top 15 manufacturers reached 77.3%, an increase of 5 percentage points over the same period; the cumulative sales share in the first quarter was 77.7%, an increase of 4 percentage points over the same period.

It means that the market share of more than 100 domestic passenger car companies is only 22.3%, and the status of weak brands is more dangerous, facing the fate of being eliminated at any time.

Looking at the list of car companies whose sales fell by more than 50% in 2019, they may counterattack in the future, but more likely to gradually withdraw from the market and become a thing of the past.

For example, Changan Ford, whose cumulative sales fell to 182000 in 2019, down 51.8% from the same period last year, has entered a moment of life and death. With the successive launch of new products and the further strengthening of marketing, Changan Ford still has the possibility to stop falling and pick up. Changan Ford's cumulative sales from January to March this year were 30456, down 17 per cent from a year earlier, less than the 40.8 per cent decline in the passenger car market as a whole.

Due to the serious decline in sales, Suzuki has withdrawn from domestic joint ventures, and two other joint ventures have become history. Weak brands have withdrawn and the trend of strong brand concentration will continue.

The Changan PSA joint venture was dissolved at the end of last year after eight years, and both Changan and PSA shareholders sold all their shares in the joint venture, which operates DS-branded cars owned by the PSA Group.

Dongfeng Renault is also confirmed as history. According to the internal announcement of Dongfeng Automobile Group on April 14, after friendly consultation between the company and Renault, Renault signed a non-binding memorandum to reach a preliminary intention. Renault intends to transfer its 50% stake in Dongfeng Renault to Dongfeng Automobile Group. Dongfeng Renault stops the business activities related to the Renault brand. At the same time, the after-sales service of 300000 domestic Renault owners will be maintained by the existing dealer network and Dongfeng Nissan dealer network. After the completion of the acquisition, the Dongfeng Renault plant will be upgraded and transformed into a Dongfeng intelligent manufacturing production base after Dongfeng takes over.

Dongfeng Renault was founded at the end of 2013 and launched two domestic SUV models, Coreja and Coreao, in 2016. From 2017 to 2019, Dongfeng Renault sales fell off a cliff, from 72000 to 18600.

DPCA, another French car company, is also facing a survival crisis. DPCA's dual brands, Dongfeng Peugeot and Dongfeng Citroen, sold only 11, 540000 vehicles in 2019, down 54.5% from a year earlier. Affected by the epidemic in Wuhan, DPCA's sales fell to 6385 in the first quarter of this year, down 81.6% from a year earlier.

The rest, including BAIC Yinxiang, Speed Motor, Huatai Automobile, Cheetah Motor, Lifan Automobile, Quan Zhi Automobile, Haima Automobile, and so on, have all encountered the plight of the rapid decline in sales and the company's operating crisis. For these marginal brands, survival is more difficult under the impact of the cold winter of the car market and the epidemic.

Industry insiders said, "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 collapse one after another. " At this stage, the most important thing in the automobile industry is to change, and the collapse of some brands is inevitable.

The concentration of the market is increasing, and weak brands are facing elimination. After Changan Suzuki, Changan PSA and Dongfeng Renault, who will be next?

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