AutoBeta(AutoBeta.net)09/09 Report--

On September 8th, Stellantis Group issued a statement that after the discussion between the shareholders of Stellantis Group and GAC GROUP, GAC Feike Joint Venture will focus on its production in Changsha plant in order to improve the capacity utilization of the plant, further reduce enterprise operation and maintenance costs, improve the management efficiency of the joint venture company, and effectively enhance the comprehensive competitiveness and profitability of the enterprise. Both shareholders will provide full support to the steady and orderly progress of related work, especially the proper placement of employees. The announcement also means that Guangzhou Auto Fick's plant in Guangzhou, Guangdong Province will be closed.

On Sept. 7, several media reported that GAC GROUP had agreed with Stellantis Group to transfer his 20 per cent stake in Guangzhou Auto Fick and was in the process. As part of the plan, GAC Fick Guangzhou plant is about to stop production, and all GAC Fick models will be produced by Changsha factory in the future. an insider GAC GROUP told the media: special production equipment for Guangzhou factory matching existing products will be transferred to Changsha factory, and general equipment such as welding equipment, robots and sites will be sold to GAC Honda. On the "20 per cent share transfer" GAC GROUP said that there is no such information at present, please refer to the official information. According to the plan, the Guangzhou plant will complete the transfer of the main production line equipment to the Changsha plant and the classified disposal of other assets within 2021, and cancel the Guangzhou Branch of Guangzhou Automobile Fiat Chrysler Co., Ltd. by March 2022.

When the factory in Guangzhou is closed, should the staff be relocated? According to GAC Fick's internal employees told the media, the existing employees of the Guangzhou plant will be compensated in the form of "buyout seniority", but the specific amount has not been determined. In addition, some insiders said that the current capacity utilization rate of the Changsha plant is not high, and many workers are on vacation at home, the longest of which is as long as half a year, and the factory is still laying off staff, unable to rehouse redundant staff.

According to relevant data, Cifik was established on March 9, 2010. it was jointly invested by Guangzhou Automobile Group Co., Ltd., Fiat Group Automotive Co., Ltd., and Chrysler Asia-Pacific Investment Co., Ltd., with a share ratio of 50:10:40. The company is headquartered in Changsha Economic Development District, Hunan Province, and currently has two major vehicle production bases, Changsha factory and Guangzhou factory, with an overall design capacity of 328000 vehicles. It is understood that Changsha factory mainly produces Jeep free light, big commander and big commander PHEV, Guangzhou factory mainly produces Jeep free man and guide.

Since its establishment, Guangzhou Auto Fick has had a "highlight moment". In 2015, Jeep, the main brand of Guangzhou Auto Fick, was officially domestically produced, and the first model was launched freely and welcomed by the market. Guangzhou Auto Fick has successively launched different market segments such as Freedom Man, Compass, Big Commander and other models to seize the market. GAC Fick sold 179900 vehicles in 2016 and 222300 in 2017, but the good times did not last long. After 2018, under fierce market competition, GAC Fick's market share was also severely squeezed, selling only 125200 vehicles in 2018, 73900 in 2019, and 40500 in 2020. According to the 2020 performance report, GAC Fick's cumulative sales in 2020 was 40500 vehicles, down 40.38% from the same period last year. The cumulative production capacity of GAC Fick was 38600 vehicles in 2020, down 57.78% year on year, and the capacity utilization rate was only 11.77%.

In July 2021, sales were only 528, down 82.60% from January to July, and the cumulative sales were about 12300, down 40.38% from the same period last year. Production was 7898 vehicles, down 57.78% from the same period last year, and capacity utilization was only 2.4%. Overcapacity has also led to a sharp rise in terminal pressure. According to data released by the China Circulation Association, the inventory coefficients of Guangfeike in March and April this year were 2.47 and 2.17 respectively. In response, a staff member of Guangzhou Auto Fick said that among the models sold in the first half of this year, there are still stocks produced last year. In addition, in order to sell more cars, dealers also continue to offer high-discount promotions. In this context, the pressure of poor sales and insufficient capacity utilization not only affects the market end, but also makes enterprises lose a lot of money. According to GAC GROUP's financial report, the net worth of Guangzhou Auto Fick in 2020 has fallen from 1.336 billion yuan at the beginning of the year to-331 million yuan, which means that GAC GROUP's 50 per cent equity share loss is about 1.333 billion yuan. It is not difficult to see that Guangzhou Auto Fick has become the biggest lossmaking brand under GAC GROUP. GAC Fick, whether it is the transfer of production line or equity transfer, is undoubtedly related to GAC Fick's losses in China. Recently, with the continuous rise of independent brands, the viability of joint venture car companies is also being squeezed. Although there is no final conclusion on the sale of Guangzhou Auto Fick's stake, for now, Guangzhou Auto Fick seems to have no choice.

Some industry insiders said that the main reason for GAC Fick's closure of the Guangzhou plant is that the current capacity utilization rate is too low, the factory production line has aging and other problems, as the main production line of fuel trucks, its sales volume must reach more than 200000 vehicles to achieve profit, while the Guangzhou plant has been built for more than 10 years, unable to form economies of scale. After moving to Changsha factory in the future, both resources and labor costs will have certain regional advantages over Guangzhou, and the construction time of Changsha factory is later than that of Guangzhou factory, and the automation and flexibility of the production line in Chengdu will be stronger. Therefore, it is imperative to close the factory in Guangzhou.

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