AutoBeta(AutoBeta.net)08/05 Report--

"overcapacity" has always been a topic of concern in the automobile industry. Since 2018, China's automobile industry has faced greater pressure, suffering from the first decline in market sales, with annual sales of only 28.08 million vehicles, down 2.8% from the same period last year. In the same period, the capacity utilization rate of the automobile industry is also less than 70%.

In addition, judging from the current economic indicators, the overall growth rate of the market slows down, the car market remains depressed and does not pick up, it is difficult for the market to return to the original growth level in the short term, and the problem of overcapacity will continue to intensify.

Dongfeng Motor was founded in 1969 and is now one of the three major automobile enterprise groups in China, with a number of cooperative brands.

However, the polarization is obvious. in recent years, Dongfeng Company has been supported by Japanese brands, and the sales of independent brands and French and Korean joint venture brands have fallen off a cliff, and its capacity utilization has also fallen to a freezing point.

The most serious overcapacity under Dongfeng should be Dongfeng Yulong. Prior to this, the media exposed Dongfeng Yulong plant stagnant, Dongfeng Yulong refuted the rumor, and said that the company's business is in normal development. But its declining sales and overcapacity are hard to hide.

Dongfeng Yulong has been losing money since 2015 and expanded to 1.4 billion in 2017.

It is reported that Dongfeng Yulong currently has a production capacity of 240000 vehicles and has reached 90 per cent vacant capacity in 2018. In the first half of this year, Dongfeng Yulong's monthly sales fell to more than 100 vehicles, and spare capacity expanded.

In addition, the joint venture brand of Dongfeng Company is also weak. Due to the decline in sales, Dongfeng Yueda Kia decided to stop production at a factory. Since the beginning of the year, Kia has considered shutting down a factory in China to restructure its business to save itself in response to a sharp drop in sales. Later, Dongfeng Yueda Kia responded not to shutdown, but to structural adjustment.

After Dongfeng Yueda Kia No. 1 factory stopped production, subsequent upgrades were carried out in the form of "long-term leasing" and leased to the new power of car-building, Chinese Express, to produce new energy vehicles, which could not only charge part of the rental fee, but also solve the problem of idle production capacity.

In the first half of the year, Dongfeng Yueda Kia sold 162700 vehicles, with utilization falling to 18.0 per cent from 40 per cent in 2018. After the closure of the first plant, the capacity of the remaining two factories dropped to 750000 vehicles, but the utilization rate of the remaining capacity will not be very high for current sales.

In addition, on the basis of a 62% drop in sales in the first half of the year, the capacity utilization rate of French car DPCA is only 22%, and the capacity utilization rate of joint venture brands such as Dongfeng Renault and Dongfeng Infiniti is also well below 50%.

Earlier, Philippe de Rovira, PSA's global chief financial officer, said the group was working to cut capacity at DMC, a joint venture with local partner Dongfeng Motor, possibly by renting out plant facilities.

The once brilliant DPCA has built four major vehicle factories in China, with a total production capacity of 990000 vehicles, but according to its current sales, one factory is more than sufficient, and the other three factories are idle. In addition to shutting down the third plant in Wuhan, the fourth plant will also be leased to Dongfeng Nissan.

Some industry analysts say that average factories usually need to maintain more than 80% of their production capacity to break even.

"our sales are structurally adjusted." Zhu Yanfeng, chairman of Dongfeng Automobile Group Co., Ltd., said on the decline in Dongfeng's production and sales volume, "you have seen the change in quantity, not the change in price. Now it is a high-quality development. Of course, the total amount has something to do with the industry, but not 100%."

At the beginning of the year, Dongfeng also set a "double 400" target, that is, operating profits of more than 40 billion yuan, annual car sales of 4 million vehicles, a challenge of 4.1 million. By June, Dongfeng had achieved 42% of its sales target, while the decline in capacity utilization by many of its car companies further highlighted the seriousness of Dongfeng Group's current situation.

Based on the current market environment, it is difficult for the automobile industry to grow substantially in the short term, and the market has changed from incremental competition to stock competition. The double pressure of declining sales, sharp decline in profits and the burden of production capacity have overwhelmed many companies. However, the China Federation of passengers also said that the real recovery should be after August.

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