Auto & Transportation

Recently, China's auto industry has handed in its 2021 "mid-term" answer sheet. According to data released by the China Association of Automobile Manufacturers, from January to June, domestic automobile production and sales completed 12.569 million and 12.891 million respectively, an increase of 24.2% and 25.6% year-on-year, respectively. Compared with the same period in 2019, production and sales increased by 3.4% and 12.891 million respectively. 4.4%.

In this gold-rich report card, the data on automobile exports is particularly eye-catching.

In June of this year, auto companies exported 158,000 vehicles, an increase of 5.0% month-on-month and a year-on-year increase of 1.5 times. Among them, 120,000 passenger vehicles were exported in June, an increase of 3.7% month-on-month, an increase of 1.7 times year-on-year; the export of commercial vehicles was 39,000, an increase of 9.2% month-on-year, an increase of 1.1 times year-on-year. The contribution of new energy vehicle exports this month was 11.1%.

From January to June this year, auto companies exported 828,000 vehicles, a year-on-year increase of 1.1 times. In terms of vehicle types, passenger vehicle exports were 631,000, a year-on-year increase of 1.2 times; commercial vehicle exports were 197,000, a year-on-year increase of double.

Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, analyzed and pointed out that the increase in automobile exports in the first half of the year was mainly related to the recovery of the international market, the enhancement of the competitiveness of Chinese brand automobiles, the more comprehensive overseas layout of automobile companies, and the growth of new energy automobile exports.

"The epidemic in various overseas markets has gradually eased. After the epidemic, travel demand has surged, and the auto market has become a seller's market in short supply. Under this market, Chinese auto companies that resumed production as early as last year have a certain advantage." Xu Haidong said.

Automobile exports rose against the trend, and the system layout became a key driving force

"Opening up overseas markets during the epidemic is a process of finding opportunities in crisis." In August 2020, Liu Xinyu, deputy general manager of SAIC Europe and general manager of SAIC France, went to Paris, France, to shoulder the important task of SAIC to develop the French market. .

When he first arrived in Paris, Liu Xinyu's team had only 3 people and was extremely understaffed. Coupled with the continuous raging new crown pneumonia epidemic, French brands such as Renault, Peugeot, and Citroen have been working locally for a long time. It is conceivable that SAIC's difficulty in opening up the market from scratch.

"When we first arrived in France, we needed to drive a roadshow for the dealer. Because there were 4 cars, a team of 3 people had to drive twice for each roadshow." Liu Xinyu bluntly said that in the early stage of market development, there were still many difficulties like this. . But he believes that during the epidemic, many global car brands have undergone some major strategic changes in Europe, and even some brands have withdrawn from the French market. "For Chinese brands, this is an opportunity."

After more than ten months of development, SAIC France has now established a team of more than 30 people, signed 83 dealers, and formed a cyclical sales system through team building and network layout.

In terms of branding, MG signed a formal contract with the Lyon Football Club in France on June 8, and will become the official partner of the Lyon Football Club in 2021-2024 to enhance its brand influence in overseas markets with the help of sports marketing.

"More importantly, we are focused on long-term development. More and more people cannot do without Chinese manufacturing and Chinese brands. We have been communicating this matter positively and impressing local consumers with the best products and services. This is what Long-term and stable development strategy." Liu Xinyu said.

In fact, SAIC's presence in France is only a microcosm of its overseas markets. Recently, at the SAIC Group’s overseas business communication meeting, SAIC Group President Assistant and General Manager of International Business Department Yu De revealed that in the first half of 2021, SAIC achieved overseas sales of 265,000 vehicles, an increase of 112.8% year-on-year, and continued to rank first in the country. Among them, overseas sales of independent brands such as MG and Maxus reached 166,000, a year-on-year increase of 132%.

In Yu De's view, SAIC's performance in overseas markets is inseparable from SAIC's "systematic and well-established" overseas layout.

"As China's only car company that has a systematic, planned, and established system to "go global", SAIC has established a global market-oriented car that integrates R&D, marketing, logistics, parts, manufacturing, finance, and second-hand cars. The industrial chain has laid a solid foundation for the rapid expansion of overseas business." Yu De said.

In the process of competing with the world's automobile giants on the same stage, in addition to the product itself, multiple factors such as brand and service also determine whether the brand can continue to develop in this market.

It is reported that at present, SAIC has set up more than 1,000 overseas marketing and service outlets, all of which are localized in marketing, sales, service, brand communication and other aspects. At the same time, SAIC also opened four self-operated international routes in Southeast Asia, Mexico, South America and West Europe, to escort overseas production and sales.

"Thanks to the localized service system and brand marketing, in the first half of this year, the overseas sales of the SAIC MG brand, the'China's single-brand overseas sales champion', reached 136,000 vehicles, an increase of 130% year-on-year, of which nearly 50% were sold in developed countries and regions. At present, the MG brand has successfully ranked first in the local passenger car market (TOP10) in Australia, New Zealand, the Middle East, Egypt, and Chile.” Yu De said.

It is worth mentioning that in addition to SAIC, the export data of Chery, Changan, Great Wall, Geely and other auto companies have also achieved rapid growth. At the same time, among the newly created car companies, brands such as Weilai, Xiaopeng, and Ai Chi have also entered the European market and have taken the first step of "going out".

At the 13th Automotive Blue Book Forum, Fang Zhongyou, Chairman of the China Insurance Research Institute of Automotive Technology, said: "I believe that after 2025, China will definitely become a major exporter of automobiles. The domestic market is mainly for transformation and upgrading, while foreign countries are a blue ocean market. ."

Continued breakthroughs in electrification and intelligence, and the globalization of Chinese car companies accelerates again

A detail worthy of attention is that in the process of Chinese auto brands "going out", smart electric vehicles have become a new focus of development.

Take the above automobile as an example, Yu De revealed that during the "13th Five-Year Plan" period, SAIC invested nearly 60 billion yuan in independent research and development to form innovative technology advantages such as new energy and intelligent network connection, and actively overflow overseas to create differentiated competition. force.

In the first half of this year, SAIC's own brand MG and Maxus new energy vehicles sold more than 12,000 vehicles in developed European countries, ranking the top in the market segments of the United Kingdom, Norway, the Netherlands, Denmark, and Iceland. "Electric vehicles have become the entry point for SAIC's layout in mature markets."

At the same time, in emerging markets, SAIC focuses on exploring the implementation of intelligent network technology. "'I-Smart' intelligent network connection system is popular among consumers in Thailand, India, Indonesia and other countries. It has been used on more than 30 overseas models and has activated more than 130,000 users."

Chen Jingyue, executive vice president and secretary-general of the China-Europe Association for Economic and Technical Cooperation, analyzed that there are two main reasons why Europe has become a new blue ocean in the new energy vehicle market.

"First, the EU has introduced the world's strictest carbon emission standards, and electrification has become the only way out; second, EU countries have implemented a double subsidy policy to stimulate the purchase and use of new energy vehicles." Chen Jingyue said.

In fact, the "New Energy Automobile Industry Development Plan (2021-2035)" issued by the General Office of the State Council clearly stated that we should practice the cooperation concept of openness, financing, mutual benefit and win-win, expand high-level opening up, and promote reform, development, and development through opening up. Promote innovation; adhere to the combination of "bringing in" and "going out", strengthen international cooperation, actively participate in international competition, cultivate new advantages in the new energy automobile industry, and deeply integrate into the global industrial chain and value chain system.

At the same time, due to the relatively complete industrial supporting facilities and earlier deployment, smart electric vehicle-related products and technologies have also become the advantages of Chinese auto companies.

According to Liu Yan, deputy secretary-general of the China Association of Automobile Manufacturers, the rapid development of new energy and intelligent connected vehicles provides opportunities for the upward development of Chinese brands. With policy encouragement and demand traction, Chinese automobiles have formed a certain first-mover advantage and brand breakthroughs have become The essential.

"Global development is the only way for companies to grow bigger and stronger. It has become a consensus. Under the strategic guidance of building a new dual-cycle development pattern, Chinese auto brands are expected to accelerate their global development." Liu Yan said.

The Irish National Transport Authority announced on the 19th that it will introduce 200 Enviro200EV pure electric single-deck buses in the next five years. This type of electric bus is jointly produced by the British bus manufacturer Alexander Dennis and the Chinese car company BYD.

This is a microcosm of Chinese automakers' continued efforts in the European electric vehicle market in recent years. Analysts pointed out that Chinese car companies' deep cultivation in Europe can not only meet the needs of the European market, but also provide new opportunities for China's new energy vehicles to go overseas, promote mutual benefit and win-win results between China and Europe, which will stimulate more innovation and cooperation sparks.

The development potential of electric vehicles in the European market is huge. Driven by the EU's green transition policy, the sales of electric vehicles in Europe doubled in 2020 compared to the previous year, and it is expected that there will be substantial growth in 2021. The European Commission recently proposed a package plan for addressing climate change. In order to achieve emission reduction targets, the number of newly registered petrol vehicles in 2030 will be reduced by 55% compared to 2021, and there will be no new petrol vehicles registered by 2035.

With high cost performance, Chinese electric vehicles are increasingly recognized by the European industry and sought after by consumers. The "European Electric Vehicle Market Report" recently released by the German professional automotive organization Schmidt Automotive Research Institute shows that China's electric vehicles are ushering in a period of rapid development in the European market. In 2020, the total sales volume of Chinese electric passenger car manufacturers' brands in 18 major European automobile markets will reach 23,836 units, an increase of more than 13 times compared with 2019, and the market share will reach 3.3%.

With the rapid development of the new energy automobile industry, new domestic automobile manufacturers are constantly emerging, new products are emerging in an endless stream, and the demand for new energy automobile foundry is also increasing. The Ministry of Industry and Information Technology recently stated that it will orderly liberalize the OEM production of new energy vehicles to curb blind investment and redundant construction. Weilai Automobile, Xiaopeng Automobile, and Zero Run Automobile have all experience in OEM of traditional car companies. So, will OEM new energy vehicles become a new business for traditional car companies?

Complementary needs, mutual symbiosis

At present, there are two main modes of automobile foundry-OEM (OEM and OEM) and ODM (commissioned design and manufacturing or original design and manufacturing). Among them, ODM is the first to design and manufacture the prototype, which is purchased by Party A or Modification after buyout; OEM means pure production and does not participate in design. For example, Magna that manufactures traditional cars is a typical ODM supplier, while OEMs that manufacture new energy car companies such as Weilai and Xiaopeng are OEMs.

Industry insiders believe that for new car manufacturers, OEM production can achieve asset-light operations before they have no production qualifications, and there is no need to bear the risk of building factories and capital investment before the products are launched and brand influence is built, thus avoiding resources Waste: For traditional car companies, foundry will enable the original idle capacity to be effectively used, and it will also help car companies with strong new energy vehicle manufacturing capabilities to quickly achieve capacity ramping.

Yingya Securities Consulting pointed out that the number of parts and components of smart electric vehicles is significantly reduced compared with traditional fuel vehicles, accounting for only 40% of the value of vehicles, and the difficulty of manufacturing is greatly reduced. With this background and national policy support, the smart electric vehicle foundry model may gradually become a trend.

The CICC research report also pointed out that, in the context of long-term low profits on the automotive hardware or manufacturing side, common foundry models in the clothing, luggage, electronics, and semiconductor industries have become options worth considering.

The cooperation between NIO and JAC is a relatively successful case in the field of automotive foundry. Before cooperating with Weilai, Jianghuai had gone downhill for a period of time, but through cooperation with Weilai, Jianghuai successfully "rescued" Jianghuai. "The prerequisite for foundry is complementarity. Initially, Weilai did not have qualifications and required JAC to provide qualifications. The actual results of the cooperation are not only the requirements for qualifications." Wang Binggang, Director of the Technical Committee of the National Electric Passenger Vehicle Technology Innovation Alliance Both the OEM and the OEM are important. Both parties can obtain greater benefits with less investment through OEM, and achieve the purpose of promoting development on the basis of mutual benefit.

"Foundry is a double-edged sword"

At present, the industry holds two diametrically opposed views on the foundry production of new energy vehicles. Li Bin, CEO of Weilai Automobile, once said: “When there are so many high-quality production capacity in the country, we will repeat the construction of production plants. It is a waste.” However, Shen Hui, the founder of Weimar Motors, questioned the foundry: There is a big difference between actual operation and theory. Theoretically, R&D, process, and marketing channels are all in their own hands, and OEMs are responsible for the intermediate links, but various problems will arise in actual operations."

Some insiders said that in actual operation, it is difficult for the brand to directly control the quality of the vehicle, production costs, etc., and there are potential risks. At the same time, some consumers have low recognition of OEM products and have doubts about quality.

"It is not easy to handle the relationship between competition and cooperation," Wang Binggang said frankly. OEM is a double-edged sword. OEMs need to balance their own brands and OEM brands. If the foundry project is not progressing well, the foundry party will lose a large amount of money, and at the same time, it is easy to be labeled as an foundry car company, which may adversely affect its own brands.

However, as technology companies have stopped building cars, auto OEM has entered a new era. Take the cooperation between Geely and Foxconn as an example. The two have been deeply involved in automobile manufacturing and mobile phone OEM fields for many years. The joint venture will provide OEM production and customized consulting services for global car companies. At the same time, there is news that Geely’s SEA Haohan architecture and Foxconn’s MIH electrification platform are ready to open up to the industry and move towards OEM specialization.

Is it an inevitable trend for automakers to build their own factories?

Wang Binggang said that OEM is the short-term choice of related car companies. While the two parties are cooperating, there is also competition. "Take the cooperation between Weilai and Jianghuai as an example. I think the products of the two parties belong to different routes and are quite different. They do not belong to the same field in the market. This is one of the reasons for the cooperation."

Haima Automobile said recently that the company and Xiaopeng have a cooperative production relationship, and the cooperation will expire at the end of this year. It is understood that Xiaopeng currently has a factory in Zhaoqing that can produce vehicles. At the same time, its Guangzhou intelligent manufacturing base is expected to be completed and put into production by the end of 2022, and the Wuhan intelligent manufacturing base will also be signed this year.

OEMs are now a sweet pastry, and many disadvantaged car companies regard it as a life-saving straw. So, for OEMs, how should they survive in the future? Wang Binggang said that if any vehicle manufacturer wants to grow and develop, it will not rely solely on OEMs for a long time. It is an inevitable trend to build vehicles by itself. "Automobile manufacturers will eventually break away from the foundry model in terms of R&D and overall development."

Unlike mobile phones, manufacturing and R&D in the automotive industry are closely linked and highly complex. Wang Binggang further pointed out that traditional car companies on the foundry side should not rely solely on substituting work as their support, but should master core technologies and change their passive state. "In the future, there will not be an OEM that only provides OEMs without its own products. As a competitive OEM in the market, it must have better R&D capabilities and results. Only in this way can it survive. It’s not feasible for a long time, such as the way of working to provide production conditions."

Christina Bu, secretary-general of the Norwegian Electric Vehicle Association, said that China's electric vehicle development is in a leading position in the world. She said that Norwegians have a positive opinion of China's electric vehicles, and she has a good driving experience herself. Many Norwegians are concerned about China's electric vehicles and expressed their willingness to buy models that will be launched soon.

In addition, the achievements of Chinese car companies in the European market in recent years have also benefited from the development of electric vehicle sales channels and the layout of service networks. For example, AIWAYS has been sold in European countries such as France, Germany, the Netherlands, and Belgium. Taking Belgium as an example, AIWAYS pays attention to this 

Localization experience, through cooperation with Cardoen, Belgium's largest online car sales company, established a strong integrated sales and after-sales service system.

At the same time of rapid development, China's electric vehicles are still facing a series of challenges in deepening the European market. The "European Electric Vehicle Market Report" pointed out that compared with other regions, the European new energy vehicle industry has higher regulatory standards. In addition, the EU also plans to successively introduce more stringent regulatory measures, including legislation on standards for the full life cycle of electric vehicles and battery recycling rates, which will bring new challenges to foreign companies including Chinese brands. Chinese automakers need to study local laws and regulations more rigorously and meticulously.

Stefan Bratzell, head of the German Automotive Management Center, said that market awareness is also an important obstacle for Chinese brands to enter the European market. "European consumers have high brand loyalty. Chinese companies need to further improve their services on the basis of accurately grasping market needs to increase brand trust and recognition."