The global automobile market is hovering in the trough, and the downward
trend in sales in China, the United States, and Europe, the three largest
automobile markets in the world, continues. "Affected by the economic situation,
the downturn in the global automobile market will continue for two to three
years.
"On May 29, Xu Haidong, assistant secretary-general of the China
Association of Automobile Manufacturers, said in an interview with a reporter
from the 21st Century Business Herald. The downturn on the consumer side has put
tremendous pressure on the production side, and a storm of layoffs in the
automobile industry has swept the world.
In the past six months, car companies such as General Motors, Honda, and
Ford have closed factories one after another, and global car companies have
announced more than 40,000 layoffs. The global automobile industry has entered
its "darkest moment" and will undergo a period of sustained adjustment.
Of course, declining sales and operating profits are not the only reasons
why global car companies are laying off employees. The consensus in the industry
is that the transformation path towards electrification, intelligent
connectivity, and autonomous driving has been established, and for this, car
companies need to invest billions or even tens of billions of dollars.
In order to save costs, improve efficiency and reduce risks in the
development of new technologies, cooperation between car companies has become
more frequent. Volkswagen and Ford formed an alliance, "enemies of the century"
Daimler and BMW "married", FCA and Renault Group proposed a merger, and the
structure of the global automobile industry began to adjust.
The development of science and technology will redefine the value and
connotation of cars. Facing an uncertain future, car companies are in the
darkest moment of the industry and have developed complex cooperative
relationships with competitors for many years. Traditional car companies are
bidding farewell to cars. industry’s “tradition”. A wave of layoffs has swept
the world. Affected by multiple factors, the world's three largest auto markets
have collectively been "slow" for several months. Xu Haidong said, "China's
automobile market is still in a state of decline, and it is difficult to judge
at present, but we believe that it is expected to improve in the second half of
the year, and the single-month growth rate is expected to turn from negative to
positive.
"Data from the European Automobile Manufacturers Association shows that the
European automobile market, which is implementing new emission regulations, is
still in a period of adjustment. In April this year, the European market has
declined for the eighth consecutive month. However, due to rising interest rates
and the Trump administration's tariff stick, international Affected by multiple
factors such as trade relations, U.S. car sales have also continued to decline.
The downturn in several major global markets has directly affected the operating
performance of car companies. From January to March this year, Volkswagen, BMW,
Daimler, Ford, FCA (Fiat) Transnational automobile groups such as Chrysler
(Chrysler) and Renault have all experienced declines in revenue and profits.
Even Daimler, one of the world's most profitable car companies, has seen its
profit margins squeezed.
According to Daimler's financial report for the first quarter of 2019,
revenue in the first quarter was 39.7 billion euros, almost the same as 39.8
billion euros in the same period last year, but operating profit was 2.1 billion
euros, a year-on-year decrease of 16%, while Mercedes -Mercedes-Benz’s
first-quarter profit margin dropped to 6.1% from 9% last year.
The market is sluggish. Based on cost and market considerations, in order
to ensure profit margins, many car companies have begun to look for
countermeasures to deal with shareholders' doubts about the company's "not
increasing profits." According to statistics from reporters from the 21st
Century Business Herald, since General Motors announced 15% of its global
layoffs on November 26 last year, many car companies such as Jaguar Land Rover,
Volkswagen, FCA, Nissan, Honda, and Ford have announced plant closures, layoffs,
or major layoffs. Across the entire organizational structure, the number of
people in the entire industry who have publicly announced layoff plans has
reached 43,000.
In addition, Daimler, PSA, Audi, Tesla and other brands have also reported
layoffs, but the specific number has not been announced. Of course, market
disruption is not the only reason for layoffs. Behind more car companies'
layoffs, there are longer-term strategic considerations. “Closing factories and
reducing staff is not necessarily a bad thing, especially in the context of the
current transformation of the automobile industry. It can even be said that it
is more forward-looking to abandon certain departments in traditional fields and
instead increase investment in emerging fields with more development prospects.
Strategic adjustment." An insider in the automotive industry told a reporter
from the 21st Century Business Herald.
Zhao Fuquan, chairman of the World Federation of Societies of Automotive
Engineers and director of the Institute of Automotive Industry and Technology
Strategy at Tsinghua University, believes that the development of the automobile
industry over the past 100 years has mainly been the improvement of traditional
technologies based on machinery, which is perfecting a " old world,” but now
it’s time to “end an old world and build a new one.” Not only in China, the
world is going through the transition stage from fuel vehicles to electric
vehicles. The incremental market will almost entirely come from electric
vehicles. In the existing market, electric vehicles will also replace part of
the market share of fuel vehicles.
In 2018, the European Union set a target of reducing automobile emissions
by 35% in 2030, that is, car companies must reduce average carbon dioxide
emissions by 35% based on the 2021 baseline. Previously, European car companies
were very hesitant about electrification due to the high profits of fuel
vehicles and the high investment in electric vehicles. However, huge fines for
exceeding emission standards force them to accelerate the pace of
electrification. Entering 2019, German auto giants such as Volkswagen, Daimler,
and BMW have announced more radical electrification strategies. At the same
time, the rise of self-driving technology companies such as Waymo, Cruise, and
Baidu has made car companies more eager to get rid of the "traditional" hat. The
"century-old companies" in the automobile industry do not want the core say in
the future industry to fall into the hands of these young technology companies.
According to Ford's plan, in the next five years, it will invest US$4 billion in
the field of autonomous driving and will also increase research and development
in the field of electric vehicles. In order to develop autonomous driving and
electric vehicles, General Motors has launched It has carried out large-scale
layoffs and closed factories with idle production capacity to concentrate
resources on industries that can bring higher returns, thereby improving cost
efficiency; and Jaguar Land Rover's "Charge & Accelerate" project launched
in the third quarter of last year plans to Achieve £2.5 billion in cost cuts and
cash flow improvements by the end of March 2020, but this will allow it to have
more funds to invest in electric vehicles and autonomous driving.
The era of electric vehicles and intelligent connected vehicles is rapidly
approaching, but the current global automobile market is still "depressed." A
huge contradiction faced by car companies is that market instability has led to
a decline in turnover and profits, but they have to invest a lot of money in new
technologies. For most car companies, cooperation and alliances are a better
strategic choice. "In fields such as electric vehicles, autonomous driving, and
shared travel, which often require tens of billions of dollars of investment,
there is an even more urgent need for enterprises to form alliances to share
high development costs, risks, and resource sharing." An automotive industry
insider told reporters . On May 27, FCA officially submitted a proposal to
Renault Group, proposing to merge their respective businesses on a 50:50
basis.
After the merger, the company will become the world's third largest
automotive equipment manufacturer, with sales of 8.7 million vehicles, second
only to Toyota and Volkswagen. FCA expects the merger to generate more than 5
billion euros in annual synergies, mainly from the integration of platforms,
integration of powertrain and electrification investments, and economies of
scale. In addition, FCA expects the total number of vehicle platforms to
decrease by approximately 20% and engine series to decrease by 30%.
Synergies are expected to be approximately 80% complete by the fourth year
of the merger and fully realized six years later. This is another example of
in-depth cooperation between multinational car companies, following the alliance
between Volkswagen and Ford and the in-depth cooperation between Daimler and BMW
earlier this year. The merger and reorganization between two very large
multinational giants has further confirmed the anxiety and determination of car
companies about the huge changes in the automotive industry.
"The traditional automobile industry aims to achieve greater economic
benefits in the global market through integration. Mergers in the automobile
industry have always existed, but what we are seeing now is more cooperation or
mergers and reorganizations between traditional automobile companies in new
energy or intelligent network. The purpose is to survive in the more fierce
market competition in the future." Xu Haidong told reporters. In fact, a new
round of technological revolution is driving the automobile industry chain to
evolve into a travel ecosystem. "The automobile industry will transform from
manufacturing to manufacturing + services. Cars are more than just means of
transportation. Enterprises must not only consider 'how to build a good car',
but also 'how to use the car well'. Humanity will enter multiple industries to
jointly develop cars." A new era of travel.
"Zhao Fuquan told reporters. At this stage, software will play an important
role in defining cars. However, this is not an area that traditional car
companies are good at. The traditional industrial chain and organizational
structure can no longer meet the needs of the new automobile era. , Car
companies with stronger financial strength are more likely and have the
opportunity to continue to control core competitiveness and the right to speak
in the industrial chain in the future.
This change in the global automobile industry is of reference significance
to the development of China's automobile industry. China has hundreds of
automobile companies, but so far it still does not have a globally influential
and competitive independent brand. Even in China's domestic market, the
competitiveness and product premium capabilities of China's own brands have
always been lower than those of joint venture brands. In the context of the
downturn in the auto market, the lack of competitiveness has become even more
apparent. The market share of China's own brands has exceeded the 40% market red
line. In fact, for Chinese auto companies, the adjustment of the global auto
industry will also bring unprecedented strategic opportunities. Of course,
seizing opportunities requires new strategies and new capabilities to match.
However, a major advantage of China's automobile industry lies in its
leadership in Internet and information and communication technology and its
policy support, which allows my country's automobile manufacturing industry to
have the possibility of surpassing through cooperation with automobile
companies. "The differentiation of China's auto market is intensifying, and the
market-oriented survival of the fittest is conducive to the healthy development
of the auto industry. Automobiles are an economy-of-scale industry, and auto
companies need to invest a lot of money in R&D, manufacturing, marketing,
and other supporting facilities. Each additional unit sold Cars can share part
of the cost. Only manufacturers with large-scale sales can remain competitive in
a sluggish market. If the market cannot be cleared and bad money drives out good
money, it will not be able to improve the development level of my country's
automobile manufacturing industry." Auto industry experts finally said.
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