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 sweeps the world
Affected by multiple factors, the world's three largest auto markets have
been collectively "dumb" for several months.
Xu Haidong said, "China's auto market is still in a state of decline. 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 is still in a period of adjustment after the
implementation of new emission regulations. In April this year, the European
market has declined for the eighth consecutive month; it has been affected by
rising interest rates, the Trump administration’s tariff stick, and
international trade. Affected by multiple factors such as relationships, U.S.
car sales have also continued to decline.
The downturn in several major global markets has directly affected the
operating performance of automobile companies. From January to March this year,
multinational automobile groups such as Volkswagen, BMW, Daimler, Ford, FCA
(Fiat Chrysler), and Renault 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.
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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.
Hug together for warmth
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 the car.
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. Automobile 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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