For the Chinese automobile market, which is known as the world’s largest auto market, the momentum of “runaway†in the first two years has finally slowed down due to various factors, and it has begun to enter a different development path than before. The slowdown in demand has become an indisputable fact, and the tilt of policy has also become a thing of the past. In the past year, the domestic auto market was like a child who started to escape from the care of parents and faced an independent growth. He completed a transformation that he could be proud of. He became more and more steady on the road of rational return. It is undeniable that this is an important symbol of the maturity of the auto market. However, the domestic auto market that is in the growth stage will still be like a half-sized child. Inevitably, there are some slightly more radical problems. For example, overcapacity expansion is an important factor leading to a rational return of the auto market.
The return of the auto market to a rational return The auto market in China has been steadily moving forward. It has been a leap from 2008 to 2010 that people have seen what is called a roller coaster. The crowded car companies made a lot of money and exclaimed. The reason is that the government's tax benefit and subsidy policy for supporting the auto industry is an important factor. However, with the purchase tax preferential policies in 2011, the exit of cars to the countryside and the exit of old-for-new policies, the “policy growth†momentum is no longer making the auto market cool. As a result, 2011 has naturally become the year of adjustment for the domestic auto industry, and the trend of rational return has become more pronounced.
According to the data, in 2011, the sales volume of narrow passenger vehicles was 12,320,427 units, which was a year-on-year increase of 8.7% compared with 11,336,687 units in 2010.
However, compared with the year-on-year growth rate of more than 30% in 2010, it is a bit “little surpriseâ€. Faced with the “urgent brake†of the auto market, major car companies have issued adjustment signals and re-deployed products and market strategies. For the Chinese auto industry, 2012 will also be more of a kind of adjustment and growth to further ease the impact of the “hard landing†of the auto market last year.
From rapid development to emergency contraction, the auto market experienced an inevitable "labor pain" during the process of rational return in 2011. With the advent of 2012, the Chinese automobile market has begun to transform, and thus entered a new stage of steady and rational growth. Both car companies and professionals have predicted that the growth rate of the auto market in 2012 will be between 5% and 10%.
According to data from the CLUCC, in January 2012, the sales volume of domestic narrow passenger vehicles was 98,2008, a year-on-year decrease of 14.9% and a month-on-month decrease of 19.9%. This shows that the auto market has gradually drifted away from the road of rational return. After experiencing the development of gold for 10 years, the Chinese auto market has shown signs of fatigue, and it is in urgent need of a new round of integration and adjustment. The overriding issue is the overcapacity of auto manufacturers.
Industry analysts believe that in the first half of 2012, most of the company's expansion capacity can be completed, when the domestic automobile production capacity will be greater than sales. According to statistics, the total vehicle production capacity for the “Twelfth Five-Year Plan†of 18 provinces, regions, and municipalities will be added. After four years, China’s automobile production capacity will exceed 45 million vehicles, which is nearly 2.5 times of the current annual sales volume. Overcapacity, and many car companies and blindly expand production capacity, which also means that the domestic auto market from the seller's market began to fully transition to the buyer's market, 2012 may become the turning point in the auto market supply and demand.
The expansion of production capacity or the oversupply of the auto market from the peak of the auto market suddenly dropped to a rational development trend, exposing a clear problem - there may be hidden dangers of overcapacity expansion, in fact, not far from this.
Since China's accession to the WTO in 2001, the Chinese automobile market has ushered in a decade of golden development. The automotive industry has become a pillar industry supported by the national policy. Foreign car companies and independent Chinese brands have seized the opportunity to take advantage of the opportunity to make the automobile market in the past decade develop brilliantly. Until China has become the world's largest auto market, the development of the domestic auto market has reached a peak. Many auto companies have also expanded their confidence in the Chinese market to an unprecedented level. Thus, in the past two years, auto manufacturers have expanded their production capacity in a “staking their own way†in order to cater to the rapidly growing auto market. It is understood that by the end of 2012, after the completion of Beijing Hyundai Plant No. 3, Beijing Hyundai’s total production capacity will reach 1 million units and it will enter the ranks of “million-level†car companies.
It is reported that the planning of the Beijing No. 4 modern factory has been put on the agenda. Dongfeng Yueda Kia plans to establish a third factory in Yancheng, Jiangsu Province, which will be put into operation in 2014. Kia Motors stated that the new plant will “produce a strategic model developed specifically for the Chinese market†with an annual output of 300,000 vehicles. By then, the annual production of Kia Motors in China will reach 730,000 vehicles.
Changchun FAW Fengyin new plant will be completed and put into use in the first half of this year. The new plant with a capacity of 100,000 will increase FAW Toyota’s total production capacity to over 560,000 units. In October last year, the third plant of FAW-Volkswagen’s initial capacity of 300,000 units was put into operation in Chengdu. By 2013, the third phase of the Chengdu plant with a capacity of 450,000 vehicles and the fourth Foshan plant with a capacity of 300,000 vehicles will also be completed.
On December 21, 2011, Dongfeng Nissan Huadu No. 2 Plant, which was established in 19 months, was officially completed and put into production. According to reports, after the plant is put into production, the Dongfeng Nissan Huadu plant will have a vehicle production capacity of 600,000 units in 2012, and the subsequent annual production capacity will increase to 670,000 units. So far, Nissan’s largest and most efficient vehicle production base in the world has settled in Huadu, and the total vehicle design capacity of Dongfeng Nissan’s three production bases in Huadu, Xiangyang and Zhengzhou has reached 1 million.
The new Changan Ford plant in Chongqing, which is under construction, will also start production of the new generation of Ford Focus. The new plant will have a total investment of 3.34 billion yuan. The initial annual production capacity will be 150,000, and the production time is expected to be in 2012. In addition, Sichuan FAW Toyota's plant will also be put into production in 2012, and the Volkswagen Southern Plant will also take shape this year.
Compared with large-scale joint ventures, the speed of expansion of foreign luxury vehicles is not much to give. It is reported that as early as mid-2011, FAW-Volkswagen has a high-profile attitude, Audi's production capacity will reach 700,000. The new Tiexi plant in Shenyang City of Brilliance BMW will be put into operation in early 2012. The first phase will have an annual production capacity of 100,000 units. The BMW X1 will be the first production model of the new plant. At the same time, Beijing Benz will also invest RMB 30 billion in the “Twelfth Five-Year Plan†period to increase production capacity from the current 100,000 to 300,000. Infiniti will be located in Dalian and rely on the Dongfeng Nissan framework to adopt an Audi-made model. The Infiniti Independent Business Unit will be established and put into production in 2014. In addition, rumors of localization of Jaguar Land Rover and Subaru have continued to spread.
The expansion plan of independent brands in 2012 was even more crazy. BYD, Geely, Chery, Brilliance, Jianghuai, and other self-owned brands have established factories across the country.
Based on the original four bases of Linhai, Ningbo, Luqiao and Shanghai, Geely Automobile has successively built three bases in Lanzhou, Xiangtan and Jinan within three years. According to the plan, Geely Automobile will reach an annual production capacity of 2 million vehicles by 2015. Chery Motors opened a production base in Dalian in 2009, and the horn of production expansion began to sound. In 2010, Chery successively launched the construction of three bases, namely, the integrated production base of Chery North in Wuhu, the Kaifeng production base in Henan, and the Ordos production base. Among them, Chery Automobile's newly built Ordossky has a total investment of 20 billion yuan and an annual production capacity of 300,000 vehicles. In 2009, Great Wall Motor opened a production base with an annual production capacity of 500,000 vehicles in Tianjin Economic and Technological Development Zone. In 2010, Tianjin's production base increased investment and added 300,000 passenger car projects.
According to the plan, the production capacity of the self-owned brand will be level with the joint venture vehicle factory in 2012, and the production capacity will be close to 9 million, while the mini vehicle production capacity will also exceed 5 million. The completion and production of these new factories will lead to an explosion in production capacity in the automotive industry. However, according to the current sales volume of independent brand car manufacturers, the issue of overcapacity is very obvious.
Consequent, overcapacity will inevitably lead to increasingly fierce market competition, and terminal sales will also rely more on price reduction promotions. This will promote a further cooling of the auto market, making the auto market more rational and stable. However, the return of rationality does not mean a halt. One thing is certain - China is still in the period of development of automobile consumption, the automotive industry is still promising, and the pace of industry consolidation is also quietly accelerating. Opportunities always coexist with challenges. I believe with the development of a more rational and mature automobile market, China's auto industry will also usher in a brand-new situation.
The return of the auto market to a rational return The auto market in China has been steadily moving forward. It has been a leap from 2008 to 2010 that people have seen what is called a roller coaster. The crowded car companies made a lot of money and exclaimed. The reason is that the government's tax benefit and subsidy policy for supporting the auto industry is an important factor. However, with the purchase tax preferential policies in 2011, the exit of cars to the countryside and the exit of old-for-new policies, the “policy growth†momentum is no longer making the auto market cool. As a result, 2011 has naturally become the year of adjustment for the domestic auto industry, and the trend of rational return has become more pronounced.
According to the data, in 2011, the sales volume of narrow passenger vehicles was 12,320,427 units, which was a year-on-year increase of 8.7% compared with 11,336,687 units in 2010.
However, compared with the year-on-year growth rate of more than 30% in 2010, it is a bit “little surpriseâ€. Faced with the “urgent brake†of the auto market, major car companies have issued adjustment signals and re-deployed products and market strategies. For the Chinese auto industry, 2012 will also be more of a kind of adjustment and growth to further ease the impact of the “hard landing†of the auto market last year.
From rapid development to emergency contraction, the auto market experienced an inevitable "labor pain" during the process of rational return in 2011. With the advent of 2012, the Chinese automobile market has begun to transform, and thus entered a new stage of steady and rational growth. Both car companies and professionals have predicted that the growth rate of the auto market in 2012 will be between 5% and 10%.
According to data from the CLUCC, in January 2012, the sales volume of domestic narrow passenger vehicles was 98,2008, a year-on-year decrease of 14.9% and a month-on-month decrease of 19.9%. This shows that the auto market has gradually drifted away from the road of rational return. After experiencing the development of gold for 10 years, the Chinese auto market has shown signs of fatigue, and it is in urgent need of a new round of integration and adjustment. The overriding issue is the overcapacity of auto manufacturers.
Industry analysts believe that in the first half of 2012, most of the company's expansion capacity can be completed, when the domestic automobile production capacity will be greater than sales. According to statistics, the total vehicle production capacity for the “Twelfth Five-Year Plan†of 18 provinces, regions, and municipalities will be added. After four years, China’s automobile production capacity will exceed 45 million vehicles, which is nearly 2.5 times of the current annual sales volume. Overcapacity, and many car companies and blindly expand production capacity, which also means that the domestic auto market from the seller's market began to fully transition to the buyer's market, 2012 may become the turning point in the auto market supply and demand.
The expansion of production capacity or the oversupply of the auto market from the peak of the auto market suddenly dropped to a rational development trend, exposing a clear problem - there may be hidden dangers of overcapacity expansion, in fact, not far from this.
Since China's accession to the WTO in 2001, the Chinese automobile market has ushered in a decade of golden development. The automotive industry has become a pillar industry supported by the national policy. Foreign car companies and independent Chinese brands have seized the opportunity to take advantage of the opportunity to make the automobile market in the past decade develop brilliantly. Until China has become the world's largest auto market, the development of the domestic auto market has reached a peak. Many auto companies have also expanded their confidence in the Chinese market to an unprecedented level. Thus, in the past two years, auto manufacturers have expanded their production capacity in a “staking their own way†in order to cater to the rapidly growing auto market. It is understood that by the end of 2012, after the completion of Beijing Hyundai Plant No. 3, Beijing Hyundai’s total production capacity will reach 1 million units and it will enter the ranks of “million-level†car companies.
It is reported that the planning of the Beijing No. 4 modern factory has been put on the agenda. Dongfeng Yueda Kia plans to establish a third factory in Yancheng, Jiangsu Province, which will be put into operation in 2014. Kia Motors stated that the new plant will “produce a strategic model developed specifically for the Chinese market†with an annual output of 300,000 vehicles. By then, the annual production of Kia Motors in China will reach 730,000 vehicles.
Changchun FAW Fengyin new plant will be completed and put into use in the first half of this year. The new plant with a capacity of 100,000 will increase FAW Toyota’s total production capacity to over 560,000 units. In October last year, the third plant of FAW-Volkswagen’s initial capacity of 300,000 units was put into operation in Chengdu. By 2013, the third phase of the Chengdu plant with a capacity of 450,000 vehicles and the fourth Foshan plant with a capacity of 300,000 vehicles will also be completed.
On December 21, 2011, Dongfeng Nissan Huadu No. 2 Plant, which was established in 19 months, was officially completed and put into production. According to reports, after the plant is put into production, the Dongfeng Nissan Huadu plant will have a vehicle production capacity of 600,000 units in 2012, and the subsequent annual production capacity will increase to 670,000 units. So far, Nissan’s largest and most efficient vehicle production base in the world has settled in Huadu, and the total vehicle design capacity of Dongfeng Nissan’s three production bases in Huadu, Xiangyang and Zhengzhou has reached 1 million.
The new Changan Ford plant in Chongqing, which is under construction, will also start production of the new generation of Ford Focus. The new plant will have a total investment of 3.34 billion yuan. The initial annual production capacity will be 150,000, and the production time is expected to be in 2012. In addition, Sichuan FAW Toyota's plant will also be put into production in 2012, and the Volkswagen Southern Plant will also take shape this year.
Compared with large-scale joint ventures, the speed of expansion of foreign luxury vehicles is not much to give. It is reported that as early as mid-2011, FAW-Volkswagen has a high-profile attitude, Audi's production capacity will reach 700,000. The new Tiexi plant in Shenyang City of Brilliance BMW will be put into operation in early 2012. The first phase will have an annual production capacity of 100,000 units. The BMW X1 will be the first production model of the new plant. At the same time, Beijing Benz will also invest RMB 30 billion in the “Twelfth Five-Year Plan†period to increase production capacity from the current 100,000 to 300,000. Infiniti will be located in Dalian and rely on the Dongfeng Nissan framework to adopt an Audi-made model. The Infiniti Independent Business Unit will be established and put into production in 2014. In addition, rumors of localization of Jaguar Land Rover and Subaru have continued to spread.
The expansion plan of independent brands in 2012 was even more crazy. BYD, Geely, Chery, Brilliance, Jianghuai, and other self-owned brands have established factories across the country.
Based on the original four bases of Linhai, Ningbo, Luqiao and Shanghai, Geely Automobile has successively built three bases in Lanzhou, Xiangtan and Jinan within three years. According to the plan, Geely Automobile will reach an annual production capacity of 2 million vehicles by 2015. Chery Motors opened a production base in Dalian in 2009, and the horn of production expansion began to sound. In 2010, Chery successively launched the construction of three bases, namely, the integrated production base of Chery North in Wuhu, the Kaifeng production base in Henan, and the Ordos production base. Among them, Chery Automobile's newly built Ordossky has a total investment of 20 billion yuan and an annual production capacity of 300,000 vehicles. In 2009, Great Wall Motor opened a production base with an annual production capacity of 500,000 vehicles in Tianjin Economic and Technological Development Zone. In 2010, Tianjin's production base increased investment and added 300,000 passenger car projects.
According to the plan, the production capacity of the self-owned brand will be level with the joint venture vehicle factory in 2012, and the production capacity will be close to 9 million, while the mini vehicle production capacity will also exceed 5 million. The completion and production of these new factories will lead to an explosion in production capacity in the automotive industry. However, according to the current sales volume of independent brand car manufacturers, the issue of overcapacity is very obvious.
Consequent, overcapacity will inevitably lead to increasingly fierce market competition, and terminal sales will also rely more on price reduction promotions. This will promote a further cooling of the auto market, making the auto market more rational and stable. However, the return of rationality does not mean a halt. One thing is certain - China is still in the period of development of automobile consumption, the automotive industry is still promising, and the pace of industry consolidation is also quietly accelerating. Opportunities always coexist with challenges. I believe with the development of a more rational and mature automobile market, China's auto industry will also usher in a brand-new situation.
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