The compound annual growth rate of 19.3% in China's auto market has come to an end in the past decade.
The 2015 China Automotive Outlook Report released by global business consulting firm AlixPartners pointed out that 2015 is the most challenging car manufacturer in China, given that sales in January-July this year only increased by 3.4% year-on-year. year.
Lin Lianyun, Managing Director of Arrow Platinum, said: “Unless there is a strong rebound in the market in the second half of this year, 2015 may be the most pessimistic year for automakers and dealers since the global recession in 2008. Inventories are growing and sales are growing The decline, automakers are rethinking production strategies – these signs all indicate that competition is more intense and the industry environment is more difficult.â€
From the perspective of automakers, the high growth in the past decade has accelerated the pace of expansion of major automakers, which has led to foreign media's assertions on the overcapacity of the Chinese auto market. Although most people in the industry believe that it is not possible to simply determine the overcapacity of China's auto market, because the planning and release of production capacity has a certain time difference, and the utilization rate of each enterprise is different, the Chinese auto market can only be regarded as a structural excess. Indeed, according to data from Arrow, most of the OEMs in Japan, Europe and the United States have a capacity utilization rate of more than 90% in China, but the capacity utilization rate of local Chinese automakers is almost less than 60%. In the industry, more than 85% of capacity utilization is considered to be the lowest operating level for profitability.
In the overall environment of good auto market and good profit margin, the lower capacity utilization rate may not expose more problems, but in the past two years, the market profit rate has continued to fall. According to the statistics of the reporter, in the past two years, the gross profit rate of automobile groups including SAIC Group has been declining.
The cruelty of market competition is more pronounced in the terminal. The weak sales and the price cuts of the car companies have further diminished the dealer's gross margin. In 2014, the gross profit margin and net profit of the top 100 auto dealer groups continued to deteriorate. In addition, the increase in dealer inventory will further affect the dealer's cash flow and profitability.
Recently, Jiangsu Automobile Deal Management Association sent a letter to SAIC-GM. In the Jiangsu region, Chevrolet brand dealers are experiencing many problems such as high inventory, falling profits and insufficient cash flow. The association said that it hopes that SAIC-GM can give certain The policy addresses the problems in the above dealers. SAIC GM insiders said in an interview with the "First Financial Daily" reporter that these problems are not only the existence of SAIC-GM's dealers this year, but some luxury brands with past profitability are facing problems. Indeed, this year, dealers including Audi BMW and Mercedes-Benz and other luxury brands such as Volvo and Jaguar Land Rover have exposed their survival problems to varying degrees, and OEMs have to give some policies to support them.
Enterprise support is obviously not a long-term solution. In the above-mentioned SAIC GM insiders, many of the difficulties of dealers are also related to their own operations. "The more difficult the market is, the more the survival of the fittest."
Indeed, in the context of imbalances in supply and demand in the market, the situation of parallelists and “big fish eating small fish†between dealer groups has begun to emerge. Recently, after the Greenland shares in Rundong Group, recently, the property Zhongda (600704) announced that its holding subsidiary Zhejiang Property Yuantong Automobile Group Co., Ltd. (hereinafter referred to as “Yuantong Autoâ€) intends to invest through foreign investment. Participated in the auction of 60% of Hecheng Automobile held by Zhejiang Guoda Group and 20% of Hecheng Baoshili Toyota. According to the reporter, Hecheng Automobile is a large-scale automobile group with a history of 10 years. It has more than 10 4S points including Audi, BMW, Volvo and Nissan. Although it is on the books, the operating income of Hecheng Automobile in 2014 is close to 53. Billion and profits reached 2.7 million yuan. However, in the eyes of the industry, at this stage, the big tree such as “Shangshang†Yuantong is obviously not only conducive to the improvement of anti-risk ability, but also has favorable conditions for the future development of derivative business.
According to Arrow Research, China's auto sales will maintain the current annual growth rate of around 4% to 2018, and in the next five years, this figure may be reduced to 2.9%. For dealers, in addition to the big environment, the impact comes from the openness of the after-sales service market.
Arrow Platinum estimates that by 2018, the overall compound annual growth rate of China's passenger car service and parts market will be 14%, totaling 1 trillion yuan, but the market share of dealers will be estimated from 49% in 2014. It fell to 38% in 2018. With the rise of the independent after-sales service market, it is expected that a large number of cars will no longer receive services through the original dealers after the manufacturer's warranty period.
Therefore, Mr. Steve Maurer, Managing Director of Arrow Platinum added, “As the total number of cars increases, it will become more and more important for dealer service departments to get repeat customers. In order to regain growth and profitability, Chinese car dealers must consider some Strategic actions to adapt to market changes, including improving customer experience, enhancing after-sales service, exploring opportunities for auto finance expansion, and developing business capabilities related to used car sales. Dealers should also consider improving store efficiency through store network optimization and Cost control, increasing productivity and efficiency, and adapting to the changes brought about by the rapid development of the Internet."
From the current point of view, these changes may cause some small dealers to face short-term cost and operational pressure, and in order to seek solutions, the tendency of the group to warm up between groups may become more and more obvious. Perhaps the scene of “big fish eating small fish†between dealers will be frequently performed in the future.
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