Manufacturers with serious overcapacity in the automotive industry push "hungry" therapy


In the eyes of the layman, the overcapacity and how large the car inventory is is a problem that is “more difficult than predicting the Chinese stock market”.

In the industry, the cracking ability of this problem is being increasingly concerned by manufacturers and distributors. Through the rapid digestion of inventory, dealers have more say in the game with the interests of manufacturers; and some manufacturers through the reasonable control of inventory, increased the bargaining chips with their opponents.

Overcapacity

"Surprise - Polaris buys 20,000 sales!" At the beginning of October, the news of this title once occupied the headlines of the capital's major auto media.

"This is actually a buyout of stocks, not a real buyout." Jia Xinguang, chief analyst at the China Automotive Research Institute, told CIEN reporters that these buyout sales are to clean up the stock car. According to foreign practice, the turnover period for automobile sales is two months. If it is not sold before this time, the stock vehicle will be sold. In China, 10% of the factory's production is counted as a reasonable stock. If the car that exceeds this ratio is not sold, it is a stock car. Since it is clearing inventory, similar price promotions, natural and new car promotional offers can not be the same language.

All this is caused by excess capacity.

Volkswagen China President Van Anders has also admitted that in 2004, FAW-Volkswagen and Shanghai Volkswagen sold a total of 648,000 new cars, but the total inventory in production plants and social channels reached 150,000. In 2004, Volkswagen’s profit margin in China was zero. In the first half of this year, the two masses sold 265,000 vehicles, which is less than one-third of the production capacity. The current market share of VW in China has fallen from the previous 50% to 18% this year. Therefore, for the public with severe situation, the most important task this year is to reduce the cost by 40% in order to enhance the competitiveness of the models in the market.

"It is in the face of such a situation that North and South China Volkswagen has to adopt a buyout strategy to clear inventory." Senior industry expert Zhong Shi said to the CIEN reporter.

Inventories, the element that once had the most strength in forensic value, have now become an embarrassment that the general public does not want to mention again.

Chen Bin, deputy director of the Industrial Development Department of the National Development and Reform Commission, also told the media on November 13 that the overcapacity situation in China's auto industry will become more severe during the “Eleventh Five-Year Plan” period. By the end of the “Eleventh Five-Year Plan”, the auto industry’s production capacity will be higher than actual. The demand has more than doubled, and it is estimated that the passenger car capacity utilization rate will fall to 55% this year.

The situation is so grave, but other than the public at large, other companies are still obsessed.

Shortly after the public plan was announced, GM also announced that it will jointly invest 2 billion yuan in Shanghai GM and increase its production capacity to 200,000 units. Ford, which has been slow in the Chinese market, has also accelerated its pace. Changan Ford is building a new car base in Nanjing and will add 160,000 new production capacity.

More ambitious are Hyundai and Toyota Japan.

Hyundai has announced that it will build a capacity of 1 million vehicles in China before 2008. Many projects are currently being implemented.

Toyota and FAW currently have three complete vehicle joint ventures in Tianjin, Sichuan, and Changchun, and have produced nearly 300,000 vehicles. In October this year, Toyota announced that it will jointly invest RMB 1.9 billion with GAC Group to build the second phase of GAC Toyota Motor Co., Ltd., which will increase production capacity from 300,000 engines per year to 500,000 units.

At this point, not only did companies not reduce their production capacity with the public, on the contrary, their capacity expansion project is still in an orderly manner.

Hunger therapy

Relative to the mass sales of the public, although other manufacturers did not act, but the business has played a new card.

"Inventory shortages, especially the 1.8 manual classic type are scarce. If you set a car, you have to pay a deposit of RMB 1,000-3,000 according to different models. The fastest car to be picked up also has to wait two weeks later." Beijing Yazhijie Century Ford Store Zhang Peng told the CIEN reporter. In addition, FAW Toyota's Corolla and Reiz have no cars at the moment, according to dealers. "Even if you book a fare increase, you have to wait a month or more before you can get a car."

In Shanghai, Shanghai Volkswagen's sales situation is due to the fact that Passat's privatization is in short supply, and now it has generally increased its sales. A Shanghai Volkswagen dealer said: “At present, the six models of the Passat prix are all based on the guide price and have increased the price from 800 yuan to 7,000 yuan.” The same situation also appears in the new cars such as Tiida, Corolla and Suzuki Swift. Body.

This phenomenon is called "starvation therapy."

“The manufacturers’ tasks this year are more practical, unlike 2003 and 2004, which are set to be high. Now manufacturers use order-based sales, and how many tasks will be given to you under the number of vehicles.” Say.

He thinks that many businesses nowadays are learning the original broad-based approach in their marketing strategies. They artificially create some tension. “You have to have a car. I don’t have to be.” In fact, auto companies have that capacity, but they do not produce so much. Let the market not be saturated.

In addition to corporate factors, the market itself has also made this "hunger" status even more prominent. That is, the number of dealers is growing faster than the market. The number of cars sold by each dealer is not enough, and the sales cycle does appear to be "less porridge." The situation of the distributors' "failure to eat". There has been a shortage of supply of so-called "hunger."

A sales manager of a Shanghai Volkswagen 4S store in the Asian Games Village car market also said: “We are not afraid of outsiders. We are afraid of our own people.” He said that Shanghai Volkswagen's main competition comes from the inside, is the competition between dealers, is more than 40 Shanghai Volkswagen in Beijing Home shop competition.

However, he also admits that this year's marketing strategy is well-coordinated between manufacturers and merchants, and it has become a national phenomenon in the automotive market.

Author: Lee Han Bridge

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