·A quarterly newspaper behind the three major battle fronts

Recently, listed auto companies released their first-quarter earnings reports. Although the data showed mixed performance, they all showed considerable market pressure. Guangzhou Automobile Group's net profit increased by 99% and 55%, respectively, but Beijing Auto's investment income fell 46% year-on-year, with a revenue of 400 million yuan. Changan Automobile (000625, shares it) also faced the same dilemma, its investment income was 2.22 billion yuan, down 8% year-on-year, and net profit fell 10%. Prior to the big profit, Great Wall Motor (601633, shares) in the case of operating income increased by 11% year-on-year, net profit fell 18% year-on-year. Even the first echelon of SAIC Group (600104, stocks), it is not easy to achieve a 4% net profit growth, its growth rate fell by 2 percentage points.

Under the fierce competition, how to maintain market share and even seek growth? How can companies effectively use the two legs of joint venture and autonomy to compete? What is the competitive situation of independent brands? The first quarter of this year is tantamount to a harsh winter for car companies, but new changes and confrontations have already begun.

Joint venture: price shift and localization

The “milk production” capacity of cash cows is facing challenges.

In the first quarter of this year, the financial report showed that the investment income of Beijing Auto and Changan Automobile fell by 46% and 8% respectively, reflecting the current pressure from Beijing Hyundai and Changan Ford. In the first quarter of this year, Beijing Hyundai sold 196,100 units, down 14.37% year-on-year; Changan Ford sold 200,000 units, down 25.5% year-on-year. “Beijing Hyundai is facing serious challenges.” Wu Zhoutao, deputy general manager of Beijing Hyundai and copy of the headquarters of the sales department, spoke at the Shanghai Auto Show.

Is this the challenge that Beijing Hyundai and Changan Ford face or are close to a million? Is it a new problem under the new competitive situation?

In the first quarter of this year, sales of SAIC Volkswagen fell by 4.7% year-on-year, SAIC GM increased by 2.3%, and the terminal concessions increased. SAIC Group achieved a net profit increase of 4.1% and investment income increased by 11.8%. The reason is that Ping An Securities believes that it is related to the overall price shift of the company's products and the improvement of profitability.

At present, the sales of Tiguan Volkswagen Tiguan, Tourang are high-priced SUV products, and in the future, Skoda Kodiak, Chevrolet explorers and other products are also high-margin products. Coincidentally, Changan Ford's decline in the main models such as Fox and Maverick, the sharper of higher prices, and the upcoming luxury brand Lincoln will become the driving force for its growth. Guangzhou Automobile Group, which is enjoying the cash dividend of the joint venture, its products, Guangfeng Highlander, Guangben Guandao and GAC Fick Free Light, all belong to products of more than 200,000 yuan.

Obviously, compared with the previous market forecast, the joint venture brand will further price down and suppress the opposite of the independent brand. When the self-owned brand began to stand at a level of 100,000 yuan and attacked 150,000 yuan as a whole, one of the joint venture's profit support was to stabilize the market at the upstream price.

But to stabilize the market, it is not to take high-priced products.

Xu Liuping, chairman of Changan Automobile, publicly stated: “One of the advantages of Chinese brands is to be able to understand and provide products that meet the needs and preferences of Chinese consumers.” The joint venture brand also realized the importance of localization in the Chinese market.

Zheng Jie, president of GAC Fick, said that the new guides will modify the rear seats to enhance the leg space before considering the Chinese consumers' experience. Beijing Hyundai has also launched a localization strategy. In addition to the Yantai R&D Center, it has divided its product line into global models and local Chinese models, and achieved a large proportion of localized procurement. Ford invested $1.3 billion in the Nanjing R&D Center this year to build a complete vehicle lab and test runway.

Independence: Hard power guarantees gross profit margin

The autonomy of sales doubled is not always smooth.

In the first quarter, the overall gross profit margin of Changan Automobile decreased by 0.7% to 15.2%, mainly due to the intensified competition of self-owned brands and the price reduction of products. Among them, its sales expenses increased by 0.7 percentage points, which was used to increase sales promotion.

The profit of the previous big profit Great Wall Motor in the first quarter fell 3.5% year-on-year. Its main product, Haval H63, fell 13% year-on-year. On March 16, the Haval brand launched a “1 billion red envelope” marketing campaign to maintain market share.

Even Guangzhou Auto Chuanqi, whose current performance is eye-catching, saw its sales expenses increase by 93% in the first quarter, which was due to “the growth of self-owned brand sales and related business development in the current period.”

The cruelty of the market is evident in how many “water” can be squeezed into one of the decisive factors in maintaining the existing share.

For self-owned brands with lower prices, it is necessary to squeeze out “water” from existing revenues, which requires strong technical support.

Great Wall Motor, which has a decline in gross profit margin, plans to introduce 1.3T and 1.5T direct injection engines and 7DCT transmissions this year to increase the self-distribution rate of parts and thus reduce costs. There have been many successful cases in this approach.

Whether it is Changan, Roewe or Guangzhou Automobile, the common point is that it has an independently developed engine. The 1.5TDPI engine independently developed by Changan and the blue core and green core independently developed by SAIC passenger cars have been widely used for their best-selling models.

It is worth mentioning that in the first quarter, the gross profit margin of Guangzhou Automobile Group increased by 3.3% year-on-year to 23.8%. In this respect, GS4 increased by 21% year-on-year, the scale effect diluted the cost, and the high gross margin GS8 began to increase. Whether the two products can achieve high gross profit has an important relationship with the self-developed 1.5T engine.

Independence: Breaking through the high end

It is obviously not a long-term solution to rely on the transfer of gross profit to maintain market share. The up-and-coming of self-owned brands to 150,000 to 200,000 yuan has already begun. Strategically, independent brands choose two paths to achieve price steps. On the one hand, it further enriches the existing brand and product connotation, on the other hand, it chooses to open a new brand.

Geely's LYNK&CO keke and Great Wall Motor's WAY are both new brands that break through. Geely Automobile President An Conghui said that the Lectra brand will enter the 50% blank market occupied by the joint venture, and may contribute 300,000 to 400,000 sales for Geely's 2 million vehicles in the future. The WAY07, which was listed at the Shanghai Auto Show, sold for 167,800 to 188,800 yuan, and proposed the promotion of “more people hold the luxury in their hands”.

Changan and GAC Chuanqi chose to further enrich the existing brand and product connotation.

With the CS55 in place, the Changan SUV family layout has been completed. Changan announced the new design concept "Smart Color Double Spin" and signed a cooperation intention with Intel. The first model to apply this design concept will be launched in 2018. GAC Chuanqi introduced the "Normal Edition GS8" - GS7, which uses the same design and power to adjust the size and configuration to reduce the price. The GS8, which sells for 163,800 to 259,800 yuan, has a monthly sales volume of nearly 10,000 vehicles, and the addition of GS7 may further strengthen the competitiveness of this price.

But independent breakthroughs in high-end also mean continuous investment for companies. In the first quarter of this year, the main reasons for the 18% decline in the net profit of Great Wall include “continuously increasing R&D investment” and “increasing marketing and promotion activities for new products and sales promotion.” The Great Wall, which is rarely advertised, is currently in the micro Bo and other platforms launched WAY brand advertising.

At the moment when the joint venture's ability to obtain cash support is gradually weakened and the independent gross profit margin is challenged, how to achieve high-end breakthroughs in independent products will be one of the core issues of the major auto companies in the future.

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