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Interview with Zeng Zhiling, Senior Analyst, Automotive Division, Global Insight
(A) The node is consistent The auto market "brakes" in the middle of the year
Gasgoo.com: Looking back on the automobile market in 2008, we have experienced twists and turns. With your observation of the entire economic situation at home and abroad, when did the auto market begin to decline significantly?
Zeng Zhiling: Although there was growth in the whole year of 2008, the main reason was that the inertia of last year's growth was continued in the first half of this year. In fact, it has already begun to “brake†in the middle of the year. Therefore, although 2008 is still a year of growth, but strictly speaking, the second half of the year actually showed a downward trend.
The obvious turning point in passenger cars appeared at the end of the second quarter of this year. Sales volume began to decline since the end of the second quarter, while the decline momentum in the third quarter accelerated. The node and speed of this decline are consistent with the rapid slowdown in the export of our country, mainly due to the beginning of a new peak period in the US subprime mortgage crisis since the second quarter.
Under the impact of this rare global financial tsunami, the Global Manufacturing Purchasing Managers PMI index has been refreshing historical lows since the index was established for several months in a row. Among them, the US manufacturing industry’s recent contraction has been the most significant, and the output and new orders have fallen. To the level of the mid-1980 recession. China's PMI also showed an accelerated decline, with the PMI index falling to 38.8% in November, the lowest since the index was founded in January 2005. To know that PMI is a comprehensive indicator, the index is higher than 50%, reflecting the overall economic expansion; less than 50%, reflecting the economic recession, and entering the 50% channel from the second half of the year. In addition, the new export orders index dropped dramatically, from 50.2% in June to less than 30% in November. This is basically the same time as our national auto market enters the down channel at the same time.
Gasgoo.com: However, the auto consumption market in China is in fact not very much related to overseas markets, exports, and so on. Why does it coincide?
Zeng Zhiling: China's Pearl River Delta and Yangtze River Delta are the most economically active areas in China, particularly in Zhejiang, Jiangsu, and Guangdong (in 2007, the number of passenger cars on these three sites accounted for about 35% of the total national licenses, and the first three quarters of 2008 These three places are only 25% of the country's total car consumption volume. They are a major province of auto consumption, and are heavily dependent on the export economy. Guangdong's exports account for more than 90% of GDP, and Jiangsu and Zhejiang account for more than 50%. The export-oriented enterprises in these provinces and cities are greatly affected by the appreciation of the renminbi and the financial crisis. For the first time in a decade, the growth rate of gross industrial production has fallen below the national level for the first time. This has led to purchasing power and desire to purchase in these most consuming regions. decline.
The economic downturn started from the coast first, and the trend is to spread from the coast to the mainland. Many of the central and western provinces had a 30%-40% increase in the number of licences in the first half of this year, and Anhui has reached 50%, which is an alarming figure. From the second half of the year, the recession of the coastal economy will spread inwards. After a lagging effect, it will be reflected in the mainland market. The impact will be relatively small, but it will be faster.
Gasgoo.com: What is the commercial vehicle market?
Zeng Zhiling: The fluctuations in the commercial vehicle market are mainly affected by the Euro III emission standards. It should be said that the factors of early consumption caused blowouts in the commercial vehicle market in the first half of the year. After the second half of the year, even without the impact of the economic crisis, it is expected that the commercial vehicle market will definitely decline, but the financial crisis has further accelerated the downward trend.
The declining heavy-duty market in commercial vehicles is almost “destroyed†in the second half of the year. The export of heavy trucks has been severely affected since the second half of the year, and some backbone enterprises have achieved half of their export targets even if they achieved good results. Among them, Russia, which is a major export market, has raised its emission standards, raised tariffs, and adopted targeted measures for Chinese companies, which have a significant impact on the exports of Chinese auto companies. The demand for third-world countries has also decreased significantly. .
An important indicator for deciding the demand for commercial vehicles is the total turnover of passengers and freight and social possession. Now that the volume of freight turnover has dropped significantly, the sharp fluctuations in international commodity prices have also contributed to the rapid decline in demand for commercial vehicles. (Natural disasters are not considered influencing factors?) These are just a few episodes that have short-term effects compared to the larger-scale dominant factors. The plunge in the stock market and the shrinking wealth will definitely affect the auto market, but the impact is far from the financial turmoil. The financial turmoil shook the company’s investment plans and shaken individual consumer confidence. The profitability of enterprises, the direction of the job market, etc., all have problems, resulting in a domino effect and the related industries have all fallen down.
(B) comment on the various market segments Japanese car prices may be a big dive
Gasgoo.com: Remember when you commented on the 2007 passenger car market analysis: The market performance of C-class, D-class, and B-class vehicles gradually decreased. The performance of B-class cars and SUVs and MPVs was almost the same, and the performance of A-class vehicles was the most inexhaustible. People. Looking back at the performance of various market segments in 2008, are there any changes? (Global View's classification standard for cars: A- miniature B-small C-compact D-medium E/F-medium-large)
Zeng Zhiling: In 2008, the growth of MPV was weak, and the focus of growth was still on the B-class and C-class models. There was not much change by grade. The shrinkage of the coastal consumer market will have a greater impact on D-class vehicles, especially mid-to-high-end cars. The performance of small-displacement vehicles, that is, A-class vehicles, is smaller than that of last year. One of the reasons is the aging of products. Some mainstream models such as Alto are discontinued, while new models like F0 and Panda are only listed at the end of the year. . However, I believe that with the implementation of many favorable measures next year and the introduction of new models, A-Class vehicles should be more eye-catching.
The competition in the D-class car is tending towards a "zero-sum game," and a certain number of car sales growth will inevitably put pressure on other car markets. D-class car market share growth is relatively limited, many companies want to push new cars, like Shanghai GM's new Regal next year and the new LaCrosse, so the competition in this area may be more intense.
Gasgoo.com: If the old and new models are compared, is the old model still strong in vitality?
Zeng Zhiling: The oldest of them have already exited, and Santana and Jetta have already transferred their production. It can be seen that these old models are beginning to prepare for the market in the future, in the transfer to the mainland market, which actually shows that manufacturers also see these cars are going downhill. The sales of old models next year may be equal to this year. We expect these vehicles to gradually shrink within the next three to five years.
Gasgoo.com: Comparing the performance of multinational corporations and self-owned brand companies, the two sides have different trends: multinational corporations are moving downwards in pushing new products, and independent brands are going upwards. Do you think their respective attempts in 2008 were successful?
Zeng Zhiling: In 2008, the self-owned brand had spent a year in deficit. In particular, Chery has performed well in the past few years and has been relying more and more on exports in the past two years. In the current circumstances, its domestic market has shown a rapid negative growth; the decline of Brilliance is even more alarming; other companies are also It is in the maintenance of Philip that many of the new models introduced are not particularly satisfactory.
Among the independent brands, including the FAW Car and Geely, the market is performing steadily. Geely's product structure is the most noteworthy part, it has changed the face of the previous shoddy, product change, replacement success, the new models are more solid - I think that in this regard, Geely is doing a good job of. Of course, FAW is a fast-growing company. Regardless of whether it is sales and word-of-mouth or quality, FAW Cars are among the top brands in their own brands.
The Dongfeng self-brand sedan, code-named BF3, which was originally scheduled to debut in December of this year, will be postponed until the first half of next year. This vehicle has been injected with a lot of manpower and material resources. Dongfeng’s ability is more concerned with. It seems that the relatively large (self-owned brand) companies, although progress is slow, but once they do it, the speed will be very fast.
The integration of SAIC at this stage has not yet been completed. It is still not in place to master the technological transformation of Roewe and MG. After the new car is put on the market is not very ideal, the configuration can not keep up, it is difficult to hit a hit. As far as performance is concerned, it should be said that they are lower than their own expectations. I feel that after the completion of the integration (such as the Nanjing production base), it will perform better.
The leader of transnational corporations in terms of low-level penetration is GM, including what has been announced and will be implemented in the future: as will be the introduction of some mid-level sedan projects in Wuling, etc.; now many models like Jingcheng and Le Feng are fairly low in price, Has completely cut into the price system of its own brand. But its future is still difficult to assert, because now North America is in crisis. We speculate that the lower-gold models of its brands will be transferred to Wuling, or that SAIC-GM-Wuling will create another brand instead of directly using generic brands (low-cost battles). Judging from the information currently revealed in the media, I think GM is trying to stop the decline of the Chevrolet brand, because once a brand's positioning has been declining, it is difficult to go further.
Japanese cars have always maintained a high brand premium ability, but this year has also been affected by the price war. If Yaris had just started to set the concept of a fine car, it later dropped by 20,000 yuan. In the past, the main reason that the Department cars depended on was the coastal market. Under the current economic situation, the focus of their work is definitely to be transferred to the Mainland. Japanese cars do not easily adopt price wars. Although they are the most capable of fighting price wars (because of the large price space and strong profitability), Japanese manufacturers have always paid attention to overall profits. If the market conditions are really bad to a certain extent next year, It does not rule out the possibility that Japanese car prices will begin to dive sharply.
Korean cars - I think it should be the most prominent, it may be because the reality of the modern table last year is too bad. The listing of Yuet is relatively good, and the new Lion Run is also more popular. This year, the Korean car has taken back the market share it deserved in China. This year's growth is already in place, and future growth will be concentrated in compact cars. Future Hyundai and Kia will have compact cars specifically designed for the Chinese market; its weakness is that high-class cars do not perform well, and SONATA has been unsuccessful for several generations, so it may continue to focus on its compactness. Car market.
(III) European suppliers or dominant suppliers
Gasgoo.com: Do you think that the top three automakers in the United States are on the verge of bankruptcy and the North American market is experiencing rapid sales decline. What impact will this have on domestic business?
Zeng Zhiling: U.S. auto companies are on the verge of bankruptcy and will surely have a certain influence on its brand image in China. For consumers who have received a large number of relevant news reports, they will no longer have as much trust in the brand as it used to, and there will be a crisis of brand trust - although Chinese consumers have always preferred foreign brands. A recent survey conducted jointly by Xinhuaxin and Sina.com revealed that 51.5% of the respondents said that if the top three American car dealers went bankrupt, they would give up buying American cars. Because once the brand has a problem, its after-sales service and vehicle residual value will be negatively affected. How to prevent brand value from being damaged? This is one of the things that GM and Ford are going to do next in China. They are taking steps to increase consumer confidence in them. Now there is news that GM is selling its brand, which will undoubtedly shake consumer confidence.
Gasgoo.com: Is the recession in the European and American markets particularly good for domestic brands?
Zeng Zhiling: It is difficult to say whether it is good or not. Whether the self-owned brand companies have the ability to seize the opportunity to take over the brands that GM or Ford should handle, or to intervene in the overseas parts and components industry chain, is a big question mark. Of course, it should be the best time for mergers and acquisitions: Assuming that the three major assets or brands should be dealt with, or part of their joint ventures in China, their own brands will have the opportunity to fill this vacancy quickly to enter the market, or increase in the joint venture. Right to speak, I think these are all positive.
The negative side is that if the three major problems really arise, their associated suppliers, such as Visteon and Delphi, will inevitably be affected. This may not be a good thing for local Chinese companies. At present, auto brands such as Chery and Geely have purchased a large number of multinational suppliers such as Visteon and Delphi. We know that in the auto parts suppliers system in Europe, the United States, Japan, and South Korea, Japan and South Korea's supplier system is relatively closed. Once the U.S. system of parts and components is dropped or impacted, Chinese domestic companies will only switch to European suppliers in the short term. Such dependence will result in a situation in which European suppliers of parts and components will dominate the market, which is not good for Chinese companies.
(D) The US profit model has been subverted China's auto market is expected to increase 4% next year
Gasgoo.com: With the general decline in the world and the slowing growth of China's auto market, will the speed of domestic new listings slow down?
Zeng Zhiling: Looking at GM's situation, there has been no apparent slowdown. New cars are still being launched as planned. There is no doubt that the development of some future models of domestic vehicle companies may be delayed accordingly. The short-term slowdown in demand across the entire market has led auto companies to change some tactics. Take Korean cars as an example. The cars sold in the Chinese market are no longer the introduction of new models from abroad. This is a very typical example.
Gasgoo.com: Do you think there will be some changes in the global automotive market that will affect the Chinese automotive market?
Zeng Zhiling: At present, the rapid decline of the US auto industry has been a considerable impact on the American automotive market on a global scale. In particular, countries like the United States that rely heavily on credit to buy cars have a greater impact than ours in the event of a financial crisis - almost 90% of Chinese people use cash to buy cars, and 90% of Americans use credit to buy cars. -- The profit model of the US auto industry will be completely overturned. GM does not rely on manufacturing to make money, but instead earns a lot of profits from its auto credit department, so the focus of profit is on auto finance. How the future of the three major automobile companies in the United States change their own survival is still an unknown. The three major U.S. states have already faced an unavoidable acceleration of the recession, and this recession has been showing signs since more than ten years ago. It is only because of the highly indebted-high consumption mode caused by the abnormal development of the U.S. financial market for so many years that the three major groups are able to respite. to date. Now that the last piece of rice straw has also been removed, the "big three" will depend entirely on production, improvement of vehicle models, quality, cost reduction, etc. The challenge is still great.
Our GDP growth is still driven by investment. Therefore, in the short term, the government's stimulus measures will have a clear effect on improving the operating rate of factories and stimulating the upstream and downstream industries of certain key industries. However, most of the affected enterprises are coastal export-oriented enterprises. It is difficult for them to immediately obtain direct benefits from the state’s four trillion investment plan and it is difficult to return to the previous level in the short term. I personally hold conservative expectations and believe that exports will continue to be in a state of malaise. The rejuvenation of these enterprises will ultimately have to wait for the recovery of the European and American markets; it is unlikely that their products will be completely transferred to the domestic market. Therefore, it is a relatively long time for the sedan market in the coastal areas to rejuvenate.
(Does the domestic auto industry's export business recover?) The outlook for the export market in 2009 is difficult, and it will be a very difficult year for the self-branded companies. Therefore, we must pay more attention to the domestic market. Although the expectation for next year is only a slight increase or may decline, but after all, China's auto market is still second only to the United States, the world's second largest market, while the European and American markets are falling by 20%, 30%.
Gasgoo.com: What is the expected growth of the domestic auto market in 2009?
Zeng Zhiling: The market is definitely showing a downward trend in the first half of 2009. It is now controversial whether the rebound will occur in the second half of the year. The policy of stimulating automobile consumption at this moment is not yet clear, so it is difficult to assert, but it is expected that the sales of small-displacement vehicles will increase substantially. Fuel tax, reduction of purchase tax, etc. will help change everyone's spending habits. The reduction in car costs will increase the affordability of low-end consumers, and some potential buyers may be motivated to purchase.
If the country’s series of policies to expand domestic demand, stimulate economic development, and many measures to revitalize the auto industry are effective, and the international economic environment can improve in the second half of next year, we expect the auto market to have a slight increase next year. About 4%. However, if the U.S. economy does not rebound as expected in the fourth quarter of 2009 or early 2010, the entire global economy will be difficult to restore confidence, and China’s export expectations will also be bearish, leading to negative growth in the auto market. So now is a more special period with great uncertainty.