When many people are still arguing about whether "excessive production capacity," at the recent Shanghai International Automotive Finance Forum, Professor Fu Mingjie, director of the Department of Industrial Economics at the School of Management of Fudan University, believes that China has entered the era of major construction vehicles. The car must be the same as the original color TV and now the mobile phone, catch the "price competition" shuttle. With the continuous promotion of price cuts, domestic automobile prices will gradually be linked to international standards, and the profit margins of auto makers will continue to decrease. At this time, the Chinese automobile market will usher in the “post-price era†and enter the “service competition†sequence, which will be in line with the developed countries.
The era of big carmakers
Driven by strong market demand, China’s auto industry has been “blowout†for two consecutive years since last year. In 2002, the country produced 3,251,200 automobiles, an increase of 38.49% year-on-year; and sold 3.248 million automobiles, an increase of 36.65% year-on-year; this is the first time that China’s automobile production and sales exceeded 3 million, making it the world’s fifth-largest automobile producer. Among them, 1,109,800 cars were produced, a year-on-year increase of 55.05%, and sales were 1.126 million, an increase of 56.08% year-on-year.
In 2002, some manufacturers were underestimated (and indeed difficult to predict), and they suddenly failed to keep up with sales. In the face of such a prosperous market, many manufacturers looked at profits and complained about it. Due to concerns about the continued situation in 2003, one after another raised its own production. So this year, the auto industry has been making great strides and has made remarkable achievements. From January to September 2003, China's auto industry produced 3.1989 million vehicles and sold 3.183 million automobiles, which represented a year-on-year growth of 35.77% and 30.16%, respectively, and achieved both sales and sales.
It is an indisputable fact that China's auto market is extremely prosperous. It is also obvious that the prices of domestically-made cars are higher than those of similar products in the world, and the profit rate of some manufacturers averages 12.5% ​​or more. The profit rate of international auto giants is generally between 2% and 4%. This has led to a lot of funding began to flock to the domestic auto manufacturing industry, in addition to Volkswagen, General Motors continue to add investment, Mercedes-Benz, BMW and other foreign high-end brands have also begun to enter the Chinese auto manufacturing industry, at the same time, build mobile phone waveguide, high-tech Fosun, as well as private companies such as Maple, have also entered the automotive industry.
Under the guidance of high profits in automobile production, the current pattern of large-scale automobile production has already taken shape. Already, 27 provinces and cities across the country have already started or built cars.
Overcapacity will lead to "price drop"
The formation of Dazai's automobile structure will inevitably lead to excess production capacity of the product. Everyone wants to get a share from this big cake, so the increase in production, launch, launched, behind the scene of prosperity, many experts worry about "overcapacity" has begun to show.
At the beginning of November, the Information Department of the China Association of Automobile Manufacturers announced that the current domestic automobile inventory is 136,000. Since the second half of the year, the national car inventory is increasing at a rate of 20,000 per month. Prof. Mingjie Ming estimates that at present, China's auto production capacity will reach 10 million by 2010, and the demand will not exceed 8 million, and the production capacity will be greatly surplus.
After the overcapacity, the domestic car companies to maintain the existing market share, price reduction is inevitable. At present, this kind of price cuts have begun to appear. Since May 2002, most car manufacturers have begun to loose their car prices in order to seize major consumers. According to relevant department statistics, as of the end of October this year, direct price reductions have 29 brands and nearly 95 varieties, and more manufacturers have adopted the “hidden price reduction†method—the reorganization of product prices, that is, the introduction of new products and improvement of new products. At the same time, price adjustments are often added to the product, adding technology, configuration, and functionality. According to incomplete statistics, nearly 90% of the products have adjusted their prices this year, with an average drop of more than 8% and a maximum of more than 20%. On November 20th, the price of Sail dropped by 15,000 yuan, GOLO dropped by 7,500 yuan, and the price of the two cars dropped to 75,000 yuan. It can be estimated that the new round of car prices will show domino effect. Xiao Guopu, vice president of SAIC Motor Corporation, predicts that in 2004 China's auto market will further reduce prices, and the decline will reach more than 10%. In this regard, the industry generally commented: In 2003, the auto market price cuts came faster, came more densely, and fiercely.
"Post price era" highlights "service competition"
Price cuts have set off a burst of consumer climax in the market. Zhai Mingjie believes that the price war can reduce the profit space of the Chinese auto market, not only can China's car prices and international standards, but also eliminate many non-professional car manufacturers, can make real capital, technical car manufacturers enter the competition The front desk carries out a new round of "service competition." In the profitable space of 2%-5%, automakers need to rely more on services to win the market, while dealers, finance and other related industries will become more involved.
Nowadays, there are more and more manufacturers, and the competition is fierce. At the same time, raw materials such as steel products are continuously rising, and foreign sales channels are gradually becoming open. Many auto companies are relying on high profits to maintain, but the wool in the sheep, in the final analysis is the consumer "pays." Many domestic consumers are expecting that domestic car prices will soon become international.
At the same time, China's auto distribution system is still in the process of integration, showing scattered, unstable, and partially chaotic phenomena. In the case of insufficient capacity or the shortage of automobiles, the auto market is clearly dominated by manufacturers, and dealers can only listen to them. With overcapacity, the price dropped to no further drop. After entering the post-price era, car manufacturers sold the car, which in turn would look at the dealer’s face, and dealers would compete for "quality of service." From "price competition" to "service competition," anyone who can satisfy customers can win the market. By that time, related services such as auto finance will also step in deeper. Like developed countries, they will win 40-60% of profits in the entire automotive industry chain and usher in their true spring.
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