KPMG GLLP, a US consulting firm, said in an annual global automotive industry survey that in the face of overcapacity and the resulting negative profit outlook, global auto industry managers expect the auto industry economy to decline in the next five years. Some of these companies will choose to go bankrupt, while others will seek to merge or form alliances.
1. The financial crisis has spawned the integration of the automobile and parts industry
The development of Chinese society emphasizes harmony and balance. It is the most difficult to strike a balance between supply and demand. Most of the time, supply is always faster than demand. The market finally experiences saturation and then eliminates many enterprises. In the past 20 years, many industries in China have experienced such a phenomenon. The automotive and parts industry is no exception.
In addition to low labor costs, China's manufacturing advantage lags far behind Japan and North America in its production economy. By the end of 2006, the average production of the model was only 26,000 units, which was nearly 30% lower than the 36,000 units in 1997. If there are only a lot of models, but many models share the platform, the problem seems to be small. But the opposite is true. The number of platforms in China is growing even more crazy – by the end of 2007, China will have 130 platforms, which is exactly double the number of platforms in Japan or North America.
The sheer number of platforms makes China's platform-based production scale more pitiful than Japan and the United States. China averaged only 38,000 vehicles per platform in 2007, which is a far cry from the average annual output of 145,000 vehicles in Japan, only a quarter of Japan. Such a status quo makes people wonder why the Chinese auto industry has done a good job in the past years. Low labor costs and low wages do not explain all of this.
Parts suppliers do not need to reinvest and develop certain parts for this “new platformâ€, just direct supply. Fortunately, it is even possible to supply one component to the two plants at the same time, and the cost is naturally reduced.
The industry may hope that the independent parts supply system can quickly penetrate into the high value-added parts monopolized by foreign suppliers, and solve the cost problem of the automakers with high quality and low price parts supply.
In the end, the only way to maintain the relative healthy growth of the industry is to increase the overall market size.
There are so many uncertainties in China's economy. Although it can be expected that the average annual growth rate will maintain a certain range in the future, the bumps and bumps on the road are inevitable. If the overall auto industry market growth in 2009 is less than 10%, we have reason to believe that the Chinese auto industry will start large-scale restructuring and mergers and acquisitions without the promotion and promotion of the central ministries.
2, precautions, nothing more than "open source and thrifty"
In terms of cost reduction, it is not necessary to force suppliers to cut prices and share platforms of the same level. The modular concept of shared parts for cross-level models in the future needs to be put on the agenda as soon as possible. In terms of “open sourceâ€, exports are an important industrial strategy. The reason why Japan can now reach 145,000 units per platform is entirely because it has half of its output.
China's own brands must improve quality and plan strategies for exporting products. Once China's domestic market demand growth slows down, and the size of international giants' investment in China is already so large, even these foreign-funded factories will use Chinese base exports without over-concerning the interests of certain factories in other parts of the world.
In the final analysis, the Chinese auto industry must ask itself a question: Are you ready to face a more tragic situation than in 2004? The world also has to ask itself a question: Are you ready to face large-scale exports of cars from China?
By region, 81% of Asian managers expect global mergers and alliances to increase in the next five years. Second, 58% of North American managers hold this view, and again Eastern Europe managers, accounting for 56%. Only in Western Europe, there are relatively few managers with this view, and only 32% of survey participants expect global alliances, mergers and acquisitions to increase.
According to Daron Gifford, head of KPMG's automotive industry division, "Most people in the automotive industry think this time is suitable for consolidation, not for expansion, because many people expect global overcapacity to exceed 10%. The reason for the merger is obviously to streamline the organization and reduce Costs, as well as increased revenue through new business opportunities.†A little more than half (57%) of executives believe that alliances in the automotive industry over the next five years will be more important than mergers and acquisitions.
The results of KPMG's survey now seem to have become a realistic trend. As the winds of mergers and acquisitions and reorganization become more and more intense, the division of the regional sector of the United States, Japan and Europe will gradually become blurred. The global automotive industry will also enter an era of criss-crossing.
3. The road to integration
At the end of 2006, the National Development and Reform Commission announced the "Notice on the Adjustment of the Structure of the Automobile Industry". Several notices mentioned the merger and reorganization of the automobile industry. "Government departments at all levels should vigorously promote cross-regional and cross-border The department united and reorganized to cultivate large-scale enterprise groups with international competitiveness." The rumors of the reorganization of Jianghuai and Chery do not rule out the policy-oriented factors inside.
At the beginning of 2009, the Ministry of Industry and Information Technology issued a policy to promote the merger and reorganization of industries such as steel and automobile while pushing for “cars going to the countrysideâ€.
In KPMG's survey, managers also believe that supply chains will also merge, with 59% expecting mergers and alliances between automakers and Tier 1 suppliers to increase, and 61% expect Tier 2 and Tier 3 suppliers Such activities will increase, while 41% said that the merger and alliance activities of dealers will increase. Forty-nine percent of executives said they expect mergers to be affected by product synergies, while 44% said that access to new markets and customers is a key factor.
In the recent case of bankruptcy restructuring in the automotive industry, Delphi, the world's second-largest auto parts manufacturer, is typical. In January 2007, Delphi will announce a complete bankruptcy restructuring plan involving various debt solutions. Delphi’s restructuring is expected to see a major turnaround, and its North American operations are expected to end its bankruptcy protection. Under the impact of the financial crisis, news of the bankruptcy of various countries in the world from auto giants to component manufacturers has been reported in newspapers.
At the beginning of 2009, with the fall of Beitai parts, the curtain of the integration of China's auto and parts industry has been quietly opened.
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