From January to May of 2004, the sales volume of domestically-made cars in China was 2,117,800, which was a year-on-year increase of 28%, which was a drop in sales from 32% in the same period last year. A closer look at the sub-sectors reveals that the growth rate of passenger cars has dropped the most rapidly, from 83% in the previous year to 38% this year. Looking at the monthly growth in sales volume in each month, the “big†change in car demand was discovered, starting in May.
Under the stronger atmosphere of holding money and buying, in 2004, the elasticity of the sales volume of automobiles, especially cars, was significantly reduced, resulting in a very limited stimulation of sales volume.
During this period, three major adjustment signals appeared in the car industry:
First, the growth of car sales slowed down. From January to April 2004, the sales volume of imported cars was 39,500, an increase of 28% year-on-year, weaker than the sales growth of 43% of domestic cars during the same period, and the continuation of historical growth in sales of imported cars was weaker than that of domestic cars. This situation was only broken in 2001. However, from the month-on-month growth rate in 2004, it was found that the sequential growth of imported cars was lower than that of domestically produced cars, which began in April and the lead time was one month.
Second, the production and sales rate, inventory and other indicators tend to deteriorate. From January to May 2004, the production and sales rate of cars decreased significantly and dropped to 0.84 (0.95 in the same period of last year), which ranked at the end of the nine major sub-sectors.
At the same time, sedan inventories have also risen sharply. This year, new inventories have increased to 65,800, accounting for 78% of the total inventory in the automotive industry. This year's new inventory ratio has risen to 6.4%. If we consider the new inventory that was generated in 2003, the total new inventory of cars has risen to 117,100 since 2003, and the total new inventories have risen to 3.7%, compared to 1998 to 2001. 5 The year's negative inventory cycle, starting in 2002 with a positive inventory cycle, is accelerating.
Third, sales volume sensitivity to the price significantly reduced. Under the strong atmosphere of holding money and buying, in 2004, the elasticity of the sales of automobiles, especially cars, was significantly weakened, resulting in a very limited stimulation of sales volume.
Shanghai GM sharply reduced its prices for mid- to high-end products on May 17th. How effective is the price cut? In the month before the price reduction, that is, in April, the monthly sales volume of all products was 26063 units (monthly sales ranked third in the passenger vehicle industry); in the month of price reduction, that is, in May, the monthly sales reached 22,912 units (monthly sales were ranked in the passenger vehicle industry. Second); After the price reduction, the first full month—the sales in June was 24043 units (monthly sales were ranked first in passenger cars). The effect of price cuts is that market rankings and market share have risen significantly, but price reductions have a relatively limited stimulating effect on sales.
What is still vividly remembered is that on July 1, 2003, Jianghuai Refine MPV significantly reduced its price and contributed significantly to sales growth! In the month before the price reduction, Ruifeng MPV had a monthly sales volume of 820 units. In the month of price reduction, the monthly sales volume reached 1,500 units. In the first month after the price reduction, the monthly sales volume was 1,561 units.
From the historical data point of view, the demand for cars is gradually falling:
December 2003: Sales of cars in the month hit a record high, reaching 227,300 vehicles, an increase of 18%. The sales volume was excessively heavy this month. Most car companies initiated sales sprints at the end of 2003. Typical are those of FAW-Volkswagen and Shanghai Volkswagen. (In December of that year, FAW-Volkswagen's monthly sales volume was 43,900 units, a 47% increase from the previous quarter; Shanghai Volkswagen monthly sales of 44,500 units, an increase of 26% year-on-year, significantly more than the industry's month-on-month increase), the result of the sprint is that companies basically completed the beginning of the year's scheduling plan, at the same time the success of some manufacturers of explicit inventory transfer to dealers invisible in stock.
January 2004: When the sales of sedan were low in the month, the monthly sales volume was only 155,500 units. The month-on-year growth rate dropped to -32%. The month-on-month growth rate of this month has dropped significantly and is a normal performance. The main reason for this is that it digested the invisible inventory formed at the end of 2003. The sales of FAW-Volkswagen and Shanghai Volkswagen in the month were 14,900 and 28,300, respectively, a drop of 66% and 36% respectively from the previous quarter. The performance of the two months before and after was the same as that of a roller coaster.
May 2004: Sales of cars in the month were 177,700, a decrease of 19% from the previous month. Objectively, it should be acknowledged that the month-on-month decline in May was due to seasonal reasons. Usually, during the months of the Spring Festival, May 1st and 11th holiday, the sales volume of the month fell back to a certain extent. In order to exclude seasonal influences and find the chain growth rate in May in recent years relative to April, we found that the 19% drop this year was a relative decrease from the 6% in May 2003 and 7% in May 2002. Consider small.
At the beginning of June, dealers generally reflected that the phenomenon of holding money at the time of purchase was obvious, and the atmosphere was like that before entering the WTO in 2002. There are indications that the demand for cars has indeed experienced a phased decline.
At present, the “Black May†appearing in the domestic auto market is a concentrated expression of various contradictions running to a certain stage. The gradual decline in demand for cars has deep-seated reasons.
These deep-seated reasons are:
The phenomenon of holding money for purchase is very obvious. Demand for imported cars has been adjusted before the demand for domestic cars. The two markets have filled the sentiment of “holding moneyâ€. Some manufacturers even believe that the current level of currency holdings is no less than before the accession to the WTO in 2002. The reason for the "cash-for-pending" in 2004 is:
Before and after the introduction of the policy, consumers adopt a wait-and-see attitude and wait for the details of consumer policies to become clear. As the media rumors of the "new automobile industry policy" will be introduced in June to July, and stressed the introduction of the merger of automobile consumption policy, and consumption of the general concern "whether to adopt support attitude for micro-vehicle consumption, whether there is a purchase tax, etc. Concessions; whether the Shanghai license fee will be ordered to prohibit "such as consumer issues. At the time when major policies were introduced, adopting a wait-and-see attitude, this became a reason for the downturn in the auto market at that time; but after the introduction of the new automobile industry policy, relevant rules for consumption policies were not introduced. For example, “There is a clear supportive attitude towards micro-vehicles, but how There is no specific measure to support this, which has aggravated the wait-and-see atmosphere of the market; Shanghai continues to announce after the “New Automobile Industry Policy†that private vehicle licenses continue in June and the game between the Shanghai Municipal Government and the National Development and Reform Commission continues to exist. It will intensify the psychology of the purchase of money in Shanghai, and the number of new license plates for temporary vehicles in the region.
Automobile consumer credit tightened. Automobile consumer credit accounts for 20% of car sales, and it seems to be the number quoted.
In recent days, the country has started to investigate auto consumption loans, and in the context of macro-control, more emphasis has been placed on controlling the non-performing assets generated by auto consumption from the source. While questioning the ratio of "over 50%" non-performing loans, it is also speculated that the CBRC will start issuing inspections of auto loans as early as April to May.
It is understood that, recently, the proportion of consumer credit for certain brands of cars as a percentage of auto sales has slipped to around 10%. In this sense, the consumption of cars is also affected by macro-control, and it is "credit-sensitive."
The study also shows that the current retail price of domestic cars and the theoretical retail price of imported cars in 2006 (tariff of 25%) are based on the price of the same model in China and the United States in early March 2004: the economy and most of the The current price of mid-range vehicles is already lower than the theoretical price of imported vehicles in 2006, which has a strong price advantage. However, for luxury cars and most mid-size vehicles, the current domestic prices are high, and the price reduction space is between 6% and 22%. Not equal. It is speculated that, compared with last year's auto market price cut, the auto market price reduction model was mainly concentrated in 100,000 to 140,000 yuan last year. Consumers' expectations for price reduction this year are probably concentrated on mid-size cars and luxury cars.
According to the statistics of the SASAC, we predict that in 2004, the auto industry (small-caliber, including only 13 key state-owned enterprises such as SAIC, FAW, and Dongfeng, etc.) will have a more difficult profit in line with the previous year.
There are three reasons for this:
1. Frequent price cuts reduce industry profits. As mentioned above, the elimination of quotas in 2005 caused consumers to have greater expectations for further price reductions of domestic and imported cars.
Under this background, the elasticity of the sales volume of automobiles, especially cars, was significantly weakened in 2004, which resulted in a very limited stimulation of sales volume, so that the effect of economies of scale on cost reduction was quite limited. In a word, frequent price cuts in the market for holding money will not significantly increase industry profits as in 2002-2003, and will only reduce industry profits.
Second, rising prices of raw materials and energy squeezed profits. In the total vehicle cost, the raw material cost generally accounts for more than 70% of the total vehicle cost. In the raw material cost of automobiles, steel generally accounts for 72% (of which ordinary steel accounts for 55%, special steel accounts for 15%, and cast iron accounts for about 2%). Plastics and rubber account for approximately 7% and 3% respectively.
Since the first quarter of this year, the profits of the automotive industry have been severely squeezed due to the continuous rise in bulk raw materials mainly consisting of steel products, the rising prices of chemical and rubber accessories brought about by the economic cycle of the chemical industry, and the increase in energy costs brought about by power shortages. Among the above three factors, the increase in steel prices has the most obvious profit squeeze for auto companies, especially axles, bearings, wheels, carriages, and trucks with a large proportion of steel consumption. The net profit of light truck companies such as Foton Motors and Dongfeng Motor in the first quarter was respectively A drop of 36% and 56% is the best portrayal.
Third, the suspension of the automobile consumption tax reduction policy will increase the tax cost of auto companies. The Ministry of Finance and the State Administration of Taxation issued a notice in January this year: Starting January 1 this year, cars that are equivalent to Euro II emission standards for production and sales of enterprises will be stopped from reducing the consumption tax, and all tax rates will be resumed at the prescribed rate; Starting from July 1, 2004, a 30% consumption tax will be deducted for cars whose production and sales have reached Euro III emission standards. The suspension of the consumption tax reduction policy will greatly increase the tax cost of auto companies in the first half of the year.
From January to April, the negative changes in the auto industry mainly came from rising costs. At present, this factor has been controlled to a certain extent. However, the problem is that since May, the trend of car demand adjustments has basically revealed, and the sequential decline in June sales has also basically become a foregone conclusion, and the adjustment trend in the second half of the year is expected to continue. From June 20 onwards, the nationwide oversight operation began. This will have a profound impact on the demand for medium- and heavy-duty trucks and needs careful evaluation. From the perspective of rising costs and changes in demand, in 2004, in any case, it was the year of auto industry adjustment.
In view of the above considerations, the rating of the entire vehicle industry is “neutral†and the component industry is rated “weakâ€. The reason why the rating of the parts and components industry is weaker than that of the entire vehicle industry is based on the judgment that “In the automobile industry value chain, the parts and components industry is relatively 'weak', and the price of upstream automotive raw materials is rising, and the pressure on the lower prices of downstream autos is high.†. At the same time, the sales volume of domestic cars in 2004 was revised downwards, but whether or not it adjusted to 2.4 million vehicles (ie, a year-on-year growth of 21%) depends on the final sales figures in July and August.
Despite the negative changes in the auto industry, the conclusion that “the automobile industry has a downward turning point†is probably too sloppy from the current industry data.
It needs to be emphasized that investors should also maintain a normal mentality in the decline of the car market. Due to the “blowout†type of automobile consumption for two consecutive years, the growth rate of sedan sales has lost its small base effect, and will continue to operate in a downward channel in the coming months, which is also a reasonable matter.
The current atmosphere of holding money is very similar to that before entering the WTO in 2002. After a preliminary comparison of industry trends, policy backgrounds, and consumer expectations in 2001 and 2004, the intuitive hypothesis is that before and after the cancellation of quotas, manufacturers can cater to, not blindly follow, or even guide consumer expectations of price cuts to some extent. An appropriate time and a moderate margin of price adjustment, combined with the possible delay from June to September in the "consumer auto loans from tightening to normal, new automobile industry-related consumer policy rules," car consumption may be around March 2005 It will rise again strongly, but its strength will be weaker than in 2002. However, we do not rule out that entering into 2005, the demand for domestic cars will only grow steadily.
However, regardless of the strength of the car demand start, due to supply has doubled compared to 2002, resulting in the industry's survival process of the fittest is accelerating! Like "in 2002, as long as the scale of production and sales reached 20,000, you can basically make money," the "good days" are gone!
In terms of the car industry, Shanghai GM, Guangzhou Honda, and Beiqi Hyundai will play an important role in “accelerating the reshuffle of the industry†with their abundant production capacity, appropriate pricing strategies, and aggressive Chinese strategy. The sedan is a manufacturing industry. It pays attention to the scale effect and pays attention to cost advantages. Its products are consumer products and need to pay attention to brand and channel advantages. In the future, car companies that have the advantages of cost, brand, and channel will win.
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