Joint Venture Car Companies Prepare For A New Era: The Split Of The "Three Strong" Pattern

2019 was a tough year. After Renault, Citroen and other legal system brands are absent from this Guangzhou auto show, the jungle rule of jungle law in the stock market competition is exposed and firm: shuffling comes, whether it is self owned car companies or joint venture car companies, they are facing the same fierce battle.

From the data point of view, the performance of mainstream joint venture brands is not bad. In the first ten months of this year, the overall market share was 51.5%, even slightly improved compared with the past two years. However, compared with the growth of luxury brands, the performance of mainstream joint venture brands is somewhat unsatisfactory.

Under the background of improving the overall market concentration, the competition pattern of the mainstream joint venture brands has also shown dramatic changes. On the one hand, the gap between the car companies has widened. The second tier joint venture brands including Dongfeng Renault, Changan Ford and Dongfeng Yueda KIA have all met the darkest moment. On the other hand, the original pattern of "three strong ties" has also been affected. Although the overall performance of the German Volkswagen is still online, the position of the north and south public has changed significantly. SAIC GM is facing a test in the product switching cycle.

During the Guangzhou auto show, many joint venture vehicle operators talked about the pressure on the stock market in the process of communicating with the media. They also admitted that the joint venture brand is still facing the double attack of luxury brand exploration and the rise of its own brand. How to break the tight encirclement and achieve the established goal under such a background will test the ability of strategy formulation and implementation of the major brands.

The split of the three strong powers

The mainstream joint venture car companies are the most important force in China's automobile market. The annual market share is around 50%, while the North South Volkswagen and SAIC GM have been the top three car sales in the Chinese auto market. But this year, they are showing different trends.

In terms of comprehensive sales volume, FAW Volkswagen sold 1 million 638 thousand vehicles in the first 10 months, up 1.9% compared to the same period last year. SAIC and SAIC's cumulative sales volume were 1 million 550 thousand and 1 million 230 thousand respectively, down 5.7% and 13.4% respectively from the same period last year.

In twenty-first Century, the economic report reporters have been concerned about the changes in the sales champion of the Chinese market. In the first half of this year, the overall sales volume of the automobile market has changed from SAIC Volkswagen to FAW Volkswagen in the first half of last year. Before that, SAIC Volkswagen has sold the most in the domestic market for many years.

However, the overall performance of the public is relatively good. The US joint venture car company SAIC is facing greater challenges. So far this year, more than 10% of the decline is not only inferior to that of its competitors, but also has lost the market.

The split between the three powers has been fission. Japanese brands and joint ventures show the stamina of adverse market growth compared with the common rule of the public and the old horse. Taking Dongfeng Nissan as an example, its total sales volume reached 1 million 20 thousand in the first ten months of this year, and it also proposed to enter the target of "three before the joint venture".

In an interview with the twenty-first Century economic report, Wang Yongqing, general manager of SAIC, did not shy away from these pressures. He said sales decline on the one hand, the overall car market weakness and other reasons, on the other hand, this year is SAIC GM's product adjustment year, many products began to switch in the first half of this year, which will certainly affect sales.

This year is a new product of SAIC GM, and its brands such as Buick, Chevrolet and Cadillac have launched many products. This Guangzhou auto show has brought 41 models. Wang Yongqing said that in the first half of next year, the competitiveness of SAIC's products will be greatly enhanced as the layout of new products is basically completed.

It should be pointed out that the latter is not without pressure to impact the "three of the joint venture" Dongfeng Nissan, and it is difficult to maintain sustained growth. During the Guangzhou auto show, Chen Hao, deputy general manager of Dongfeng Nissan, admitted in a media interview that there was a certain "miscarriage of justice" on the market situation. The market trend of the latter half of the year was expected to reverse, but the reality is that the negative growth of the automotive industry has not stopped until October of this year.

Where is the market opportunity?

The industry has reached a consensus that after decades of incremental development, China's auto market will enter the stock market competition in recent years. For joint-venture brands, luxury brands have a certain downward trend in price, while independent brands have opened up high-end products. Shi Hong, deputy general manager of SAIC GM, admitted that the joint venture brand would be caught up with carelessness. This is a very realistic situation.

He said that SAIC's current focus is mainly on two parts, one is the rapid adjustment of traditional products, and the need to reorganize the customer experience at the marketing side. In a word, "all businesses return to their origin and start again". The two is to grasp the future, and to invest in automatic driving, vehicle networking and other fields through the "dual strategy". However, the results of these efforts can not be seen in a day, but still need some time.

In the current market environment, the strategy and rhythm of new product launch are particularly important. Peng Bo, partner of McKinsey Global Director, pointed out that for car companies, there are some factors that do not see its obvious negative effects in the market. But if we do not pay attention to the downlink market, the consequences will be immediately apparent.

"The downlink market will not allow for an extensive new product launch." Peng Bo believes that "if the new product launch time and the rhythm of car companies are not sure, or the competitiveness of new products is not good enough, even if the pricing strategy of new products is not well balanced, car companies will easily slip into dangerous situations."

As more young consumer groups enter the automotive market, joint venture car companies including the North South Volkswagen and SAIC GM have made the brand younger as one of the main selling points. For example, Chevrolet in general has launched Redline Shang Hong products in recent years, and has injected young, sports and other factors into the brand gene. At this Guangzhou auto show, the public exhibition booth has been arranged into a young and cool style to adapt to the trend of "younger customers".

But younger does not mean "low threshold". In fact, Skoda brand of SAIC Volkswagen and FAW Volkswagen's new independent Jetta brand have been challenged in this year's market environment. Chevrolet is in the throes of transformation, but after market assessment, Chevrolet Sao has withdrawn from its niche market.

For the Skoda brand, Jia Mingdi, general manager of SAIC Volkswagen Automotive Sales Co., Ltd., during an interview with the auto show, pointed out that Skoda's poor performance in the Chinese market is related to many factors such as brand recognition and cost. Now the company has worked out a plan to revive Skoda, which needs to rearrange the brand positioning and target groups, and also set up a special team to carry out product research. As an entry-level brand of the public, Skoda will also pay attention to the problem of product characteristics while considering the cost.

The trend of the joint venture brand is consistent with that of the whole market. Since the second half of last year, the luxury brand in the car market has been the only subdivision area for the growth of the adverse market, and this trend has not changed this year. According to the statistics of the Federation, 300 thousand of the high-end passenger cars totaled 1 million 248 thousand vehicles in the first 10 months of this year, an increase of 7.4% compared with the same period last year, while the total sales volume of less than 300 thousand passenger cars totaled 15 million 378 thousand vehicles, down 9.4% from the same period last year.

It is worth mentioning that with the reform and policy orientation of the automobile industry, the electrification layout of joint venture car companies is also accelerating. Whether or not we can seize the emerging market of new energy vehicles in the future will also become a key factor for the development of joint venture vehicle enterprises.