China's auto market 2019: Bringing in the wolves, sailing out to sea

On January 1, 2020, Luo Zhenyu put forward a concept in his New Year's speech: China's economy is switching from elevator mode to rock-climbing mode.

In his view, the so-called elevator mode refers to those stable and exact passages. And now that China has switched to rock-climbing mode, where to climb next is testing the creativity and choice of those involved at every step.

China's auto market in 2019 may also be undergoing such a change, with the days of automakers making money lying down gone, and they will have to look for the next reliable "handhold" as aggressively and woefully as an unarmed rock climber.

Luring the "wolf" into the room

April 1, 2019, 13 years at the helm of Brilliance Group Qi Yumin stepped down as chairman. According to the country's legal retirement age, born in September 1959, Qi Yumin, should be another six months before retirement. However, it all came too suddenly.

In April 2018, the Development and Reform Commission confirmed that the automotive industry will gradually implement the opening up of the special purpose vehicles and new energy vehicles in 2018 to cancel the restriction on foreign equity ratio; in 2020 to cancel the restriction on foreign equity ratio for commercial vehicles; in 2022 to cancel the restriction on foreign equity ratio for passenger cars, and at the same time to cancel the restriction on joint ventures of no more than two companies. The plan is to remove all restrictions in the auto industry through five years.

In October 2018, the BMW Group suddenly announced that it would acquire a 25% stake in BMW Brilliance for a consideration of 3.6 billion euros, raising its shareholding in BMW Brilliance from 50% to 75%. This meant that BMW Group officially took control of BMW Brilliance, 15 years after the joint venture was founded...?

BMW Brilliance also became the first company to be broken by foreign forces after the liberalization of the joint venture share ratio, a moment that came even four years earlier than the NDRC's timetable.

Six months later, with countless controversies, Qi Yumin left the scene in disgrace.

Benefiting from the open-door policy is also Tesla from the U.S. In January 2019, Tesla broke ground on its Shanghai Superfactory, China's first wholly foreign-owned automotive factory. 10 months later, the factory was completed and put into production. on Dec. 31, the first batch of domestically produced Model?3s were officially delivered to customers.

In a year's time, the plant was built, put into production and delivered, the new energy brand from the United States, in this land full of business opportunities, once again creating the world-famous "Chinese speed".

In late August, Musk flew from California to China. In the capital, Beijing, he was received by ministerial-level officials. Musk said during the meeting that Tesla is willing to continue to strengthen exchanges and cooperation with the Chinese side in the research and development of self-driving technology, standardization and other aspects.

The day the talks ended, the Ministry of Industry and Information Technology announced the "new energy vehicle models exempted from vehicle purchase tax catalog (twenty-sixth batch)", Tesla Model?3, Model?S and Model?X full range of models on sale in the catalog. The purchase tax is 10 percent of the pre-tax price of the car, and after all of them are exempted, you can save up to 99,000 yuan.

On Dec. 6, the Ministry of Industry and Information Technology released a catalog of recommended models for the promotion and application of new energy vehicles (the 11th batch), and the domestic Model?3 was included in the list, which means that users who buy a domestic Model?3 can enjoy a new energy subsidy of 24,750,000 yuan.

So far, Tesla, as a purely foreign-funded manufacturer, has for the first time gained the same market access treatment in China, and historically stood on the same starting line with independent manufacturers. The moat built in previous years was gradually filled up, and the Chinese market opened up to Tesla.

Subsequent events proved that it was much more than just an open door, and that China expressed its sincerity in the most tangible way possible.

On Dec. 26, Tesla announced that it had reached an agreement with China Construction Bank, Agricultural Bank of China, Shanghai Pudong Development Bank and Industrial and Commercial Bank of China to provide up to 9 billion yuan ($1.29 billion) in secured term loans.

In addition, Tesla signed an agreement for an unsecured revolving loan of up to 2.25 billion yuan, both of which will be used for the construction and development of its Shanghai factory. In contrast, Azalea hasn't had a single piece of financing or loan come in after offering $200 million in convertible bonds in September.

On March 13, 2019, a decision in a commercial dispute case caught the attention of major automotive media. In response to the case of Jaguar Land Rover v. Jiangling Landwind Unfair Competition and Copyright Infringement, the Chaoyang District Court in Beijing made a first-instance judgment that Jiangling has constituted unfair competition, and should immediately stop the production and sale of Landwind X7, and compensate Jaguar Land Rover for the economic losses and reasonable expenses of 1.5 million yuan.

1.5 million yuan, although the amount of compensation is not much, but it marks the end of an era, the era of "reverse development" is gone. Before Jaguar Land Rover, General Motors and Honda took their Chinese "imitators" to court, but their appeals were either rejected by the courts or left unsettled.

Rejecting "reverse development" and respecting intellectual property rights is the foundation of a good business environment in a market, and without a level playing field, even if the moat is filled in and the gates are open, I'm afraid the "wolves" won't dare to enter the city.

Happily, in 2019, we saw these changes happen.

Sail out to sea

In November 2019, at WEY's third anniversary brand night, Wei Jianjun, chairman of Great Wall Motor, stood under the spotlight and shouted, "We've figured out the way forward!"

The ambitious boss also drew a grand blueprint for Great Wall's premium brand - WEY, which, according to his plan, will enter the European market in 2021, be among the North American market in 2023, and become the world's leading luxury brand by 2025, completing the China-to-world breakthrough.

On January 8, 2019, Great Wall Motor announced its 2018 sales: 1,053,000 units for the year, down 1.6% year-on-year. This is the 2nd year in a row that Great Wall has seen a sales decline, with 1,070,100 units sold in 2017 and 1,074,500 in 2016.

After more than a decade of running blindfolded in the Chinese market, Great Wall Motor has looked around and realized it has gone from being a follower to a leader, and looking at its Chinese counterparts, there are very few that can match it.

Coupled with the sales performance of the consecutive years of balking, Great Wall Motor suddenly realized that their own domestic market may have touched the ceiling, in order to make a difference and then make a new era, must be upward branding, must be globalized, must be out of the sea.

So in 2019, Wei Jianjun began to frequently stand in the spotlight.

On January 14, at the Haval Global 5 Million Ceremony and Region-wide Strategy Conference, Wei Jianjun announced Great Wall Motor's "5-2-1" globalization strategy: using five years, investing 30 billion yuan in research and development to achieve an annual sales of 2 million units, and achieving the number one brand of Haval's global professional SUV.

On June 5, Great Wall Motor's Tula plant in Russia was officially completed and put into production, which is the first wholly-owned manufacturing plant of a Chinese automobile brand overseas, and the first global model, Haval F7, rolled off the production line and went on sale here.

Great Wall Motor's globalization process has thus entered a brand new stage. At this historic moment, Wei Jianjun, the family member of Great Wall Motor, once again demonstrated his determination as if he had broken his own wrist, "Are we going to die at home or abroad? Great Wall Motor chooses to die abroad, no matter how to challenge." ?

On September 7, Great Wall Motor marched to the 2019 Frankfurt Motor Show with the WEY brand and the four major parts groups under Great Wall Holdings. On the banks of the Main River, Wei Jianjun threw down the gauntlet, "Only an internationalization strategy can prove the brand value of WEY."

In November, on the eve of the Guangzhou Auto Show, Wei Jianjun personally took command as the chairman of the WEY brand and announced a grand globalization blueprint for the WEY brand.

When Wei Jianjun took over Great Wall Industry Co. in 1990, no one could have imagined that a collectively owned enterprise from Baoding, Hebei province, would later become a pivotal force in China's auto industry, or that a young man named Wei Jianjun would be able to leave his name on China's and even the world's auto industry.

When Wei was busy sailing out to sea, Geely chairman Li Shufu also ushered in his own critical moment. on Nov. 29, Li made a special trip to inspect Volvo's Asia-Pacific headquarters, nearly a decade after he wholly acquired the Swedish luxury brand.

Ten years ago, Geely, which is based in Hangzhou, took over Volvo from Ford, an acquisition that cost Geely $1.8 billion. In fact, even in the final moments of the acquisition, Li Shufu still hadn't raised enough money, and Ford finally loaned him $200 million, which made the deal happen.

A Geely executive involved in the merger once asked Li Shufu, "What makes you buy Volvo?" Li replied, "I have nothing but guts."

The venture out to sea has paid off handsomely for Li Shufu.

Geely, with Volvo's technological backing, has leapt to become a leader among independent brands in this decade. in October 2019, Geely's sales exceeded 140,000 units in a single month, surpassing SAIC-GM to become China's third-largest automaker after North and South Volkswagen.?

Meanwhile, Geely has helped Volvo out of its debt quagmire and turned it into a truly global company with well-established commercial and industrial systems in Europe, Asia-Pacific and North America. Compared with 2009, Volvo has doubled its sales worldwide.

Li Shufu attended Volvo Cars' 2019 Annual Supplier Conference on Dec. 6, delivering a keynote speech on "Changes and Constants".

In his speech, he pointed out that China's automotive industry still accounts for a very low percentage of the global market, and is also in a lower position in the entire value chain. This requires us to focus on promoting globalization, and really form a competitive pattern of you have me, I have you. And this trend is both a challenge and a requirement for us, but also contains great opportunities.

Some people have said to Li Shufu that the acquisition of Volvo is a miracle, however, he does not think so, in his view, there is no miracle in the automotive industry, look at the direction, respect the objective law, and then solidly promote, honest work, the result is a natural thing.

"Those who don't plan for the world are not enough to plan for a time, and those who don't plan for the overall situation are not enough to plan for a region." In 2019, China's auto market has changed from an incremental market to a stock market, and the globalization of Chinese car companies has become a necessary path for the sustainable development of enterprises, on which Geely and Great Wall, the two private car companies, are deserved forerunners.

The year ended with the Link 03 winning the WTCR annual championship under very difficult circumstances, the first time a Chinese brand has won a top global racing circuit, and Geely bought a big-screen advertisement in Wall Street Plaza the next day to signal the achievement.

Plugging in on China

In April 2019, Akio Toyoda appeared at Tsinghua University, the fourth-generation eldest grandson of the Toyota family and current president of the Toyota Group. In the Tsinghua University Park, the love of racing Toyota Akio also played "drift".

Two months ago, Toyota's luxury brand, Lexus, announced its 2018 sales. The data show that in 2018, Lexus sold 160,700 units in China, up 21% year-on-year, and the sales share of the Chinese market has reached 23%. For Lexus, the Chinese market is becoming pivotal...?

In 2018, a total of 1.977 million units of the luxury brand were sold in China, with the luxury brand's market share reaching 8.8 percent; in January-November 2019, 2.003 million units of the luxury brand's models were sold, with the market share reaching 10.8 percent.?

From 2015 to 2019, China's luxury car market has maintained rapid growth for five consecutive years, with the market share almost doubling in 2019 compared to 2015.

This change was seen by the Toyota Group and by Akio Toyoda. So near the end of 2019, Toyota China announced a series of personnel changes:

Li Hui, former executive vice president of Guangzhou Automobile Toyota, became executive vice president of Lexus China, which is the first time that Lexus has used a Chinese professional manager to take up this position.

Lang Lixin returned to Lexus China from Toyota Finance as Vice President of Lexus China, responsible for parts and boutique business.

Chen Chen, head of Lexus China's marketing department, has been promoted to Deputy General Manager of Lexus China, responsible for marketing and product strategy planning.

This large-scale personnel adjustment of Lexus in China can be regarded as a future-oriented personnel layout made by Akio Toyoda after a year-long investigation.

Li Hui, Lang Lixin and Chen Chen were the ones he chose to lead Lexus to continue to "Lead the Unseen - Explore the Extraordinary" in the Chinese market.

It can be expected that this localized team will help shape the brand and integrate local resources, which is also the key to Lexus' future development in China.

On the evening of Nov. 21, a new car launch event with a strong Chinese traditional cultural flavor drew people's attention. In the sheep city of Guangzhou, the world premiere of the Mercedes-Maybach GLS, the top luxury SUV, took place.

Duan Jianjun, chief operating officer of Mercedes-Benz Sales and Marketing, successively quoted "Ritual is the order of heaven and earth", "Those who treat heaven and earth with courtesy are open-minded as if they are in a valley", "Those who treat heaven and earth with courtesy are in a valley", "Those who treat heaven and earth with courtesy are in a hole", and "Those who treat heaven and earth with courtesy are in a hole". "The one who treats heaven and earth with courtesy is modest and open-minded", "The one who treats heaven and earth with courtesy is a man with a hole in the sky", "The one who treats heaven and earth with courtesy is a man with a law of nature", and "? Nine songs played Firan Shushu, sounding qin yu se will Xuan Zhu", "Tian Xing Jian, the gentleman to self-improvement; the earth's momentum Kun, the gentleman to the virtue of carrying things" and other words and phrases taken from traditional Chinese culture, supporting this unique new car conference.

At the conference site, the interpretation of the guqin and violin, ethereal and melodious, the high mountains and flowing water to meet the soulmate; pipa, cello and symphony fusion, deep and strong, to meet the heaven and earth as a gift; chimes and drums, resonant and melodious, the good music and rituals of the sound of Zhenhua.

In Mercedes-Benz, I can see the future of Lexus in China.

Predictably, with the strong rise of the middle class, the trend is to return to traditional culture. In the luxury brand camp, when traditional Chinese culture establishes some kind of deep connection with Made in Germany and Made in Japan, the two are bound to burst with incredible energy.

Just after the New Year of 2020, Lexus couldn't wait to announce its sales figures for 2019. in 2019, Lexus accumulated sales of 200,500 units, up 25% year-on-year, making it the fifth luxury brand in the Chinese market with sales exceeding 200,000 units.

The only ones still ahead of Lexus are Mercedes-Benz, BMW, Audi and Lexus.

The herd is rising

On the first day of 2020, Li Bin, founder and chairman of Azera Motors, released an internal letter in which he wrote "In the just-past 2019, we experienced unprecedented challenges."

In 2019, the head of the new car-making forces experienced negative events such as layoffs, battery recalls, executive departures, and the collapse of financing talks, and four consecutive quarterly losses have put it on the cusp of public opinion.

2019 is just too difficult for Azalea.

However, it's not just Azalea that's difficult, it's also the entire huge new energy market.

On June 25, a paper decree came, 2019 new energy subsidies new policy officially implemented.

According to the new policy, pure electric passenger cars with a range of 250 kilometers to 400 kilometers can get 18,000 yuan of state subsidies, and those with a range greater than or equal to 400 kilometers can get 25,000 yuan of state subsidies; plug-in hybrid passenger cars (including programmable) with a range greater than or equal to 50 kilometers can get 10,000 yuan of state subsidies. This means that the new energy subsidies have slipped by more than 40 percent compared to the previous period.

Losing the blessing of the policy, the market stumbled like a child whose toddler has been taken away. In the face of the widening decline, some even began to doubt the possibility of a sustained recession in this steeply expanding market.

In July, the new energy market declined 3.8 percent year-on-year; in August, it slipped 21.7 percent; in September, it slipped 34.8 percent; in October, it slipped 46 percent; and in November, it fell 45.4 percent.

From January to November 2019, the new energy market's cumulative sales totaled 895,000 units, a year-on-year increase of 6.9 percent, with the first half of the year's rapid growth momentum diluted by the shocks triggered by subsidy rollbacks.

Subsidy retreat, market decline, new energy manufacturers bear the brunt. Data show that BYD's new energy vehicle sales of 16,719 units in August, a year-on-year decline of 23%; September sales of 13,681 units, a year-on-year decline of 51%; October sales of 12,567 units, a year-on-year decline of 55%; November sales of 11,220 units, a year-on-year decline of 63%.From January to November 2019, the cumulative sales of 216,407 units, a year-on-year increase of 7.6%.

Like the broader market, BYD's full-year sales showed a curve of high starts and low starts, but fortunately the strong growth in the first half of the year preserved the positive growth for the year.

On Nov. 7, BYD announced that the company will set up a pure electric vehicle research and development company with Toyota, and the new company will be formally established in 2020 in China, with Toyota and BYD each contributing 50 percent.

BYD said, the joint venture company design, development of products will fully use BYD's existing electric platform technology and electric parts supply, and into Toyota's quality and safety control standards requirements, the joint venture company design, development of pure electric vehicles can be used Toyota brand.

The signing of the joint venture agreement is not the first cooperation between BYD and Toyota.In June 2019, Toyota announced BYD as its power battery supplier.

From BYD's side, the establishment of this joint venture with Toyota is another achievement of BYD's open strategy. Toyota Motor Corp. vice president Shigeki Terashi said he hoped that the cooperation between the two sides would be deepened and developed through the related business carried out by the new company established with BYD.

Just as Wang Chuanfu was fretting about sales and Li Bin was running for money, real estate tycoon Xu Jiayin made his entrance.

In November this year, Evergrande New Energy Vehicle held a powerful global strategic partners summit. It is understood that the summit gathered 206 leading enterprises from Germany, Britain, France, Japan, the United States and other countries in the automotive industry, including 13 of the world's top 500 companies.

These enterprises cover a wide range of fields in the global automotive industry such as engineering, styling, manufacturing equipment, components, motors, batteries, etc.*** There were more than 1,100 CEOs and executives attending the summit. There were eight languages in the simultaneous interpretation channel alone. He intends to invest 45 billion dollars in the next three years, the annual output of 1 million vehicles, with 3 to 5 years, Evergrande to build the world's largest and strongest new energy automobile group.

The real estate businessman, who started from nothing with his extraordinary courage and has topped China's rich list many times, is trying to use the lever of capital to quickly pry the century-old automobile industry and complete the leap from nothing to something and from something to something.

Hui's bravado has left the Western media reeling, with one foreign media outlet commenting, "If he's not a crook, he's a game changer."

"Does Huawei build cars or not?" , which has been a question plaguing the industry for a long time. At the Shanghai Auto Show in April 2019, Huawei's rotating chairman Xu Zhijun solemnly announced, "Huawei does not build cars, focuses on ICT technology, and helps car companies build good cars."

Huawei's statement made traditional manufacturers breathe a sigh of relief, and also provided a new way of thinking for Internet companies to enter the automotive industry.

In Xu Zhijun's view, when a car goes to the intelligent network connection electric car, or further to the driverless electric car, the value and composition of the future industry, 70% are not in the traditional body, chassis and these areas.

Xu Zhijun said: "Huawei entered the automobile business, do incremental parts suppliers, how much money to earn, how much revenue to create, now very clear. The future of 50 million units in China, 100 million cars worldwide, 30% loaded with our brain MDC, or 50% loaded with our MDC, go to the number, and then see how much value the MDC creates, go to the multiplier, which is calculated."

In addition, he also boldly predicted that with the change in design concepts, the future of the car "incremental parts" can be replaced, this piece of the market is huge. Therefore, Huawei has positioned itself as an incremental parts provider.

Mentioning this positioning, Xu Zhijun also revealed a detail. At first, Huawei's positioning was "component provider", Xu Zhijun, a stroke of the pen, changed it to "incremental component provider", the difference between the two words, not only to the existing automotive parts suppliers to convey their own friendly, but also respond to the theme of this automotive change.

If the previous entry declaration of the new car-making forces was "redefine, subvert the revolution", then Huawei's entry declaration is "since we can't conquer it, we will choose to join it."?

In 2019, Huawei cut into this round of automotive industry changes from an unexpected angle, Huawei's entry into the game, for the subsequent aspiring to enter the automotive industry to provide a new way of thinking.

In the new energy market in 2019, multiple forces are rising up, and you are on the stage. Ten years later, who can become the bull in this market? There are no half signs to follow. In fact, in this particular year, even the new energy market itself is in a state of chaos.

Twenty years ago, Ren Zhengfei in the "Huawei's winter" wrote: "Our company after ten years of smooth development, did not experience setbacks, do not go through setbacks, do not know how to go to the right road, ordeal is a fortune, and we did not go through the ordeal, this is our biggest weakness."

Today, it seems that this passage is also very appropriate to describe the Chinese auto market in 2019. Under the cold winter, automakers either sailed out to sea, or increased China, or struggled to survive, between the major changes in the automotive industry and individual enterprises, a profound intrinsic connection was created, which ebbed and flowed with the sadness and happiness of countless individuals, which made up the Chinese auto market in 2019.

This article comes from the author of the automobile home car family number, does not represent the views of the automobile home position.