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China saves Global Automobile Industry in 2020
Jul 1,2020 16:47CST
translation
The content below was translated by Tencent automatically for reference.

SMM: the epidemic has dealt a huge blow to the global auto market.

Volkswagen, the world's largest carmaker, reported a profit of just 980 million euros in the first quarter of this year, down 81 per cent from the same period last year.

In addition, Toyota, the world's second-largest automaker, expects profits to fall by 80% in 2020 as a result of the epidemic and cut its sales target for fiscal year 2020. Meanwhile, Toyota expects its global car sales to fall to 8.9 million, its lowest level in nearly nine years.

Behind the dismal car market, the epidemic is the culprit. "compared with the 2008 global financial crisis, the new coronavirus has a greater impact on us." Akio Toyoda, president of Toyota, said.

In order to minimize the losses caused by the epidemic, car companies are betting on the Chinese market.

Audi said on June 19 that Dussman, the company's chief executive, would succeed Audi's financial director, Arnold Antritz (Arno Antlitz), as the new head of Audi's China operations. This means that an Shihao, president of Audi China, will report directly to Audi that the importance of China business has escalated.

On June 29th, Bosch Group issued a personnel adjustment announcement, Bosch CEO and Chairman of the Board of Directors Dr. Volkmar Dunnell (Dr. Volkmar Denner) will be directly in charge of the business in China.

Among the top 10 auto markets in the world, China is the only one that can be on a par with the same period last year. Why can China be left alone?

Overseas markets are in a quagmire.

The spread of the new coronavirus should not be underestimated.

According to data from arcgs.com and the Chinese Centers for Disease Control and Prevention, as of 20:00 on June 29th, 2020, the cumulative number of new top diagnoses in the world has reached 10.168 million, while the number of cases outside China has exceeded 10 million, and is growing at a rate of nearly 200000 per day.

In March 2020, the epidemic began to break out in foreign countries, and the number of infections and deaths increased exponentially. According to 2019 data from the U.S. Census Bureau, there are about 330 million people in the United States, with 2.51 million infected, accounting for 0.77% of the total population.

Most of the countries and areas with severe outbreaks are major areas of car manufacturing. Apart from China, the United States, Europe, India and Brazil are all important car markets in the world, but these countries are also the hardest hit areas of the epidemic, which has cast a heavy shadow on the global car market.

In the United States, for example, an infection rate of 0.77% means that 7770 people per million are infected with the virus. It is understood that in order to reduce people's outdoor travel, American states have stopped work on a large scale since the beginning of April this year. The impact of the shutdown on the US economy is very intuitive, with the unemployment rate reaching 14.7% in April 2020, the highest level since the Great Depression of the 1930s.

The performance of the American car market has let the car companies "rout".

In April 2020, Toyota and Honda sold less than half of what they did in March; Hyundai, Kia, Mazda and Subaru fell by an average of more than 42%. In addition, the number of passenger car registrations in the United States fell by 45.8%, 58.7% and 44% in March, April and May, respectively.

In recent years, as the market value has been tapped, Brazil has become another big emerging market for cars, ranking seventh in the world in 2019. However, affected by the epidemic, the number of passenger car registrations in Brazil in April and May this year was 40, 000 and 44000 respectively, down 78.8% and 77.9% from 189000 and 199000 in the same period last year.

Brazil is one of the major exporters of Guangdong Global Automotive supplies Company in China. Li Bin, its general manager, said that the export turnover this year was only 1/3 of that of previous years, and the resumption of domestic work and production had been basically completed. however, the collapse of foreign demand is the biggest problem facing enterprises.

European markets have also signalled an emergency.

According to the European Automobile Manufacturers Association (ACEA), the number of car registrations in the 27 member states of the European Union (excluding the UK) was only 271000 in April, down 76.3% from a year earlier and the lowest since 1990. In May, as some dealers resumed operations, there was a slight trend of improvement, with 581000 registrations, an increase from the previous month, but still down 52.3% from a year earlier.

Global car sales will fall 12% to 78.8 million units in 2020, according to IHS Markit, a business information firm. The European Association of Automobile Manufacturers predicts that car sales in the European Union (excluding Britain) will fall by about 25% in 2020. McKinsey's figures are even more pessimistic: global car sales will fall by 29 per cent in 2020, with the Chinese market falling by 15 per cent and the US and Europe by 18 per cent by 36 per cent.

Compared with the dismal car sales from March to May, what is more worrying is that the new crown epidemic abroad has not been effectively brought under control, and the epidemic in the United States has even rebounded, with 45000 new patients on June 26 alone.

Compared with foreign countries, the epidemic situation in China has been effectively controlled. Multinational car companies have to set their sights on the Chinese market.

Hold on to the Chinese thigh

There is a sharp contrast between China's car market and overseas.

On February 9, several provinces in China began to resume work. As of February 26, the return rate of China's small and medium-sized enterprises has reached 32.8%, according to data from the Ministry of Industry and Information Technology. By March 28, this figure had risen to 76 percent, the operating rate of industrial enterprises above the national scale had reached 98.6 percent, and the rate of personnel reinstatement was 89.9 percent.

China's auto market also ushered in vitality. According to a survey conducted by the China Automobile Circulation Association, as of April 8, in a sample of 155 car dealer groups and 8802 stores in China, the store resumption rate was 99.6%, and the passenger flow recovery rate was 68.6%.

China is becoming Noah's ark for multinational car companies.

Volkswagen sales in China rose 5.7 per cent in May from a year earlier to 330000 vehicles, accounting for more than half of total sales. Volkswagen's sales fell in all markets except China, resulting in an overall 34 per cent year-on-year decline in global sales to 609000 vehicles.

Toyota has only slightly improved sales in China.

In May, Toyota sold 577000 vehicles worldwide, down 31.8% from a year earlier, while key markets such as Japan, the Middle East and Africa all fell. Only the Chinese market, which grew by 28.8% year-on-year, can give Toyota some comfort.

Although the "retaliatory" consumption that China's auto industry is looking forward to has not yet arrived, sales in May have returned to the level of the same period last year, which is the envy of many countries in the environment of the continuous decline of the global car market.

Cui Dongshu, secretary general of the Federation, believes that it will take at least more than half a year for foreign markets to recover. In 2020, the major car companies will continue to hold the thighs of the Chinese market.

In 2016 and 2019, 29% of global car sales came from the Chinese market. There is no doubt that this figure will hit a new high again this year.

Behind the "restorative" consumption

Although there is no "retaliatory" consumption, there has been "restorative" consumption in China's auto market. Behind this, apart from the efforts of the car companies, it is also inseparable from the strong support of the government.

In March, China sold only 1.045 million passenger cars, down 40.4 per cent from the same period last year. Among them, nothing is more stressful than new energy vehicles. According to the China Automobile Association, sales of new energy vehicles in China in March were only 53000, down 53 per cent from a year earlier.

In the face of the dismal new energy market, on March 31, the State Council decided to extend the policy of subsidies and exemption from purchase tax for new energy vehicles for two years, which provided a shot in the arm for the new energy vehicle industry. In addition, various places have also introduced corresponding policies to promote automobile consumption, mainly reflected in the subsidy for individual car purchases, the relaxation of license plate indicators and so on.

Car companies have also gone to great lengths to cut prices, subsidize them out of their own pocket, or try new ways to sell cars to stimulate consumers.

On Feb. 25, SAIC GM Wuling announced that it officially launched the activity of "safe commuting to work, Wuling Baojun subsidy of 1 billion", offering a car purchase subsidy to individuals who buy Wuling Baojun, with a comprehensive discount of 11000 yuan.

The May Day holiday has become an important time for car companies to stimulate consumption. SAIC held a promotion of "have an appointment with SAIC", and Chen Hong, the chairman of the group, personally showed up to sell cars. It is reported that SAIC has spent a lot of money on sales promotion. Hundreds of cars enjoy a 50% discount, and the subsidy for bicycles is up to 130000 yuan.

SAIC's "hard work" has yielded considerable returns. From May 1 to 4, SAIC accumulated 33062 potential customers in Shanghai, an increase of 99.1 per cent over the same period last year, and 3692 orders, an increase of 85.1 per cent over the same period last year.

Thanks to policy assistance and the efforts of auto companies, car sales in China increased significantly from April to May. Among them, overall passenger car sales in China increased by 1.9% year-on-year in May, the first year-on-year growth in China's passenger car market in nearly 22 months.

Conclusion

The epidemic has spawned a lot of innovation. In the automobile industry, it has become a trend for car companies to keep warm together, and new sales models such as online sales and live car sales have been developed one after another, but the industry has not yet ushered in a real revolutionary innovation.

At present, it is not clear where the epidemic is pushing the global car market. However, it is certain that the development trend of the automobile industry to the new four modernizations has been accelerated under the epidemic.

In June alone, a number of giant companies, such as Amazon, Didi, Intel and Daimler, announced major advances in autopilot; BYD's blade batteries and Ningde's long-life batteries also received a lot of attention during the epidemic.

New automobile technology will get new development opportunities in this round of market restructuring, and intelligent self-driving shared electric vehicles seem to be getting closer and closer to us.

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