Domestic business needs sluggish commercial vehicle prices
Recently, the Brazilian government of Bahia officially announced that Foton Motors, the dominant vehicle manufacturer in China, will invest 300 million U.S. dollars to build a factory in the country. Just a month before Fukuda's investment in Brazil, another full-scale commercial vehicle company in China, the Jianghuai Auto Group’s vehicle project in Bahia, had to suspend production due to taxes and exchange rates. “The temporary suspension of production from the JAC Automobile Plant indicates that the pressure and challenges faced by overseas auto companies in investing in and building factories in Brazil are not small,†an industry analyst told reporters. So, now that there is already a JAC's “preceding experience,†why does Foton also have no choice but to devote itself to this unknown and challenging market? In this regard, industry analysts believe that the strong impulse of Futian’s “going global†approach is to implement the overseas development strategy of “building five overseas factories in five countries†in its “2020 Strategic Planâ€; On the one hand is also to seek new market space in the current depressed environment. In fact, in the past two years, in the face of the continuing downturn in the domestic commercial vehicle market, such as Foton and JAC, the hope of increasing sales volume has been placed on more and more overseas car manufacturers. In their consciousness, although “going to the sea†may encounter various storms, once it reaches the “other shoreâ€, it is expected to grab a delicious market cake; if it stops because of difficulties and risks, it means that the future will be more Big crisis. â—Ž Market "internal cooling and external heat" “Currently, commercial vehicle companies are relying more and more on overseas markets. To a certain extent, it is also a last resort,†said one industry insider. Since last year, due to factors such as the increasing downward pressure on the domestic macro economy, domestic commercial vehicle market demand has continued to slump. Since the beginning of this year, the downward trend in sales has not only not changed, but has accelerated the deterioration. Data show that from January to August, domestic sales of commercial vehicles were 2.5207 million, a year-on-year decrease of 8.85%, which was a “big burden†to drag down the recovery of the domestic auto market. In all commercial vehicle models, except for the micro-cards, heavy, medium, and light trucks are declining. Among them, heavy trucks have become the "catastrophic area" of the entire auto market, and sales volume has shrunk by more than 30%. As the saying goes, "The East is not bright in the West." In stark contrast to the declining sales volume in the domestic market, commercial vehicle enterprises can be said to be successful in overseas markets. Not only have big orders been harvested, but also the prices and product mix have increased. According to the data, the total number of trucks exported by enterprises this year has been 157,000, an increase of 15.5% year-on-year; the amount of exports has reached 2.036 billion yuan, a surge of 35.9% year-on-year. Moreover, bicycle prices also increased by 17.72% year-on-year. “Overall, the sales of Chinese trucks in overseas markets have already shown a trend of volume and price increases,†said Yang Aiguo, deputy secretary-general of the Automotive Branch of China Chamber of Commerce for Import and Export of Machinery and Electronic Products. â—ŽCorporate “inside complement†The strong contrast between domestic and foreign markets has made more and more car companies aware of the urgency of developing overseas markets. As a result, the promotion of export strategy has become a common choice for many commercial vehicle manufacturers. The facts also prove that overseas markets do indeed play a role as “pressure relief valves†to some extent. “This year, the domestic commercial vehicle market has experienced a considerable decline in sales. In this market context, although Shaanxi Automobile is also facing a lot of operating pressure, from the current situation, the situation is still better than the industry average.†Fang Hongwei, the chairman of CNOOC, frankly stated that Shaanxi Automobile was able to achieve a “decline of about 16%†in the heavy-duty card industry, which has fallen by more than 30%, thanks to the company’s stability and consolidation of its traditionally advantageous businesses. What is important is creating new market opportunities. Among these, the good performance in the export market is very successful. He explained that Shaanqi’s export volume from January to August was “more than doubled†from the same period of last year; moreover, it has made notable breakthroughs in channel and network construction and international market distribution. "This year, Shaanxi Automobile's export volume is expected to reach 80,000 to 90,000 units. This figure, which is already close to 20% of total sales, has become a powerful remedy for Shaanxi Automobile." In fact, the use of exports as a breakthrough point to ease sales pressure is far from Shaanxi Automobile. China National Heavy Duty Trucks, which had the largest decline in sales volume in the domestic market, also relied on the sharp increase in sales volume in overseas markets to “stopâ€. As of August, China National Heavy Duty Truck's export orders have exceeded 20,000, a growth rate of more than 36%, ranking first in the domestic heavy truck industry. The domestic heavy truck "New Army" - Hualing, has also received orders for 1,400 overseas orders in the first eight months, with an export value of approximately US$ 46 million, an increase of 32% year-on-year. The company’s stakeholders also optimistically predicted that export sales will continue to maintain its growth momentum in the second half of the year. In addition, Liberation, Beiben, Futian, Jianghuai and other overseas markets performed equally well. â—Ž Change in export methods “This year, China’s auto exports will reach 1 million. The vast majority of these are exported by simple trade of goods, and very few are achieved by setting up factories overseas. This approach is aimed at export destination countries. The industrial development, taxation, employment, etc., have limited pull, and are therefore easily subject to local regulations, adding many potential risks to market development, said Lu Luxi, deputy director of the Department of Mechanical and Electrical Industry of the Ministry of Commerce. In fact, with the continuous increase in the contribution of overseas markets to the performance of domestic commercial vehicle companies, the issue of the single export method that Lu Xun is worried about has already received the attention of many companies. Since this year, more and more car companies have turned their attention to setting up factories overseas. The export of domestic commercial vehicles has also begun to change. “Before, the domestic commercial vehicle enterprises in the export process, more is the increase in the pursuit of sales. And now, more and more companies realize that the development of overseas markets is not only a business, but also to the height of corporate strategy.†When talking about the understanding of exports, Fang Hongwei's practice in connection with Shaanxi Automobile made his way out. â—Ž chase overseas factories Under the guidance of this idea, more and more car companies have started their overseas construction. It is understood that Foton Motor will set up overseas factories as an important measure to implement its overseas strategy. On March 26 this year, Foton Motors Kenya Co., Ltd. was established in Nairobi. This has also become another major move for overseas direct investment after setting up a KD production base in East Africa last year. In addition, its factories in India and Russia are also in full swing preparations; and the news of entering the country has added a strong touch to its overseas territory. Similarly, the old domestic heavy-duty truck giant - FAW Liberation, its overseas strategy is also rapidly advancing in a series of investment and construction plans. It is reported that together with GAZ Group, Russia’s largest commercial vehicle manufacturer, it has jointly invested in the establishment of a production base in Russia to produce and sell liberation of medium- and heavy-duty trucks. At the same time, it also reached an agreement with Iran's auto industry management department to plan to jointly develop and produce heavy truck products adapted to the Iranian market. In addition, FAW also intends to build or expand a number of light trucks and medium- and heavy-duty truck assembly bases in countries such as Pakistan, Mexico, and Ukraine, and expand production at its heavy truck production base in Africa. In addition, agreements have also been reached between China National Heavy Duty Truck Trump and Iran’s Mammut Group, as well as the joint venture between Shaanxi Automobile Group and Brazilian Metro-Shac-man Company to form an assembly plant. In this regard, the industry judges that in the future, with the continued advancement of domestic commercial vehicle companies’ overseas strategy, a wave of overseas investment and plant establishments will accelerate. "With this process, car manufacturers in overseas production bases will gradually shift from the current simple assembly plant to the positioning of production bases, sales and brand centers." Silent Deutz Generating Set,Germany Deutz Generator,Deutz Engine Generator Set Huaxin Electric Motor Co., Ltd. , http://www.wfgenerator.com
He said that since the beginning of this year, in addition to the steady increase in sales of traditional export destination countries such as Russia, Algeria, and Kazakhstan, some emerging markets have also made notable breakthroughs. “South America has become a “dark horse†for truck exports this year, and the growth rate of Chinese vehicles in the region has reached more than 50%,†said Yang Aiguo.
Xu Heyi, chairman of Beiqi Group, also holds the same view. In his opinion, deepening the overseas market must stand at the top of building a brand and strategically layout it. In the process of breaking the bottleneck of sales growth and the single export method, setting up factories overseas and exporting technology and capital externally will become the only way for Chinese cars to go global.