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Self Brand "Embrace The Breakout": SAIC And GAC Jointly Play The Key Role In The End Of The Year.

2019/12/25 11:33:00 0

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The Yangtze River Delta economic belt and the two high-end manufacturing enterprises in Guangdong, Hongkong and Macau have become the closest friends from the competitors. In December 23rd, SAIC and GAC signed a strategic cooperation agreement in Shanghai. The two sides will cooperate in all aspects of developing core businesses, industrial chain resources, new business models and overseas markets.

From the cross sea alliance between the public and Ford, to the hand of BMW and Mercedes in 100 years, and to the merger of Peugeot Citroen and Fiat Chrysler, over the past year, the strategic alliance and resource integration among the global car companies have become more frequent.

At present, the industrial transformation with the core of automobile electrification, intelligence, networking and sharing is reshaping the global automotive industry. The cost pressure of innovation in traditional car companies is further increased. The globalization of automobile industry is mainly aimed at achieving the largest scale benefit and reducing risk in the global market.

SAIC and GAC have the same purpose. The two sides said that the signing of the strategic cooperation framework agreement will help the two sides achieve resource sharing in the whole industrial field, such as product research and development, production and manufacturing, overseas market expansion, business models, industrial ecology and so on, so as to enhance the efficiency of resource allocation and synergy, and contribute to the profound transformation of the automotive industry.

"Two car companies cooperate with each other in the new field and new trend, which is beneficial to both sides. It is not only a shared achievement, but also a cost reduction and a shared risk. This is a good trend, especially in the new four modernizations and new energy sources. The cooperation between China's own brands is beneficial to the growth of China's auto industry. " On December 24th, Xu Haidong, Secretary General of China Automobile Industry Association, told reporters on twenty-first Century economic report.

However, despite the industry's expectations for the cooperation of the two major auto giants, the capital market failed to show much enthusiasm. In December 24th, shares of SAIC and GAC declined by 0.34% and 0.43% respectively.

Giants embrace heating

According to the industry, there are many reasons behind the two sides' cooperation at this time. Both sides are leading state-owned enterprises in the region, and the degree of marketization is relatively high. The demand and purpose of cooperation are generally convergent.

From a policy point of view, China has liberalized the restrictions on the joint stock ratio, forcing Chinese car companies to further strengthen their own brand businesses. At present, China's auto market has been down for 17 months and experienced an adjustment period. In the process of restructuring the market, the price system of the car market is parallel to the upgrading of consumption. The price of the independent brand has been broken, and the independent brand has already faced the situation of direct competition with the joint venture brand.

In the past few years, in the rapid development of China's auto production and marketing, SAIC passenger cars and Guangzhou automobile passenger cars have maintained an upward trend due to the popularity of Roewe RX5, ZS, GAC and GS4. However, the sales volume of both companies has declined to a certain extent this year. In the first half of November this year, 595 thousand and 800 new cars were sold by SAIC passenger cars, down 5.74% compared to the same period last year, and 345 thousand vehicles sold by GAC passenger cars dropped 28.81% compared to the same period last year.

In addition to the decline in China's overall car market, another reason for the decline in sales of Chinese independent brands is due to the upgrading of products. One of the difficulties of SAIC Roewe, SAIC's name and GAC's development is that they rely heavily on single products without forming a complete product matrix that is competitive in all segments. Take GAC as an example, its GS4 is at the end of its life cycle this year. It took 4 years to replace it at the end of the year, which is an important reason for GAC's poor sales this year.

Due to the limitation of R & D strength and capital, the development of some independent brands in China has been limited, and it is difficult to further expand the space. "In fact, if Chinese brands want to enter the mainstream market of international competition, further cooperation in brand development is essential." In December 24th, Wei Lai capital management partner Zhang Junyi told the twenty-first Century economic report. If the two sides cooperate smoothly in the future, they can jointly develop new platforms or models, which will greatly reduce the cost of joint ventures and enhance the competitiveness of products.

Over the years, China's independent brands have been eager to make breakthroughs in the international market, but in different markets, it is difficult to break through the market position formed by Japanese, German and American car companies over the years. It is worth noting that SAIC and GAC have clear strategies and targets for sea going and are at the forefront. Data show that in 2018, SAIC realized vehicle export and overseas sales of 277 thousand vehicles, mainly exported to Southeast Asia, the Middle East, South America and other places. Guang Qi Chuan Qi also has the layout of the 16 countries in the Middle East, Southeast Asia, Eastern Europe, Africa and the Americas. In May 21st this year, Guangzhou automobile passenger car International Co., Ltd. was established in Hongkong.

From the overseas layout of the two enterprises, the market of the main attack is consistent. "If China's own brand goes to sea, if it can cooperate in supply chain, channel and after sales, it can reduce risk and form a resultant force, and it is also an improvement to Chinese brand." Xu Haidong said.

Similar to the cooperation between Volkswagen Ford and BMW Benz, the cooperation between GAC and SAIC will focus on R & D of new technologies, new products and new business models, especially in the field of "new four modernizations".

Due to the development trend of electrification and intelligent networking, the global automotive industry is undergoing a new round of restructuring. However, in these two key areas, huge human and financial resources are needed. Cooperation is the key word. It includes not only cross-border integration of vehicle giants with Baidu, Ali, HUAWEI and other technology giants, but also the joint and vertical ties between car companies to jointly promote technological progress.

Five years of cooperation

"Relatively speaking, SAIC and GAC have a higher degree of marketization and will have some synergies. In addition, from the joint venture between the two sides, SAIC main US Department (SAIC GM) and German Department (FAW Volkswagen), GAC is mainly Japanese department (GAC TOYOTA and GAC Honda), there is no cross between them, and both of them are also able to develop independently. Zhang Junyi said.

However, from the current cooperation agreement announced by the two sides, the duration of cooperation is 5 years, and the direction of cooperation has been determined, but specific details such as capital, manpower and cooperation projects have not yet been disclosed. Whether the cooperation between the two sides can be specifically landed is whether the two sides form a reasonable and effective cooperation mechanism. In particular, whether the core technology can be fully shared or shared will test the concurrence relationship between the two sides.

In fact, this is not the first comprehensive strategic cooperation between China automobile group. As early as December 2017, the three major automobile central enterprises FAW Group, Dongfeng Motor and Changan automobile signed a strategic cooperation framework agreement, and carried out all-round cooperation in the four major fields, namely, forward-looking technology innovation, automobile full value chain operation, joint sea going "going out" and new business mode.

The cooperation between the three central enterprises is regarded as the formation of the national team. However, judging from the cooperation effect of the three central enterprises, there are two cooperation, one is logistics, the other is travel company, and does not involve the core area of the automobile manufacturing industry.

It can be found that the cooperation between GAC and SAIC has great similarities with the cooperation between the top three auto central enterprises. So, will this be different?

"From the independent R & D capability, SAIC and GAC are stronger than three central enterprises. In addition, due to the higher degree of marketization, cooperation between SAIC and GAC may be able to push forward the feasible projects at the present stage step by step, so as to achieve the effect of marketization. Of course, the key lies in the process of running in, whether the two sides can reach an agreement. A car industry insider said.

It is worth mentioning that this is not the first time Guangzhou automobile has carried out deep strategic cooperation with domestic car companies. As early as 2012, GAC and Chery announced a strategic alliance to collaborate in technology R & D, key parts supply chain, product development, export and other areas to jointly strengthen the autonomous passenger car business. At that time, Chery was in the first tier of China's autonomy, and GAC was just beginning.

However, the difference between GAC and SAIC 7 years ago is that the alliance at this stage is not merely a technical study, but a forward-looking layout for the future trend of the automobile. Moreover, the cooperation between SAIC and GAC is more free choice at the market level, rather than external boost. Of course, what will happen to the two enterprises in the end? What kind of spark will collide and cooperate?

 

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