October 22, 2021

Expansion of production capacity cannot engage in "Great Leap Forward"

Recently, the news that automakers increase their capital and expand production has frequently been reported in newspapers. For example, Toyota is considering a new factory in Tianjin, a northern Chinese port city. This factory will increase Toyota's annual production capacity in China to 1 million. Beiqi's own-brand passenger car technical transformation project has recently started a total investment of 5 billion yuan in Zengcheng, Guangzhou, and the production scale is to produce 100,000 vehicles a year. In addition, the Infiniti domestic project has also settled in Fuyang.

The capacity of the Chinese automobile market is indeed very large, with a population of 1.3 billion and a car ownership of 100 million. This year, the number of cars sold was calculated at 19 million vehicles, and the average number of 10,000 vehicles sold was close to 150 vehicles. While the average number of 10,000 vehicles in Japan was 600, the average 50,000 vehicles sold in the United States was 570, and the average number of people in Germany was 10,000. The sales volume is about 430 cars. Although we do not have a high level of car consumption, we have a large population base and the sales volume has exceeded that of the United States, and it is not a problem that the number of vehicles exceeds the U.S. level. Our 1,000-person car ownership may not exceed the level of Europe, Japan, and the U.S., so China’s 4000- The final auto market size of 50 million vehicles is possible. From this perspective, China's auto market is far from saturated, which is why many large auto brands have made great efforts to expand.

However, from a stage of the development of the automotive industry, the expansion of production capacity has far exceeded the speed of automobile demand, which can be seen from the hot and cold auto market and the stocking of the automobile market this year. According to relevant statistics, at the end of May, the inventory of auto companies was 768,900. Statistics from the National Association of Passenger Cars show that auto inventories have increased year-on-year, from 710,000 units in the same period of last year to 740,000, and the inventory structure has changed. The sedan inventory rose from 243,000 to 338,000. The one-month dealer single store inventory pressure is generally more than 1.2 times the number of many, even up to 3 times, and some single store monthly inventory of up to 400 cars, billions of dollars of financial pressure, will inevitably force it to stop the manufacturers car. UBS Securities' monitoring shows that most of the joint venture brands have an inventory level of nearly two months, while some of their own brands last for up to 80 days.

The pressure on the end market and the rapid expansion of production capacity of automotive OEMs have obviously constituted a very direct and urgent contradiction. According to relevant statistics, by 2015, the total production and sales targets of FAW, SAIC, Dongfeng, Chang'an, GAC, and BAIC will exceed 28 million. The six automakers Chery, Geely, BYD, Great Wall, Brilliance and JAC will independently The total production and sales target of the brand will also reach 12 million vehicles, and the annual output of 40 million vehicles will exceed the current production and sales volume by more than twice. Three years later, in 2015, the domestic automobile production capacity will exceed 40 million vehicles, not including more capacity plans in the expansion of auto companies. The cruel reality is that idle capacity has reached 6 million vehicles last year, and it is estimated that by 2016, idle capacity will increase to 9 million. Therefore, it can be asserted with certainty that if the current automobile expansion plan is implemented in the next 5 or even 10 years, the idle capacity in the future may reach more than 50% of the original sales plan.

The waste of more than half of production capacity for social resources is obviously terrible. Of course, for consumers, the more capacity they have, the cheaper the car price will be, and the more consumers can benefit from overcapacity. But for the entire industry, overcapacity will cause the entire industry to pay a huge price for it. There will be a lot of car brands being forced to marginalize, and the final result is that they will all be shaken out. Some of the strong multinationals will, in this case, conduct low-cost expansion and mergers. This outcome is undoubtedly the greatest destruction for the Chinese auto industry. Countless predecessors of the Chinese automobile industry may suffer a lot of hard work and sweat for decades. Some people predict that for the Chinese auto industry, we are likely to swallow the consequences of today’s excess capacity around 2020.

Judging from the development strategy of an auto company, the expansion of production capacity is normal and necessary. However, the expansion of production capacity cannot engage in a “great leap forward”. With the steady development of the auto market, the 15% “excess margin” of production capacity should be properly reserved for the Chinese auto industry to attack and retreat in the rivers and lakes.

Soundproof Diesel Generator

Soundproof Diesel Generator,Generator Diesel Silent,Diesel Generator

Huayuan Diesel Engine Manufacture Co., Ltd. , http://www.wfdieselgenerator.com