Shulou(Shulou.com)11/24 Report--

The "knockout" of the car market is still going on.

After the layoff storm, GAC-Mitsubishi, which has stopped production for seven months, came out with new news.

Mitsubishi Motors decided to stop producing cars in China, mainly because its sales in China remain sluggish because of the popularity of electric cars and the rise of local brands, according to the Nikkei News. At present, Mitsubishi Motors has begun negotiations with GAC GROUP, a partner in China, on the eventual withdrawal.

Joint venture brands are facing comprehensive challenges caused by the rise of China's own brands.

In 2022, the share of independent brands in the fuel vehicle market remained at 30%, which was basically close to that of previous years, but the share of independent brands of electric vehicles reached 84.7%. According to the latest data from che Bai.com, the share of independent brands of electric vehicles reached 85.7% in September 2023.

According to the analysis of all kinds of market attributes, the overall share of independent brands has reached 45.3% in 2022 from 33% in 2020 to 39% in 2021. At this year's China Electric vehicle hundred people Forum (2023), Xu Changming, deputy director of the State Information Center, predicted that independent brands would experience a "qualitative change" this year or next, meaning that the overall market share would exceed 50 per cent.

Around this phenomenon, this paper mainly answers three questions:

1. Why did Mitsubishi lose to China?

2. What are the changes faced by joint venture car companies in China?

3. How should we view the current market difficulties faced by joint venture vehicles?

1. "domestic Godfather" Mitsubishi is one of the largest engine suppliers in China. Early brilliance China, son of Chery Oriental, Chirui Tiger Series, Great Wall Harvard Series, BYD F3 and other brands and products have carried Mitsubishi engines. To some extent, Mitsubishi contributed to the early development of Chinese brands.

The long board in technology has made Mitsubishi popular. As the first foreign car company to enter China, Mitsubishi has cooperated with a number of companies to build complete vehicle factories and supporting factories for producing engines and gearboxes in China since 27 years ago.

In 1996, Mitsubishi cooperated with Hunan Changfeng Automobile. Based on Changfeng's military background, the joint venture early introduced Pajero V31 technology, giving birth to Cheetah SUV.

In 2012, Mitsubishi and domestic GAC GROUP jointly formed GAC-Mitsubishi, which is 50 per cent owned by GAC GROUP and Mitsubishi Motor. In 2016, GAC-Mitsubishi made the third generation of Outlander, which achieved good market sales. In 2018, Mitsubishi Guang Olander can sell more than 100000 cars a year, and almost one car supports GAC-Mitsubishi's annual sales.

However, by 2022, only Orande will be left in GAC-Mitsubishi fuel cars.

From 2020 to 2022, GAC-Mitsubishi sold 75000 vehicles, 66000 vehicles and 33600 vehicles, respectively, according to official figures. At the same time, the monthly sales of individual models of some local brands have exceeded the annual sales of GAC-Mitsubishi, which can be imagined the dilemma faced by Mitsubishi.

In 2023, GAC-Mitsubishi's sales performance is even worse. From January to February, the cumulative sales were only 1498 vehicles.

Olande, Cui Dongshu, secretary-general of the GAC-Mitsubishi passenger car Market Information Joint meeting, said that Mitsubishi Motors has a good reputation and strength in overseas markets, but it has not performed well in the Chinese market in recent years, mainly due to insufficient investment in technology and products.

GAC-Mitsubishi has launched two new energy models, both from GAC MOTOR and GAC-Ean. In 2018, GAC-Mitsubishi launched Qizhi PHEV, which is actually a modification of GAC MOTOR GS4; in 2022, GAC-Mitsubishi launched its first pure electric model, the Artuco, which comes from the shell replacement of GAC EAN AION V.

It is only this year that Mitsubishi is determined to transform itself into electrification.

In March this year, Mitsubishi Motors announced that it would invest 1.4 trillion yen in research and development of plug-in and pure electric models by 2030, and nearly 10 new electric vehicles are expected to be launched in the next five years. About 200 billion yen will be invested to step up efforts to ensure on-board batteries.

However, in the long-term accumulation of the Chinese market is not easy to solve the situation, Mitsubishi Motors began to turn to Southeast Asia, plans to produce small pure electric cars in Indonesia.

2. Why do you "not accept the soil and water"? "the big waves rise and fall and see life and death one by one" has become a portrayal of the new era of automobiles, and the decline of Mitsubishi is only a microcosm of the plight of many joint venture car companies.

Retail sales of joint venture brands totaled 4.8 million vehicles in the first half of the year, down 4 per cent from a year earlier, according to the Federation. The performance of Japanese cars is particularly weak, with retail sales of 1.9543 million Japanese cars from January to July this year, accounting for 17.3% of the Chinese market, down 17.1% from a year earlier, second only to French cars.

German, American and Korean car companies are also not immune. The retail share of German brands was 20.2% in September, while the market share of American brands fell 3.3%, according to the Federation of passengers. SAIC GM, which once dominated the country, is also in decline. As an American joint venture with Chevrolet, Buick and Cadillac brands, its cumulative sales in the first half of this year were only 412800, down 11.8% from a year earlier, ranking seventh.

Beijing Hyundai has been revealed to be selling its Chongqing plant because of a collapse in sales, while Hyundai's sales in China have shrunk 77 per cent in six years. Similarly, Kia's sales in China did not pick up from January to August 2023, at just 36500 vehicles.

The pattern of China's automobile market is often compared to such a "pagoda". At the bottom are Korean cars, followed by French cars, American cars, German cars and Japanese cars. Although German and Japanese cars were once seen as unshakable, they now face challenges, reflecting the profound changes that are taking place in the world's auto industry.

This year is the 40th year since the beginning of the Sino-foreign joint venture model for automobiles. Why did the joint venture car companies begin to "disagree"?

First of all, it is mainly due to the fierce competition in the market.

For quite a long time, the Chinese auto market has been regarded as a hot spot for global automakers. As long as the successful models of the world are introduced into China, they can "lie down and win".

But after 2018, with the development of the market and the rise of new energy vehicles, the problem of joint venture vehicles began to emerge. On the one hand, the independent innovation capability of joint venture car enterprises is relatively weak, and most of their technologies are acquired through introduction. In the field of new energy vehicles, domestic enterprises have made many major breakthroughs and innovations, forming a series of independent technologies and core competitiveness. However, the joint venture car enterprises' technological innovation in the field of new energy lags behind, thus gradually losing their market competitiveness.

Secondly, the joint venture car enterprises are also relatively conservative in terms of market expansion. In contrast, domestic new energy vehicle companies actively explore the market, quickly win market share with more competitive products and services, and achieve rapid growth. Joint venture car companies lack the ability to fight back in the face of the comprehensive expansion and market impact of new energy vehicle companies.

Under the fierce competition, in the field of electric vehicles, the offensive and defensive situation of joint venture and independent car companies is changing. According to car online data, in the past September, China's new energy vehicle sales TOP9, with the exception of Tesla, other models are domestic brands. In addition, BYD's monthly sales have exceeded that of North and South Volkswagen for many months in a row, which would have been unthinkable two years ago.

With the advent of the post-joint venture era, an Qingheng, director of the China Automotive Industry Advisory Committee, said at the first Global Automobile New Ecological Development Conference held by the China Electric vehicle Association: "the development of electrification and intelligence has put an end to the automobile development model of changing market for technology for many years. With the emergence of various forms of Sino-foreign joint ventures and cooperation, the status of China's automobile industry is also greatly improved. Recently, many Sino-foreign joint ventures have emerged in new ways, including Volkswagen's cooperation with Horizon, and other companies are also exploring similar joint ventures. These new situations are not a joint venture in which China traded the market for its technology in the past, but now foreign investors have their eyes on the Chinese market and Chinese technology at the same time. This is a big change. "

And now the joint venture car companies are ushering in an era of polarization. On the one hand, foreign car companies such as Volkswagen, BMW and Mercedes-Benz continue to add size to China; on the other hand, a number of joint ventures have left or are about to leave China.

Of course, the joint venture car company is not without efforts. At the beginning of 2023, the joint venture brand engaged in a price war and accelerated the launch of new energy models, but it seemed to have little effect from the market reaction.

In this context, Chinese car companies begin to export reverse technology, and new joint venture and cooperation models are constantly coming out.

Volkswagen CEO Oliver Bloom (Oliver Blume) admits that Audi lags behind its competitors and that software is the culprit. In October 2022, Volkswagen Group announced that it would form a joint venture with Horizon through its CARIAD company to develop self-driving assistance systems and self-driving solutions. In July 2023, SAIC and Audi signed a memorandum of understanding that the two sides will combine their respective advantages to speed up the development of new SAIC Audi electric models to meet the needs of Chinese customers for high-end electric smart cars.

On July 26 this year, Volkswagen Group and Xiaopeng Motor reached a technical cooperation agreement, Volkswagen will invest 700 million US dollars in Xiaopeng to jointly develop electric vehicles. In the future, the two sides plan to jointly develop two Volkswagen brand electric models for China's medium-sized car market. The two new cars, which belong exclusively to the Chinese market, will complement the product portfolio based on the MEB platform and plan to enter the market in 2026.

Under the background of electrification, intelligence and digitalization, joint venture car enterprises are generally facing the pain of transformation and transformation, and the differentiation will be intensified in the future, and the post-joint venture era will come.

Zhang Yongwei, vice chairman and secretary-general of the China Electric vehicle Association, also pointed out that in the era of traditional fuel vehicles, the supply chain established by joint ventures in China was relatively closed, and foreign-funded parts companies accounted for more than 80% of the first-tier suppliers of some joint ventures. However, with the acceleration of electric and intelligent reform, the status of China's supply chain in the industrial chain is rising, and it is also speeding up the construction of a dual-cycle pattern facing both at home and abroad.

It has become a consensus in the industry that there is not much time left for joint venture cars. Jia Jianxu, general manager of SAIC Volkswagen, judged that there were only two years left for the joint venture.

China International Capital Corporation research newspaper believes that the technical barriers established by joint venture car enterprises in the field of fuel vehicles have been gradually weakened, the technical capability, product power, and brand awareness in the field of electric vehicles have not yet been formed, and the best window for electrification transformation is narrowing day by day. In the future, Chinese joint venture car companies will face three ways out:

The first is firm transformation and localization; the second is to cooperate with Chinese car companies like Volkswagen to make up for the deficiency; the third is to withdraw from the Chinese market.

However, on the whole, the comprehensive strength of joint venture car enterprises is still not to be underestimated, and independent brands still need to make efforts to catch up with or surpass joint venture brands.

"after more joint venture brands launch pure electric models, the competition in the new energy vehicle market will be more fierce, which is an inevitable phenomenon." An Qingheng, director of the China Automotive Industry Advisory Committee, said that at present, while China's new energy vehicle market is growing rapidly, the market competition is also more fierce, and the entry of more joint venture brands will undoubtedly aggravate the market competition. In particular, Toyota, Nissan and other traditional car companies represented by Japanese brands, an Qingheng pointed out: "these traditional car companies have the foundation and strength, and once they are fully developed, they will become a force to be reckoned with."

4, the end now, GAC-Mitsubishi "stranded" has become a foregone conclusion, the next exit of the car company is difficult to predict. However, a cruel fact is that the new energy battle of car companies in the Chinese market is not only a matter of winning or losing sales, but also directly affects the survival fate of brands. As long as car companies are still playing games in the Chinese market, the battle for survival will be more intense. The exit of weak joint ventures is a foregone conclusion.

In this regard, Zhang Yongwei, vice chairman and secretary-general of the China Electric vehicle Association of 100, believes that intelligent cars are the key to determining the outcome of the competition. "without the development of intelligence, the first-mover advantage of electrification may not be preserved. The two modernizations are synchronized, and it is even necessary to accelerate the transition to intelligence in order to remain in the lead."

[full text reference]

[1] "GAC-Mitsubishi stopped production? Big price reduction but the effect is not good, joint venture cars on earth where to go? "the vision of Jiang Han

[2] "GAC-Mitsubishi announced that the once-glorious Mitsubishi Motors will no longer be made in China", Qianjiang Evening News

[3] depth of automobile industry: electric and intelligent leading independently, joint venture automobile brand faces many challenges in the new development stage, Debang Securities

This article comes from the official account of Wechat: che Bai think Tank (ID:EV100_Plus). Author: Zhou Shuangjiang.

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