2019 International Forum (TEDA) on Chinese Automotive Industry Development was held in Tianjin Binhai New Area from August 30 to September 1. As a top event of China’s automotive industry, the forum has been held 15 sessions since the year of 2005.
Situation of Automobile Market is not Optimistic
The difference from the previous years is that in this year’s forum, the words such as “drop”, “pressure”, “severe winter”, “cold current” and “suffering” have become the key words in the mouth of experts in the automotive industry.
“Since 2018, China’s economy has been facing a complex and grim situation. As an important part of the national economy, the automobile industry has sustained its growth for 28 consecutive years, ranking first in the world in production and sales for 10 years. Last year, negative growth occurred for the first time, with production and sales falling by 4.2% and 2.8% respectively, compared with the previous year.” Luo Junjie, Deputy Director of Equipment Industry Department, Ministry of Industry and Information Technology, said in the forum.
Yu Kai, chairman of China Automobile Technology Research Center Co., Ltd., said that China’s automobile sales fell by 11.4% from January to July 2019, and that the data in August will not be optimistic. Zhang Xiyong, general manager of Beijing Automobile Group Co., Ltd., also predicted that the automotive industry may experience a negative growth of about 7.5% this year.
Xu Liuping, chairman of China First Automobile Group Co., Ltd., analyzed that apart from the decline of general industry data, there are three aspects drawing people’s special attention: first, the profit of automobile enterprises is declining and inventory is increasing; second, some dealers in the automobile industry chain have already had serious capital problems; third, the growth of New energy vehicles is also confronted with great challenges.
“A series of data show that the challenges facing China’s automotive industry are quite big, and may intensify in the future.” Xu Liuping said.
(picture source: www.mei.net.cn机经网)
4-5 Year Adjustment Period is considered necessary
To properly deal with the challenges, Xu Liuping said that the first thing is to correctly understand the current situation of China’s automobile industry.
“The automotive industry is a strongly cyclical industry. For China’s automotive industry, after 28 years of continuous growth, it is facing challenges; but for the developed countries with a more mature market, it has never been a longer cycle of constant growth than ever.” Xu Liuping believed that the pullback faced by China’s automobile industry is due to the laws and nature of the automobile industry itself.
Zhang Xiyong concluded that the era of the rapid development of China’s automobile industry has come to an end and is entering a new stage of comprehensive adjustment and development.
At the present stage, China’s automobile industry has several characteristics: during the mature period of development, competition tends to be white-hot; during the full opening period, the price depression will continue, and competition pressure will exist for a long time; during the fluctuation period of growth, the risk under adjustment will increase; and during the breakthrough period of technology, the new technology will be ready for development.
“In terms of the foreign enterprises development, it took 4-5 years for Japanese and Korean automobile industry sales to recover from negative growth, and now it gradually showed a trend of fluctuating growth.” Zhang Xiyong believed that China’s automotive industry will also experience a plateau period of 4-5 years, and the opportunities and risks of China’s automotive industry will increase significantly during the adjustment period.
(picture source: www.mei.net.cn机经网)
Dealing with the “Winter” with Technological Innovation
Experts at the meeting believed that the current adjustment of China’s automobile industry may not only be a turning point, but also a new starting point.
“Driven by a new round of scientific and technological revolution and industrial transformation, the automobile industry has gone through more than 100 years so far, and it is now glowing with new vitality, expanding new connotation, and establishing a new ecology and establishing a new pattern. Electricity and intellectualization are and will further change the traditional product form and technological structure, manufacturing process and service mode, industrial chain and value chain, and the consumption mode of automobiles.” Lu Weisheng, Director of the Industrial Development Department of the National Development and Reform Commission, said at the meeting.
Xu Liuping firmly believed that the capacity of China’s automobile industry is the largest in the world, and it will usher in a promising future with China’s economic development and consumption growth. At the same time, the automobile industry reform driven by the technological revolution also brings a new opportunity for the development of Chinese automobile manufacturers and even global automobile manufacturers.
Zhang Xiyong believed that every feature that touches consumers, such as quality performance, driving control, design aesthetics, all of which should return to technology itself to create new product momentum, and that the key is technological upgrading.