·The car market downturn car "diving" to GDP

Housing and automobiles are the leading industries that have driven China's rapid economic growth in the new century. Although the real estate has rebounded recently, the medium- and long-term adjustment cycle has arrived. The changes in population structure and urbanization rate are pushing the real estate industry further. High-speed growth space. The same is true for the automobile industry. The first-tier city purchase restriction measures and the rapid increase in the per capita car ownership of thousands of people in recent years have made the turning point of the growth of the automobile industry approaching. This situation was further verified in the first half of this year. As the general consensus of the industry insiders, low-speed growth in the future may become the new normal.
The changes in the two leading industries have brought about not only the intensification of competition within the industry, but also the impact of many related industries, and ultimately dragged down macroeconomic growth. The automotive industry is still the scent of local government investment, and new automobile production projects are still in progress. Now is the time to consider market demand.
Due to the overall downturn in the auto market, many cities and Chengdu are similar. The cities that have suffered from the impact include Guangzhou, Changchun, Wuhan, Chongqing and other automobile-based industries, as well as Shanghai, Beijing, Tianjin and other automotive industry markets.
On July 29th, three days before the end of the FAW-Volkswagen Chengdu factory holiday, many employees have already traveled back and waited to go to work. “There have been a lot of holidays recently, this time it has been released for 24 days.” FAW-Volkswagen internal staff said.
FAW-Volkswagen is not a special case. The employees of Changan Ford and Shanghai General Motors have more holidays this year than in previous years. The reason is that the overall market of the car is sluggish this year, and most of the car companies have already stopped production. Instead of becoming a stock car, it is better not to produce it.
FAW-Volkswagen's plant in Longquanyi District of Chengdu just completed capacity expansion last year. I am afraid that this year it will not be able to produce 700,000 vehicles at full capacity. Longquanyi District had previously predicted that the target of the automobile manufacturing industry output exceeding 100 billion yuan this year may also be defeated.
“In the regions and cities where the automobile is the pillar industry, the sales of a heavy-duty model car in the market is good, which can greatly affect the local GDP growth and fiscal revenue. It can be seen that the car enterprises are in the local economic development. How important is it.” An insider of a car company in Guangzhou told the 21st Century Business Herald.
Due to the overall downturn in the auto market, many cities and Chengdu are similar. The cities that have suffered from the impact include Guangzhou, Changchun, Wuhan, Chongqing and other automobile-based industries, as well as Shanghai, Beijing, Tianjin and other automotive industry markets.
Car "diving" to GDP
Many first-tier cities have driven two industries in the past, one is real estate and the other is automobiles. After the real estate market slump, the car once became the most stable pillar.
Guangzhou Automobile Toyota (Weibo) factory in Nansha District of Guangzhou, the high-priced SUV model Highlander (participation, picture, inquiry) in its product camp, has a great impact on the economy of the entire Nansha District. “Hanlanda has not sold well for a while, and the Nansha government is more anxious than automakers,” said a person close to the Nansha government.
Shanghai is the largest city in the automobile manufacturing industry. As early as 2013, its annual output value is close to 500 billion yuan, and its GDP is 215.022 billion yuan, accounting for about 23%. Guangzhou, the Guangzhou Automobile Group, has the highest proportion of 25%. In Changchun, where the FAW Group is located, automobile manufacturing accounts for 60% of industrial output.
In the past 10 years, the automobile market has been developing at a high speed. From 2006 to 2013, the national passenger car output increased by an average of 19.39% annually. It began to decline last year, and the output increased by only 10.15%. However, the auto industry is still higher than GDP growth, and it is an important engine for driving GDP.
However, in the first half of this year, car sales suddenly fell to the bottom (except for the period after the global financial crisis in 2008). According to the China Association of Automobile Manufacturers, the world's largest auto market grew by only 1.4% compared with the same period last year. The top ten car companies in the rankings did not complete the sales target. The China Automobile Association even lowered its sales growth forecast for the whole year from 8% to 3%.
The impact of the car on the economy reversed, and it was dragged down by pulling. “There are some cities with a relatively large proportion. The growth rate of the automobile industry is more than 20%, becoming 1% or even lower. It is possible to lower the growth rate of GDP by one or two percentage points.” Peng Yu, Senior Research Fellow, Guangzhou Academy of Social Sciences Say.
According to relevant data cited by local media in Guangzhou, the production of automobile manufacturing industry, the largest pillar industry in Guangzhou, is still in negative growth. The accumulated output value reached 133.4 billion yuan, down 4.5% year-on-year, and the growth rate of industrial enterprises above designated size was 1 percentage point lower.
Sales of “automobile manufacturing giant ships” such as Shanghai Volkswagen and Shanghai GM all fell into low growth, and Shanghai’s secondary industry grew slowly in the first half of the year. According to data released on July 16, Shanghai's GDP grew by 7%, of which the secondary industry only grew by 1.9%, while in the hot car market in 2013, this figure was an increase of 6.1%.
The impact may be global. According to the statistics of the Ministry of Industry and Information Technology, in 2010, automobiles have become a pillar industry in China. The total output value of China's automobile industry in the year was 4.34 trillion yuan, accounting for 6.13% of the total output value of the national economy. The automobile industry has experienced a growth rate that is much higher than GDP growth for four years. The proportion has been much higher than the current data, and the impact on the economy is even greater.
Avoid becoming a "Detroit"
On July 28th, Shenlong Automobile Company issued a message on the WeChat public account, which will set up employees and relatives to “family purchase” and “enjoy the best transaction price at the time, and also support the company's sales”. The performance of Shenlong Automobile in the first half of the year was lower than expected, and the backlog of stocks was serious. It came up with the way to sell cars for all employees.
This is a common phenomenon in the current automobile market. The hardship behind it is that car companies rent parking lots everywhere, put in stock cars, and the inventory of terminal sellers is much higher than the warning line. According to data released by the China Automobile Dealers Association, the inventory warning index for June this year was 64.6%, an increase of 7.3 percentage points from the previous month. Above the warning level.
The initiative of the car companies to reduce production is the only way to expire after the dealers pressure warehouse and price reduction promotions. Car dealers are not easy. "The market is not in good condition. The sales situation is lower than expected, which means that a large amount of funds are being put in the warehouse. Manufacturers require cash on time, banks must pay interest, dealers become less liquid, and they operate. There will be problems.” said a person in charge of a special store in Baiyun District, Guangzhou.
The industry generally believes that there are two direct reasons for the rapid decline of the automobile market: First, a lot of funds have entered the stock market, and the funds in the consumer market have been taken away. Second, the auto market has entered its own adjustment period, and it has also caught up with the policy restrictions such as restrictions on purchases in first- and second-tier cities.
The latter is considered to be the root cause. According to data from the Guangzhou Development and Reform Commission, commodity sales are still low. In the first half of the year, sales growth of automotive products slowed down, and sales of automotive products above designated size increased by 17.5%, down 7.5 percentage points from the first quarter.
The vehicle market has shrunk and has extended to the upstream auto parts market. The purchase volume of the whole vehicle manufacturers has decreased, especially the Chinese-funded parts and components enterprises whose products are concentrated in the middle and low-end, and the market has been further squeezed by foreign capital. The automakers have to stop production on a large scale, and the parts and components companies must bear the inventory pressure.
“Inventory pressure is getting bigger and bigger, and at most, the pressure warehouse is more than 800 million.” A spare parts supplier who did not want to be named said that this was the time when it entered the parts for more than a decade. In the parts market, 20% of foreign companies control 70% of the market.
The biggest problem is not in the industrial chain. Because the automobile industry chain is long, it can be “more than one month in a row”. The establishment of a complete vehicle enterprise may bring hundreds of parts and components supporting enterprises. The automobile project has always been the fragrance of local government investment.
The formation of the urban automobile industry group is very tempting, and Guangzhou, Wuhan, and Changchun have all proposed to become "Oriental Detroit." In 2014, after the completion of major vehicle projects such as Dongfeng Renault, Wuhan Development Zone is expected to have a production capacity of 2.3 million vehicles, and the output value of the automobile industry will exceed 300 billion yuan. The output value of Wuhan's automobile industry is expected to reach 700 billion yuan.
In addition, Chongqing also expects that the future automobile industry group output value will reach 600 billion yuan; Changchun is expected to reach 500 billion yuan; Tianjin is expected to reach 200 billion yuan.
However, overcapacity in the automotive industry is already a consensus. According to data released by PricewaterhouseCoopers, the proportion of China's auto overcapacity in 2012 has reached 28.5%. However, there have been many new projects in various places in the past two years, and the enthusiasm of car companies and local governments for capacity expansion has not decreased.
Recently, after a high-level investigation by the automobile enterprise group, the total production capacity of China's automobiles reached 40 million in 2015, which is twice the expected sales volume in the whole year, and the capacity utilization rate is less than 80%. Among them, the overall capacity utilization rate of self-owned brands is lower, and 15 of the 19 independent brands in the sample survey have a capacity utilization rate lower than 50%.
Automobile projects may bring fiscal revenue, employment, and economic growth. However, the Chinese auto market may say goodbye to the high growth period. The huge production capacity may bring a burden to many local governments. Detroit, which went bankrupt after the financial crisis, is an example.

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