[China & SEA][China]Gradual recovery!
Liu Jin ,Economic Daily
Affected by the epidemic and other factors, China's auto exports have slowed since March. The latest data from the General Administration of Customs shows that in April, China's auto exports of 171,000 units, up 10.3% year-on-year, compared to the high growth rate of 57.2% in the first three months, a significant slowdown.
Industry insiders believe that, as enterprises gradually resume work and production, the supply chain of the industry chain tends to stabilize and the overseas market for Chinese automobiles is gradually returning to normal levels.
Export slowdown due to multiple factors
In 2021, China's auto exports exceeded 2 million units, leaping to become the world's third largest auto exporter.
Entering 2022, China's auto exports hit a single-month high of 231,000 units in January, an 87.7 percent year-on-year increase. However, data released by the General Administration of Customs showed that China exported 200,000 vehicles in March, up 33.6% year-on-year, and 171,000 vehicles in April, up 10.3% year-on-year, with the increase narrowing for two consecutive months.
The main reason for the slowdown in exports was the disruption of the supply chain of the industry chain due to the multi-point distribution of the epidemic. since March, many vehicle plants and component manufacturers in Shanghai and Changchun, two important domestic automobile production bases, reduced or suspended production. For example, FAW Group's five major vehicle plants in Changchun, BMW Brilliance's plant in Shenyang, as well as a number of SAIC Group's Shanghai plants and Tesla's Shanghai plant, all announced production suspensions.
Cui Dongshu, secretary-general of the National Passenger Vehicle Market Information Joint Committee, said that the impact of the epidemic, the shortage of imported parts, domestic parts system suppliers in the Yangtze River Delta region can not supply in a timely manner, and some even completely stop work and transport, coupled with reduced logistics efficiency and uncontrollable transport time, resulting in poor automobile production problems. In April, the production of the five main vehicle enterprises in the Shanghai region dropped by 75% compared to March, while the production of the main joint venture vehicle enterprises in the Changchun region dropped by 54% and the overall production of other regions dropped by 38%.
Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, also said that since April, the supply chain of the automotive industry has experienced a severe test, with some enterprises shutting down production, logistics and transportation being greatly hindered, and production and supply capacity plummeting.
In addition to production and logistics pressures, the complex international environment has also brought impact to auto exports. The Internationalization Research Team of the Automotive Industry Policy Research Department of CAC Political Research points out that the current complex and volatile situation in Russia and Ukraine and the increasing Western sanctions have led to many problems such as delayed logistics, price increases of raw materials and cut-offs of parts and components, which have had an impact on the export of domestic automotive products and the development of the industry chain.
New energy still has a strong edge
On May 24, an iron-sea intermodal train carrying 24 complete sets of accessories for new energy vehicles left the Liuzhou South Logistics Centre in Guangxi, and was loaded onto a ship via Qinzhou Port and shipped to Jakarta, Indonesia.
Since last year, China's auto exports have increased greatly, especially the export of new energy vehicles. 2021, China's new energy vehicle exports 588,000 units, this year's exports show a continued strong trend. Customs data show that in the first quarter, exports of new energy vehicles reached 179,700 units, up 278.7% year-on-year; exports amounted to US$4.621 billion, up 252.9% year-on-year. In 2021, China's exports of new energy vehicles to Europe will grow by more than 200% and to North America by more than 100%.
China's new energy vehicles go global, not only in terms of sales and service, but also in terms of global layout such as overseas factory construction. The person in charge of BYD told reporters that up to now, BYD has six overseas production bases and more than 30 industrial parks around the world.
Zhang Yongwei, Vice Chairman and Secretary General of the China Electric Vehicle Council of 100, said that the explosive growth of new energy vehicle exports is the result of a combination of factors. Firstly, China attaches great importance to coordinating the enthusiasm of traditional automobile enterprises and electric vehicle enterprises, and fully balances the relationship between the government and the market, which greatly promotes the synergy and cooperation of the development of the electric vehicle industry in different fields such as management departments, scientific research and energy. Secondly, based on the proper handling of various technical routes, the independent brand car enterprises have not only achieved breakthroughs in key electric vehicle technologies such as power batteries, but also successfully achieved "overtaking" in the field of high-grade autonomous driving with the advantages of fast product development and close contact with users by domestic smart chip enterprises. Once again, thanks to the timely response of major automobile companies to the diverse demands of consumers, Chinese brands have focused on different segments to meet the diversified needs of consumers for electric vehicles, and developed a variety of diversified and multi-functional products.
Stabilisation and quality improvement while insisting on "going global"
"In the future Changan's sales, overseas market share has to exceed 30%." Zhu Huarong, chairman of Changan Automobile, expressed such determination. In the first four months of this year, Changan's export sales accounted for 13 per cent of total production, compared to 5 per cent last year.
Cui Dongshu said that the auto industry chain is gradually changing from a "fire-fighting" emergency response to a normalised and highly resilient supply chain management. Confidence in the supply chain should be rebuilt, policy expectations should be stabilised, and a stronger information sharing system should be established, so that China's automotive supply chain system can maintain its core position in the world's automotive industry and give Chinese cars a greater share in the world.
The mastery of core technologies has added to the bottom line for Chinese automobiles to "go global". In terms of new energy vehicle components, the current drive motor technology of Chinese car enterprises is basically synchronized with foreign levels, and most of them are close to the international advanced level; motor control has also basically mastered the key technology of core components; in terms of power battery, Chinese enterprises are at the forefront.
New energy vehicles are a major opportunity for China to move towards a strong automotive industry. Cui Dongshu believes that domestic automotive enterprises should strengthen the resilience of their supply chains and improve their strategic planning, management and execution capabilities; establish effective risk monitoring capabilities in the existing supply chain system to quickly and accurately assess the impact of major risks on enterprise sales and profits and formulate corresponding contingency measures; and improve the corresponding core capabilities, including supply chain strategy design, dynamic integrated supply chain planning, end-to-end supply chain Data transparency and collaboration, and operational model optimisation.
The "going global" of automobiles should also ensure stability and improve quality. Zhang Jianping, director of the Regional Economic Cooperation Research Centre of the Ministry of Commerce, said that in an open and competitive environment, the competitiveness of the automotive industry will also improve. The auto industry should further enhance its brand reputation, improve its technology and product added value, and strengthen its independent innovation capability. It should be noted that in the process of expanding overseas markets, automotive enterprises should fully combine investment and trade and make good use of domestic foreign trade policies, especially in some parts and components areas, with the full support of the policies of the high-standard FTAs agreed between China and some countries and regions.