Global Automotive Market Moves East China's Automotive Companies to Accelerate Development Opportunities

The automobile, a modern vehicle invented by the German Carl Bentz, was gradually developed in the western countries at the end of the 19th century to form an industrialization, and quickly replaced the carriage as a major modern means of transportation in Western countries. With the advancement of society and the development of economy in the countries of the modern world, automobiles have become indispensable tools for people's daily life. The rise of western developed countries has made the automobile market grow rapidly in the western world. Before the 21st century, although the automobile industry in Japan and South Korea has also developed, in 1980 Japan surpassed the United States to become the world’s top automobile producer. The world auto market is still concentrated in Western countries, Europe and the United States. Japan’s auto exports are also dominated by European and American markets. With the rapid development of developing countries around the world, especially the large developing countries represented by China and India in the 21st century, their demand for automobiles has grown rapidly and the scale of the auto market has continued to expand. In 2005, China’s auto market surpassed Japan to become the world’s second largest auto market after the United States. According to the forecast, India may become the world’s fifth-largest auto market in 2013, and the trend of “moving eastward” in the world auto market is very clear. . The unexpected global financial crisis in 2008 swept the world. Under this crisis, the process of the eastward shift of the world automobile market has accelerated.

The potential of the "Oriental Market" has been highlighted by the acceleration of the financial crisis to the eastward process
In 2008, the international financial crisis triggered by the issue of US subprime mortgages broke out and spread rapidly on a global scale. The economies of Western developed countries have been hit harder, and its auto market itself is in a mature period. The period of high-speed growth of the market has passed. The market demand fell, and the market entered a recession under the influence of the financial crisis. Although the "Oriental Market" has not been spared, over time, the difference with the "Western market" has started to show itself.

In the first quarter of 2009, the production and sales of Chinese automobiles were 2,567,600 and 2,668,800, which were an increase of 1.91% and 3.88% year-on-year, respectively, ending the downward trend of sales volume in the fourth quarter of 2008, with a slight increase in both production and sales; India’s overall sales volume in March 2009 In the same period of 2008, it rose by 1.09%, from 884,000 units in 2008 to 893,000 units in 2009, of which sales of cars were 129,000 units, a slight increase compared to the same period in 2008. In contrast, in the Western automotive market, UK commercial vehicle registrations registered a significant decline in March 2009, a year-on-year decrease of 42.1% to 34,000 vehicles, and passenger vehicle sales decreased by 30%. The German Automotive Industry Association released data for the first quarter of 2009 in Germany. The production and export of automobiles were 1,003,800 and 713,700 vehicles respectively, down 33% and 38% respectively year-on-year; the data released by major US auto makers in March showed that US vehicle sales continued to decline sharply. The United States sold less than 9 million cars and light trucks at an annual rate in March; it was 9.12 million vehicles in February, the lowest level since 1981. At the same time, Japan’s sales in March 2009 fell by 32% to 32,370,700; sales in the Japanese automobile market fell by 16% to 2.89 million units in the fiscal year 2008-09; Korea’s domestic automobile production in the first quarter of 2009 was 68.6221 Ten thousand vehicles, a decrease of 32.1% over the same period last year. Of which, domestic sales were 257,221 units, a year-on-year decrease of 14.9%; exports were 436,580 units, a decrease of 36.6% year-on-year. It can thus be seen that the "Oriental Market" has shown strong resistance to pressure under the influence of the financial crisis. The "Oriental Market" here actually refers to the developing countries represented by China and India.

China and India have certain similarities in the automotive market. They are also developing large populations. The national economy has grown rapidly in recent years, and the per capita car ownership is still at a relatively low level. Therefore, the implied automobile demand potential is very large. With the improvement of people’s living standards and per capita income, the potential market demand has become a condition for conversion to actual consumption. Although affected by the financial crisis for a time, the prospects of the automobile market in China and India are very promising in the long run. The shift in the focus of the auto market has become a general trend. From another perspective, the impact of the financial crisis has accelerated the process of the eastward shift of the world automobile market. The two major US car companies have reached the edge of bankruptcy. The days of auto companies in the world are not easy; the world's auto giants have come to China and India. To seek cooperation and shift the future development focus to the "Oriental Market" for long-term development, this is indeed an opportunity for China's auto industry to achieve leapfrog development.
Opportunity Comes to China's Auto Companies Face Multiple Choices

China's auto market has become one of the focuses of the world's auto companies. Many foreign automakers have come to China to seek cooperation and the initiative of Chinese auto companies has been significantly enhanced. In addition, the fuse of the financial crisis directly triggered the bankruptcy crisis of some auto giants in the world. They are seeking to sell part of their assets or their brands for self-help. This will be a cross-border merger and acquisition for Chinese auto companies and will reinforce shortcomings in the corporate value chain. Gain good opportunities to learn from foreign advanced technologies or enhance its brand awareness and influence.

At present, some companies have taken action. On March 27, Australia local time, Geely Automobile chief Li Shufu officially signed a contract in New South Wales and will be the automatic power transmission system manufacturer's international power system, or "DSI" for short. Through the acquisition of DSI, Geely has further enriched its product line based on the independent intellectual property rights of the existing small torque automatic transmission, strengthened the research and development and production capabilities of Geely's automatic transmission, and has become the most technologically advanced enterprise in the field of domestic transmission gearboxes. In addition, as GM and Chrysler are on the verge of bankruptcy, some of their assets have also become objects of sale; the downturn in the international automotive market has caused many international vehicle and component manufacturers to face difficulties. These are all overseas acquisitions for domestic automakers. Provide opportunities. In addition, the joint ventures and cooperation also showed a fiery scene. In 2008, the joint venture between Beiqi Foton and Daimler adopted a brand-new strategic cooperation. It was no longer a "market-for-technology" cooperation. It was a comprehensive expansion of the Futian Auman brand in the global market. This aspect shows that the importance of the international auto giants to the Chinese auto market has been continuously increasing, and the cooperation with Chinese auto companies has become more important. On the other hand, it also shows that Chinese auto companies have increased their voice in cooperation with foreign auto companies. At present, China National Heavy Duty Truck Corporation also issued an announcement that the company is discussing with an independent third party about possible long-term strategic cooperation. Under the current environment, China’s auto companies are faced with multiple choices in their development. How to seek advantages and avoid disadvantages is the primary issue in choosing the development path that suits them.

Opportunity and risk coexist strategy and details determine success or failure

Regardless of whether or not the opportunity arises in all walks of life, the opportunity is always accompanied by the same amount of risk. For Chinese auto companies, the risks are self-evident while facing leap-forward development opportunities. The experience and lessons of SAIC and Ssangyong events are worthy of reference by other car companies. Whether it is mergers and acquisitions or joint ventures and cooperation, the company’s definition of its own development strategy and its control over the details of the implementation process are the keys to success or failure. The formulation of the strategy is a long-term vision for the development of the enterprise. Each behavior of the enterprise is as large as mergers, reorganizations, joint ventures, and other major investment decision-making actions. The allocation of human resources and the formulation of marketing strategies are closely related to the overall development strategy of the enterprise. Together, they should all serve the company's development strategy. It can be said that the strategy runs through the company's behavior. The implementation of each of these steps, even the specific attention to each one of them, is the control of the details. The success of each detail has been accumulated to create strategic success. Under the current background of the times, China’s auto companies should combine long-term strategic vision with attention to every detail to achieve their own leap-forward development.