SAIC-GM-Wuling's micro-vehicle giant "Longhudou"

Concerned about the location of the SAIC-GM-Wuling 3rd Base, the site was finalized and Chongqing was finalized.

A few days ago, SAIC-GM-Wuling signed a formal contract with Chongqing’s Liangjiang New District to build a third production base in Chongqing. The Chongqing base of SAIC-GM-Wuling will start construction in early 2013. It is expected to be completed and put into operation in 2015. After completion, it will have a production capacity of 400,000 vehicles and 400,000 engines.

According to industry insiders, apart from expanding the production capacity for SAIC-GM-Wuling, the new base is more significant. SAIC-GM-Wulings's fall in Chongqing will undoubtedly have a great impact on Chongqing-based Changan Automobile. Under such circumstances, how will Changan respond?

Laozi Chongqing

According to the relevant plans of Chongqing No. 3 Base, SAIC-GM-Wuling will invest RMB 6.6 billion in the first phase to build 400,000 complete vehicles and 400,000 engine production capacity, which will be used for the production of micro-vehicle products.

"As of October 2012, SAIC-GM-Wuling's sales have reached 1.21 million, and it is expected to reach 1.4 million units this year," said Shenyang, general manager of SAIC-GM-Wuling, in an interview.

From the sales of SAIC-GM-Wuling’s existing sales and future production and sales plans, it is indeed imminent to expand production capacity. It is understood that the current production capacity of the SAIC-GM-Wuling Liuzhou base is 800,000 units. After the second phase of the expansion of the Qingdao plant, the total vehicle production capacity has been expanded to 500,000 vehicles. Therefore, its overall capacity is currently 1.3 million vehicles. As early as 2011, SAIC-GM-Wuling achieved sales volume of 1.3 million units. This year's figure will obviously continue to increase. The problem of its capacity shortage is self-evident.

According to the "12th Five-Year Plan" of SAIC-GM-Wuling, it will achieve a production and sales scale of 2 million vehicles in 2015. According to report, SAIC-GM-Wuling will add a 400,000-unit SAIC-GM-Wuling factory to the SAIC-GM-Wuling plant. Even so, SAIC-GM-Wuling is still facing 300,000 vehicles. Capacity gap. According to the relevant plan for the Chongqing Third Base, SAIC-GM-Wuling will invest 6.6 billion yuan in the first phase to build 400,000 complete vehicles and 400,000 engine production capacity, which will be used for the production of microcar products in the first phase.

In fact, as early as 2011, SAIC-GM-Wuling reported that it was planning to establish a third base in the central and western regions. Since then, Chengdu, Chongqing, Wuhan and other places have successively reported on negotiations with SAIC-GM-Wuling.

“Chongqing was ultimately chosen because it will help us to form the production pattern of linkage between north and south (Liuzhou, Guangxi and Qingdao, Shandong) and the Midwest (Chongqing). From the aspects of human cost, resource advantages, service and supporting radius, etc., Chongqing The city has outstanding advantages," said Yuan Zhijun, Deputy General Manager of SAIC-GM-Wuling. Based on the plan of Chongqing Liangjiang New District to “build a fishbone 100 billion automobile city”, Chongqing has attracted nearly dozens of domestic and foreign auto supporting enterprises, such as Hankook Tire, Honeywell, Textron and Magna.

In fact, in addition to the geographical advantages of Chongqing, SAIC-GM-Wuling finally chose to fall to Chongqing and Huang Qifan, mayor of Chongqing, has an inseparable relationship. It is understood that Huang Qifan had served as the director of the Economic Commission of the Shanghai Municipality in charge of industry. After his transfer to Chongqing in 2001, the relationship with Shanghai state-funded enterprises such as SAIC was still quite close. In the siting negotiations of SAIC-GM-Wuling, Huang Qifan's matchmaking eventually led the balance to Chongqing.
“This year is the tenth year after SAIC-GM-Wuling’s three-way joint venture. Since 2006, SAIC-GM-Wuling firmly holds the number one position in the mini-vehicle market, and has produced more than one million units for 4 years in a row since 2009. For the rapidly developing Chongqing automobile industry, SAIC-GM-Wuling will also play a significant role in promoting it." At the signing ceremony, Chen Hong, President of SAIC Motor Co., Ltd., did not forget to "pump up" for both parties.

Dragon and Tiger Debate

After being replaced by SAIC-GM-Wuling in 2006, Changan has been seeking counter-offensive opportunities. Now, Wuling has gone deep into Chang'an's base camp, which will have a huge impact on the future sales and ranking of Changan Microbus.

Although SAIC-GM-Wuling has repeatedly stated that the third base is located in Chongqing in order to comply with the "small vehicle cluster advantage", but the industry generally believes that this time SAIC-GM-Wuling's behavior in the hinterland of Chang'an will inevitably lead to a confrontation with Chang'an.

"From the perspective of the competitive situation in the automotive market, no matter where companies set up factories, they will theoretically compete with local companies in a positive way," said Jiang Aiqun, a spokesperson for Chang'an Automobile. "The SAIC-GM-Wuling has set up a factory in Chongqing, which is certainly positive for Changan." It is a challenge, but we feel it is also a driving force."

At present, the domestic micro-vehicle market has gradually evolved into a competition between SAIC-GM-Wuling and Changan Auto’s two “oligopolists”. According to statistics from the China Automobile Association, SAIC-GM-Wuling achieved overall sales of 1.3 million vehicles in 2011, which accounted for 45.6% of the overall size of the mini-vehicle market; over the same period, the sales volume of micro-cars of Changan Automobile was 800,000 units. , The market share exceeded 25%. These two companies accounted for more than 70% of the mini-vehicle market share. Dongfeng, FAW and BAIC and other companies that produce micro-vehicles accounted for only 30% of the total.

As for Changan and SAIC-GM-Wuling, both have also been winning over the sales ranking in recent years. Before 2006, the top spot of China's mini-vehicle market was occupied by Changan Automobile. Since 2006, SAIC-GM-Wuling has surpassed Chang'an and has maintained its position as the mini vehicle sales champion. “Because Changan Heshili was vigorously developing the car business of the joint venture, its position in the mini vehicle sector was replaced by SAIC-GM-Wuling, but after that, Changan never gave up hope of returning to the top, but because Later, Changan focused on mergers and reorganizations. Its counter-offensive effect on micro-vehicles is not obvious.” Jia Xinguang, a well-known analyst in the automobile industry, said: “Now, SAIC-GM-Wuling has gone deep into Chang’an’s base camp for layout. The impact on the future sales and ranking of Changan Microcars is still huge."

According to the reporter’s understanding, in the “car to the countryside” subsidy policy implemented in Chongqing, the scope of subsidy is only for micro-vehicles produced within the scope of Chongqing. This has always been a great support for Chang’an, and Chang’an is in the micro-region of Chongqing. Car sales have been ahead of SAIC-GM-Wuling and accounted for over 80% of the Chongqing market. “And with SAIC-GM-Wuling’s future production in Chongqing, Wuling Micro-vehicles, which also enjoy financial subsidies, will also increase their market competitiveness. While the market size is limited, Wuling’s growth in micro-vehicle sales in Chongqing is bound to divert some of Chang’an’s micro Car sales, said Jia Xinguang. It is understood that SAIC-GM-Wuling will expand its channel layout in the entire central and western regions after falling behind Chongqing. The central and western regions are now the main sphere of influence of Changan Automobile. In addition, according to an executive from an auto parts company in Chongqing, after SAIC-GM-Wuling enters Chongqing, it will increase the bargaining power of parts suppliers and Chang’an in Chongqing, which will enable Changan Automobile to face future procurement systems and cost control. new challenge.

In fact, before SAIC-GM-Wuling, BAIC and Dongfeng have already achieved a production base in Chongqing, and in the eyes of Changan Automobile, they may be more concerned with the competition with SAIC-GM-Wuling. “Now, the market share of Changan Auto really lags behind SAIC-GM-Wuling, which is related to our ongoing transformation and upgrading of some product structures. Now Changan’s net profit in micro-vehicles is increasing, and we’ll continue to introduce it in the future. New products to improve profitability." Jiang Aiqun said.

But unavoidable is that whether it is Chang'an or SAIC-GM-Wuling, the next thing it needs to face is a not so good market. According to statistics from the China Automobile Association, in 2011, the total sales volume of mini-vehicles nationwide was 2,255,300, down 9.38% year-on-year; from January to October 2012, total sales of micro-vehicles were 1,843,300, down 0.20% year-on-year. On the one hand, the rapid expansion of numerous mini-vehicle companies and the continuous decline in the overall production and sales volume of the mini-vehicle market can be imagined. The next few micro-car companies in Chongqing will start a “blade knife to see red” battle. Chang'an and SAIC-GM-Wuling both will be particularly critical in the "Large-Human Dispute." At this point, people seem to be able to predict that the story of the next chapter will be even more tragic.

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