Analysis of the Operational Situation of the Automotive Industry in 2006

In 2006, China's auto industry continued its rapid growth in previous years. Under the sustained sales of economical cars, the rapid development of independent brands, and the rapid growth of export markets, the auto market has obviously recovered, and the benefits have also been greater than last year. Increase, but car prices continue to decline.

1. Car production and sales continue to grow rapidly, but growth slows month by month

In 2005, China's auto production reached 6.153 million, an increase of 13.0% year-on-year, of which car production was 2,958,400, a year-on-year increase of 26.9%. Since 2006, with the rapid growth of China’s urban and rural residents’ income and the further decline in automobile prices, China’s automobile production and sales have maintained rapid growth, but the growth rate has basically shown a trend of slowing month by month. In the previous October, China’s cumulative production of cars 620 Sixty-one thousand six hundred thousand vehicles, a year-on-year increase of 25.1%, slowed down by 11.2 and 2.7 percentage points from the first quarter and the first half respectively. The sales of automobile sales have basically kept pace with the increase in production. In the first 10 months, the cumulative sales of domestic cars reached 5,765,800, an increase of 25.69% year-on-year. The increase in sales of passenger cars was much higher than that of commercial vehicles, with the highest increase in passenger cars and the increase in both sales and sales. More than 40%.

2. Economy cars have become the main force to promote the automotive market to pick up

From the sales situation in the first 10 months of 2006, it can be seen that the economical sedan with a displacement of 1.6 liters or less has made a great contribution to the recovery of the auto market. This is due to the fact that the state has increased its policy support for economical cars. On the other hand, it is also the result of consumers' coping with high oil prices and changing consumer attitudes. In the first 10 months of this year, China had 4,111,100 passenger cars sold, a year-on-year increase of 31.68%. In the first 11 months, car sales reached 3.417 million, an increase of 38.52% year-on-year, the highest increase among all models; followed by MPV, cumulative sales of 168,200, an increase of 21.95%; sales growth is the lowest Cross-type passenger vehicles, accumulative sales of 825,700 vehicles, an increase of only 10.45 percent year-on-year. From the perspective of displacement, the dominant position of 1.0-1.6 liters of gold displacement remains unbreakable. In the first eight months of this year, a total of 1.2738 million cars were sold in this displacement segment, accounting for 53.77% of the total sales of cars; Followed by 1.6-2.0 liters of displacement cars, cumulative sales of 601,100, the market share of 25.37%; 2.0-2.5 liters and less than 1.0 liters of car market share Quite a bit, each accounted for about 10%; the market share of cars with 2.5 liters or more was the lowest, less than 1%. Market research shows that most consumers choose cars with a displacement of 1.6 liters or less.

3. The decline in car prices is still continuing

Due to the excessive growth of automobile production capacity, the new vehicle market has been fully accelerated and the market competition has become fiercer; at the same time, the lag in domestic road traffic construction and rising oil prices have made consumers more cautious in buying cars, which will reduce the price to become a car. The effective means for manufacturers to expand sales is even necessary. According to data from the National Development and Reform Commission's Price Monitoring Center, domestic auto prices fell 0.01% in September from September, 0.56% from the beginning of the year and 1.32% from the same period last year. In terms of different models, the price of light buses in October fell by 1.08% from the beginning of the year, and the prices of basic and sports passenger cars decreased by 3.57% and 2.87% year-on-year, respectively. Compared with the same period of last year, the price of goods vehicles decreased by At 0.41%, the price of imported automobiles accelerated in October, and the monthly decline rate increased from 0.3% in September to 1.01%. It is expected that with the impact of factors such as the approaching sales season of the holiday season and the mass market of new vehicles, the market competition will become more intense in the later period, and the prices of autos, especially domestic cars, will continue to decline further.

4. Rapid growth in automobile exports

Thanks to China's low labor cost advantage and the continuous growth of independent brands, China's auto exports have been growing rapidly for three consecutive years, and the average unit price has also increased. From 2003 to 2005, China's total exports of vehicles reached 4.74, 13.66, and 172,800 vehicles, respectively, an increase of 108%, 187%, and 120% year-on-year, respectively; the export volume of vehicles was 3.72 and 6.62 respectively. 15.95 billion US dollars, an increase of 49%, 78% and 157% respectively. Since 2006, China’s auto exports have continued to make rapid progress. In the previous October, 1.29 million vehicles and automobile chassis were exported, representing a year-on-year increase of 66.5%. The average export unit price was US$2167.8, an increase of 14.6% year-on-year. At present, the automotive export market has witnessed a rapid increase in the number of export business entities, export-oriented parts and components, vehicle-based export of commercial vehicles, and diversification of export markets. The main direction of export is in countries and regions with lower barriers to entry, such as Africa and the Middle East. With the increase in the scale of exports, the country has begun to shift to higher developed markets. In just a few years, China's auto trade has shifted from a deficit to a surplus, completely reversing the state of net imports that have lasted for decades. The rapid growth of the export market will not only increase the production and sales volume of enterprises, increase the utilization rate of equipment, but also gain the competitive experience in the international market and train the team.

5. Independent brands have made great progress

In 2006, self-owned brand cars showed a rapid growth trend, product performance and quality have been greatly improved, and their status in the domestic market has further improved. This is mainly reflected in the following three aspects:

First, the market share of self-owned brand cars has risen. From January to October 2006, the cumulative sales of self-owned brands of passenger vehicles accounted for nearly 1.74 million vehicles, accounting for 42% of the total passenger vehicle sales; of which, 81,000 were self-owned brand cars, accounting for 27% of the total sales of passenger cars. One-third of the top-selling car brands in the first half of 2006 were self-owned brands. In the first half of the year, the sales of self-owned brand cars in China surpassed the growth rate of 36.3% of joint venture brands with a growth rate of 51.3%. The market share of self-owned brand cars is close to 25%, and even some months are close to 30%.
Second, self-owned brands are absolutely dominant in China’s auto exports. China’s major automobile exporters are not the leading domestic automotive giants, but independent brands like the Great Wall, Geely, Chery, and even some small SUV companies that do not yet qualify for car production in China have acted as the main export force. For half a year, China’s export of cars reached 34,456, of which, the export of self-owned brand cars reached 2,020 units, an increase of 466.8% year-on-year. If we add the commercial vehicle market dominated by self-owned brands, the proportion of self-owned brands will be higher.

Third, the technological level of self-owned brand enterprises has been increasingly improved. For a long time, despite the stylish appearance of self-owned brand cars, most of the core technologies such as engines, transmissions, and chassis still need to be purchased, and the backward technology seriously restricts the development of self-owned brand cars. Since last year, Chery, Geely, Brilliance, and Great Wall have successively launched their own engines, and their independent “core building” has never been seen. On the eve of the National Day, Geely announced that it had successfully developed and began exporting overseas as a technically demanding automatic transmission, signifying that China’s auto industry has taken another step forward in technology research and development. After years of development, the research and development departments of Changan Automobile (12.55,0.12, 0.97%) have already possessed five capabilities: creative design capabilities, engineering design capabilities, analysis and optimization capabilities, prototype production capabilities, and test verification and evaluation capabilities. It represents a complete process of independent research and development, and it is also a process that independent research and development must undergo. Its independent research and development level has reached S5 level.