Double extrusion of the gross margin of the automotive industry has become a foregone conclusion

In the face of rising production costs, domestic and foreign auto companies have made different choices in different market segments.

In the commercial vehicle market, no matter whether it is a passenger car, light truck or heavy truck, he did not hesitate to choose the price increase. However, the landscape of the passenger car market is very different. The fully competitive market pattern has made the price increase a risky behavior.

What is the strength that led to the different prices of mid-size cars and economic cars? Where will the future domestic car prices go? How does this change affect the profitability of the domestic auto industry? To this end, the Shanghai Securities News reporter interviewed senior auto executives, dealers, and related agencies. All said: The rapid increase in production costs has affected the overall gross profit margin of the automotive industry. The larger the company and the stronger its bargaining power, the lower the gross margin drop.

After a price reduction for several years, the "turning point theory" of Chinese car prices surfaced.

Those who support car prices believe that raw material prices have risen steadily and have been transmitted to the consumer end of the market. Even home appliances are starting to rise in price, and the auto industry (or passenger vehicle segmentation market), where competition is fierce, will eventually increase prices.

Those who do not recognize car price hikes propose: In addition to the cost, there is demand. In a perfectly competitive market, no company can raise prices because it may be robbed of market share by opponents that have not risen in price.

The price increase is still not a price increase, becoming a problem that hangs over the domestic auto industry. Whether rising or not rising, this year's decline in the gross margin of the automotive industry is a foregone conclusion. This point has been clearly reflected in the key economic indicators of key enterprises of the automobile industry in the first quarter of this year: In 2006 and 2007, the gross profit rate of key enterprises in the automobile industry was 16% and 16.1%, respectively; in the first quarter of 2008, it quickly fell to 15.5%. The gross profit rate of listed companies in the entire vehicle category has also dropped significantly: from 15.7% in 2006 to 14.31% in 2007, a year-on-year decrease of 8.85%; in the first quarter of this year, it continued to decline, reaching 13.08%, a year-on-year decrease of 0.83%.

This may not be the end of the decline in gross margins! Is it still feasible to transfer part of the pressure to parts suppliers?

Rising commercial vehicle fleets

Faced with the ever-increasing prices of raw materials, China’s commercial vehicles and passenger vehicles have significantly differentiated their responses. While internal digestion and finding other markets break through, commercial vehicles generally increase prices. From light trucks, heavy trucks and passenger buses, without exception, the current commercial vehicle price increase has reached 2% to 5%; but the price increase for passenger cars is only part of the Chery Automobile models, and the Pentax sedan of the Jianghuai Automobile Co., Ltd. .

As for the different price trends of commercial vehicles and passenger vehicles, Lu Lei, an automotive industry researcher at Great Wall Securities Co., Ltd., believes that the impact of steel price increases on the market segments is different. The greater the weight, the lower the added value, the greater the impact of rising steel prices on profitability. Therefore, the impact of steel prices on heavy trucks is greater than that of passenger cars. The impact on passenger cars is greater than that of cars. The impact on economic cars is greater than that of medium cars, and the impact on mid-size cars is greater than that of luxury cars.

Dong Dong Commercial Vehicle General Manager Tong Dongcheng semi-interestedly revealed the helplessness of heavy truck companies: One kilogram of pork sold 18.5 yuan, and if calculated by kilograms, heavy trucks sold only 18 yuan per kilogram, which was also lower than pork. In this context, heavy truck companies can only "get up."