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Although Changhe's annual production and sales volume is only about 100,000 vehicles, for Beiqi, the significance of restructuring Changhe far exceeds the sales growth itself.
This year, Xu Heyi, chairman of Beijing Automotive Industry Group, which has been cautious about public affairs in public, was unconventional. After completing the restructuring of Zhenjiang Automobile, Xu Heyi once again suggested that another company planning to reorganize was located in Jiangxi and was a state-owned enterprise. Jianfeng pointed to Changhe Automobile. .
In July this year, in the 7th (enlarged) conference of the thirteenth session of the Jiangxi Provincial Party Committee, the Governor of Jiangxi Province, Lu Xinshe, stated that he “encourages Changhe Automobile and other enterprises to merge and reorganizeâ€. At present, the news that Beiqi intends to reorganize Changhe has been acquiesced by Beiqi insiders. The source said that “it will officially announce the specific situation soon,†but declined to give further details.
For Beiqi, taking food from its biggest rival Chang’an Group’s tiger’s mouth is a quick and easy thing to do.
Merge Changhe
Three years ago, Chang'an Group merged with Changhe, but the reorganization plan for Changhe has not been smooth enough. Changhe Automobile had expressed dissatisfaction with the Chang’an Group through extreme measures of work stoppage. The two sides were arrogant and the cooperative relationship was difficult to maintain. Subsequently, the Jiangxi Provincial Government came forward to communicate with Chang'an Group and reached an agreement on the independent development of Changhe Automobile. According to informed sources, Changhe’s independent approval process is currently being implemented. Changhe Automotive may sell its production base in Hefei to Changan as an independent condition. In the future, BAIC Motor's reorganized Changhe Automotive will have two bases located in Jingdezhen and Jiujiang respectively.
In 2009, Changhe Automotive and Hafei Motor were assigned to Changan Automobile by the parent company AVIC and became the two subsidiaries of Changan Group. However, the Changan Group did not inject vitality into Changhe Automobile.
In 2011, sales of Changhe Automobile dropped sharply to 120,000 vehicles, a drop of 33.3%. In 2012, Changhe Auto's sales fell again. The main reason for the continuous decline in Changhe's production and sales is that the product line is too short. In addition to mini vehicles, only Changhe Suzuki owns two models of Paixi and Liana, both priced at less than 100,000 yuan. In recent years, the Changan Group has kept new cars and the main price range is still below 100,000 yuan. The overlapping of the market areas where the two products are located causes the Changan Group to give up their cars and is unwilling to provide vehicle support for Changhe Automobile.
“The fuse that led to the breakdown of cooperation between the two sides is production qualification. Chang’an intends to transfer Changhe’s passenger car production qualification to Chang’an Mazda, which is unacceptable for Changhe.†Zhang Zhiyong, a well-known car commentator, told the China Business News The reporter said.
According to the above-mentioned sources, Changhe Auto's employees stopped work to show their protest against Changan Group. After the resumption of work, Changhe Automobile refused to accept the instructions of the Chang'an Group and adopted a non-cooperative attitude. The Chang'an Group could not do anything about this.
The intervention of BAIC Group broke the deadlock. Beiqi is currently the fifth-largest automobile company in China. Xu Heyi has recently opened up a large number of joint ventures and built five bases in the east of Zhenjiang, western Chongqing, southern Guangzhou, northern Hebei, and central Zhuzhou and improved the product line of Beiqi. Prior to this, Beiqi was independent. The brand is basically in a blank state. In the several years after Xu Heyi took over the BAIC Group, BAIC has completed its strategic layout in the fields of commercial vehicles, passenger vehicles and mini vehicles, presenting a new perspective on wind and water. The rise of BAIC and its keen interest in Changhe Automotive have brought new opportunities for Changhe Automotive's rebirth.
"This year, Beiqi reorganized Changhe and settled the dust," said Beiqi insiders. "This will be a win-win cooperation."
A double-edged sword
It is not difficult for Beiqi to reconstruct the strategic intention of Changhe.
During the “Twelfth Five-Year Plan†period, BAIC’s strategic goal was to “guarantee five fights and four disputesâ€, surpassing currently ranked Chang’an Group to become China’s fourth largest auto group. In 2012, the production and sales volume of Chang'an Group was 1.956 million units, and the production and sales volume of Beijing Automotive Industry Group was 1.703 million units. The gap between the two parties still exceeds 250,000 vehicles.
After the acquisition of Changhe, the competition between the two sides will change dramatically. In 2011, Changhe Automobile will produce and sell 120,000 vehicles a year. On the one hand, Chang'an Group will lose 120,000 vehicles contributed by Changhe Automobile. On the other hand, BAIC will incorporate Changhe's sales into its own financial statements. In this shift, the gap between Chang'an Group and BAIC Group will be negligible, and Beiqi is only separated from the goal of “guaranteeing five competitions and four disputesâ€.
In addition, Changhe Automobile's significance to BAIC is also reflected in the lack of product lines. Currently, although Beiqi has launched its own micro-vehicle brand Weiwang, the follow-up products of Weiwang brand are unable to follow up. The strength of Changhe in the micro-vehicle field will compensate for Weiwang's defects.
For Changhe, BAIC Group is also a better backer than Changan Group. According to informed sources, before this, because of the chaotic ownership, Beiqi Foton also repeatedly broke out with Beiqi. Xu Heyi served as the chairman of BAIC Group and achieved a complete control of Beiqi Foton by a series of measures such as increasing shareholdings. He also adopted the policy of Huairou for the first-time establishment of Beijin Foton Wang Jinyu, focusing on guiding the company's strategy, but more involved in corporate management. This type of management has promoted the continuous improvement of the relationship between Beiqi Foton and BAIC Group, and its performance has also increased year after year.
“Huairou is obviously a method more suitable for handling the relationship between the group and its subsidiaries than high pressure. Xu Heyi’s management capabilities will add points to Beiqi’s prospects after entering Changhe.†Cheng Wenbing, general manager of Maiwei Consulting, stated that “Beiqi’s biggest problem in reorganizing Futian It is the integration of corporate culture. This is the cause of the failure of Chang'an to reorganize Changhe. It is Xu Heyi’s biggest challenge at present.â€