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The case of mergers and reorganizations with other well-known automotive industries in the world ended in failure, and the reorganization of the new Changan Automobile Group, which complements each other's strengths, has been favored by the industry. Zhao Jiafeng Cartography
On November 10th, China Aviation Industry Corporation ("AVIC") and China Ordnance Equipment Corporation (referred to as "Bingzhuang Group") signed an agreement. AVIC will include Changhe Automobile, Hafei Motors, Dongan Power, and Changhe Suzuki. The equity of Dongan Mitsubishi was allocated to the China Changan Automobile Group under the China Military Equipment Group.
The above-mentioned two groups reorganized to establish the new Changan Automobile Group. The Soldiers Group holds 77% of shares and AVIC holds 23%.
After the integration, the new Chang'an Group has 9 large vehicle production bases, 21 vehicle factories, and 27 directly-owned enterprises across the country, with an annual production capacity of 2.2 million vehicles (sets). The integration of the two parties will increase the competitiveness of its own branded car business for Changan Automobile.
The complementary effect is very obvious
The world's more famous merger and reorganization cases in the automotive industry, such as BMW-Rover, Daimler-Chrysler, Nissan-Renault, GM-Fiat, Ford-Volvo, etc., have failed to succeed except Nissan-Renault. And it ends.
Through research, it is found that the key reason for failure lies in the fact that it is difficult to centralize the power of joint ventures; it is difficult to integrate cultures under different backgrounds; and it is difficult for the downstream markets of mergers and reorganizations to complement each other.
China Military Equipment Group and AVIC Group are both military enterprises. Chang'an Group will take over the automotive business under the Aviation Industry Corporation. Both parties have completely different backgrounds in terms of corporate culture, concentration of new management power, and complementary assets, although it is still difficult to judge. Whether the integration of the two parties can produce positive results in the future, but it has already had the first-mover advantage.
The most direct impact of the merger of the two parties on Changan Automobile is that the complementary effect between Dongan Power and Changan’s own-brand cars is very obvious.
Dongan: Independent Engine Boss
As the largest independent engine company in the domestic passenger car market, Dongan Power's main business includes research and development, production and sales of mini-vehicle engines, gearboxes, parts and related products. The products include DA465, DA468 and DA471 micro-vehicle engines. And supporting transmission, displacement covers 1.0L-1.3L; At present, Dongan Power has formed an annual capacity of 400,000 micro-vehicle engines and 500,000 transmissions, which are mainly used in the interior of AVIC and Hafei Automobile and Changhe Auto. OEMs also supply other external manufacturers. Customers include FAW Jiabao, Chery, JAC, and Haima.
Dongan Mitsubishi, which holds 36% of the shares of Dongan Power, is the largest independent sedan powertrain production enterprise in the country. Its engine displacement covers 1.3-2.0L, and its total production capacity is 400,000 units, mainly supporting its own brand cars. For example, brands such as Huachen Junjie, BYD F3, and JAC Tongyue are all equipped with Dongan Mitsubishi's engines. Dongan's Mitsubishi engine accounts for almost half of the engine market for domestic brands.
In 2008, Dongan Mitsubishi introduced mature technology from Mitsubishi Motors and invested RMB 2 billion to build an automatic transmission production line. In the first phase, 150,000 sets of production capacity are expected to be completed and put into operation by the end of 2009. This project is expected to become a new growth point for Dongan Mitsubishi in the future.
Changan: Independent brand strategy
Changan Auto’s own-brand cars currently have a production capacity of 200,000 vehicles and engines. The main products include Benben, Zhixiang, Yuexiang, etc., with displacements covering 1.3L, 1.5L, and 2.0L, and the price range covers 40,000-12. Ten thousand yuan; due to the general response of the first two products to the market, Changan Automobile has been dragged down by the car business in recent years. It was not until the third car Yuexiang listed in March 2009 that the status was changed. At present, Changan Yuexiang’s monthly sales reached 1 More than 10,000 vehicles, it is expected to significantly reduce losses next year.
After Dongan Motors, a subsidiary of AVIC, is assigned to Changan Group, the two companies have strong complementarity in the passenger car business. Changan’s own-brand sedan can carry Dongh’s Mitsubishi engines and automatic transmissions in bulk in the future, and its product competitiveness is expected to increase significantly. Chang'an Group is also expected to become the largest and most stable downstream customer of Dongan Power, which will be the main growth point of the future performance of the two listed companies.
PSA: Chang'an New Partner?
Changan Automobile currently owns two joint ventures: Changan Ford Mazda and Changan Suzuki, but Changan Suzuki has limited development in recent years.
Hafei Motors is currently in the process of negotiations with France’s PSA (Peugeot-Citroen Group). The strength of Hafei Motors in the industry is the main reason why PSA is hesitant. With Hafei Motors under the ownership of Chang'an Group, Chang'an Group will be able to increase bargaining chips with France. The cooperation process between the two parties is expected to accelerate, and Changan Automobile will have three foreign partners.
Microcar sales channels are complementary
The demand for micro-cars in the rural market is sustainable. This integration will fully benefit from the continued growth of the industry in the future: From January to October, domestic micro-vehicle sales totaled 1.6 million units, an increase of 77% over the same period of last year (hereinafter referred to as the same period). Is the fastest growing segment market.
With the increase of farmers' income, the improvement of rural road construction, and the replacement of agricultural vehicles, the mini vehicle industry is expected to maintain a growth rate of 15% to 20% in the future.
As of the end of October, Changan Automobile (including Nanjing Chang'an) sold 460,000 micro-vehicles, an increase of 96% year-on-year, and its market share increased by 4 percentage points from 29% to 29%, and it was close to full capacity; Hafei Motors and Changhe Automotive Microelectronics Co., Ltd. The total vehicle production capacity exceeds 300,000 vehicles. However, in the previous October, only 160,000 micro-vehicles were sold and there was still excess capacity.
The micro-vehicle industry has the characteristics of high product homogeneity, channel and scale that determine competitiveness. In terms of the micro-vehicle business, the integration of Chang'an-Changhe-Hafei will expand the sales channels within the new long-security countries, especially in the sales networks in the Northeast and Southwest China. If the industry continues to maintain a growth rate of 15% to 20% as expected next year, the integration will fully benefit from the development of the industry and the abundance of sales channels.