Overcoming the common challenges of the automotive industry and achieving sustainable development

The 2016 Guangzhou Auto Show became the last car industry event of the year, and the market is still booming. This year's production and sales will also exceed 27 million units, and the Chinese auto market will once again be on the “top of the world”.

From 2000, it accounted for 3.6% of global sales, and by 2015 it accounted for 27%. The Chinese market has been the world's number one for seven consecutive years. This “first” is important, but the automotive industry is not complacent. As more and more factors are constrained by transportation and environmental protection, sustainable development has become a common challenge facing the industry.

In the first 10 months of this year, vehicle sales increased by 13.8% year-on-year, much higher than the 6% forecast given by the China Association of Automobile Manufacturers at the beginning of the year. At the roundtable discussion on the 8th China China Hunting Car List, the Ryukyu Motors Group Chairman and CEO Wu Yingqiu directly throws out the question of why the China Automobile Association will "see the eye".

Shi Jianhua, deputy secretary general of China Association of Automobile Manufacturers, replied at the scene that the high growth rate this year is related to the 1.6 liter purchase tax reduction policy. The association believes that if the policy is continued, the growth rate will not be so high. We suspect that the policy may be at the end of this year. Stopped, so buy it frantically.

Before the introduction of the purchase tax reduction and exemption policy, although many companies implemented the “official price cut” in the second quarter of last year, the market feedback was very small. The growth rate in the first half of the year was only about 1%. When the favorable policy came out, the auto market began in October last year. Launched, it has maintained a long-lost growth rate.

If the Chinese auto market is about to reach the eighth place in the world, it is still at the level of “policy city”, which is obviously not normal. The rapid growth rate has a great relationship with the coherence and stability of the policy. The purchase tax reduction policy should not stop, but an alternative follow-up policy is needed. This policy should be more conducive to the continuous adjustment of the industrial structure. Optimize, encourage advanced and eliminate backwardness.

At present, there is no clear news about the follow-up policy, and the impact on the market has already taken shape. This year's high growth has become a foregone conclusion. What will happen to the market next year?

Come listen to what the business people say? Gong Bing, vice president of Changan Automobile, believes that if the purchase tax continues, it may reach a growth rate of around 6% next year. If it cannot continue, it may be between 2% and 5%. Deputy General Manager of Chery Automobile Co., Ltd. and general manager of marketing company Gao Xinhua believes that if the policy cannot continue, there will even be zero growth next year.

This is not sensational, because the rapid growth of self-owned brands this year has a lot to do with the purchase tax policy. Due to the small displacement and short replacement time, independent brands have seized this growth opportunity.

Does “zero growth” mean that the Chinese auto market will once again usher in a trough? No. If China's automobile production and sales can reach the scale of 27 million vehicles, this is basically the upper limit that can be carried by transportation, energy and environmental protection for the automobile industry, which is mainly based on domestic consumption.

This year's growth rate is 13%, and Chinese brands are growing. Shi Jianhua also believes that maintaining zero growth of 27 million vehicles in the future is also good.

"Low price is definitely not the way out. As long as your product is good, even if the price is the same as the joint venture brand." Lin Jie, vice president of Geely Automobile Group and general manager of the sales company, said that the elimination of the backward models will adjust the financial structure well and not blindly. On the volume, this is the focus of future development.

Liu Zhi, president of BMW (China) Automobile Trading Co., Ltd., also expressed similar views. He believes that the purchase tax policy will have a short-term impact on the auto market, but in the medium and long term, the impact is negligible, and the overall auto market development is Determined by the continued development of the economy. In the foreseeable future, China's overall luxury car market will have a relatively stable and sustained development.

The scale of production and sales cannot rise indefinitely, so short-term stimulus does not mean long-term development. According to the needs of consumers, improving efficiency and quality is a key step in the reform of the car supply side. For today's Chinese auto industry, how to face the development of new technologies such as Industry 4.0, new energy, and the Internet is a strategic issue that determines the future direction.

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