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Will the continued decline in automobile sales affect the aluminum alloy wheel market?


China’s total car sales this year will definitely be less than 30 million, and may even be lower than last year's sales.

The Director of the Machinery and Equipment Division of the Industrial Coordination Department of the National Development and Reform Commission said on Wednesday that China’s total car sales this year must be less than 30 million, and may even be lower than last year's sales. The National Passenger Car Market Information Joint Conference (hereinafter referred to as the "Cross Federation") also released information that the domestic passenger car sales in the first three weeks of October this year fell by 23% year-on-year, and it is expected that the overall domestic passenger car sales in October will decline. It reaches about 20%. The Association also announced specific sales data for the first three weeks of October: In the first week, the national average daily retail sales of 15,500 vehicles, a year-on-year decrease of 49%; the average retail sales of 63,400 vehicles on the second week, a year-on-year decrease of 12%; the third week of average sales Retail sales of 53,000 vehicles, a year-on-year decrease of 23%. If nothing happens, there will be negative sales growth for the fifth consecutive month in October, and the decline will tend to expand.

To make matters worse, the inventory levels of dealers have reached historical highs while sales are declining. According to the data released by the China Automobile Dealers Association (hereinafter referred to as the "Distribution Association"), the inventory warning index of auto dealers in October was 66.9%, an increase of 17 percentage points year-on-year, and the highest in three years. This is the 10th month of this year's inventory warning index. Over the warning line. In the face of continued inventory pressure, price wars have quietly staged. Many dealers’ new car business has seen price inversions, that is, new car prices are lower than used cars, and even certain luxury brands are no exception. Faced with continuous excesses of auto inventories and hopeless profitability, many dealers in the industry feel pressured and actively apply for withdrawal from the Internet.

At the same time as the price war began, the profitability of the automotive industry has generally declined. According to the Daily Economic News report, according to the third-quarter financial reports of a number of listed auto companies, the net profits attributable to shareholders of listed companies, including FAW Car, JAC, etc., have declined in varying degrees. The data shows that FAW Car’s net profit attributable to shareholders of listed companies from January to September was 135 million yuan (RMB, the same below), a year-on-year decrease of 53.6%; JAC’s net profit in the first September was 48 million yuan, a year-on-year decrease of 78.13%; Haima Motors In the first three quarters, the net profit attributable to shareholders of listed companies was -477 million yuan; Jiangling Motors was 219 million yuan, a year-on-year decrease of 66%.

According to the National Passenger Car Market Research and Analysis Report from January to August, only 32.8% of auto dealers nationwide are profitable, 26.7% of dealers are flat, and 40.5% of dealers clearly stated that they are at a loss.

All of these indicate that the mainland's automotive industry may be approaching a "cold winter". Xin Guobin, Deputy Minister of Industry and Information Technology, also affirmed this trend. Minister Xin said at the press conference on the development of the industrial communications industry in the first three quarters of 2018: Judging from the current situation, the period of rapid growth in China's automobile production and sales may have passed, and low growth may be a normal state of future development.

So what is the reason for this situation now? At present, everyone has different opinions on this issue. People from different angles and different heights come to different conclusions. In summary, the main points are as follows:

1. In the context of the tightening of the international monetary environment, automobile sales in major international economies have fallen sharply, and China's automobile sales have also begun to show signs of fatigue due to the impact of the international market. (But I personally think that this statement is far-fetched. It was exactly when Chinese cars entered the family overnight that the world economic crisis was raging. How can this be explained?)

2. my country's automobile production and sales base is large, and the sustained high growth does not conform to objective laws.

3. The current land finance and real estate economy have kidnapped China's economy. The housing market prices have risen rapidly. Excessive funds have been invested in the housing market, causing the people's debt ratio to rise rapidly and squeezing out the consumption capacity of automobiles.

4. Factors such as uncertain prospects and degraded consumption caused by the economic downturn in Mainland China have led to a lack of consumption.

In short, no matter how you explain and find the reason, there are data on the economic operation of mainland China and the data on automobile production and sales here. We have maintained a continuous growth in automobile sales for 26 years. Finally, there are variables. This change is closely related to our aluminum alloy. What impact will the wheel market have?

First, the competition of aluminum alloy wheel OEMs will intensify. Due to the decline in automobile production and sales, the number of orders for OEM aluminum alloy wheels will shrink, which will intensify competition among wheel manufacturers.

Secondly, the overall profit of aluminum alloy wheels will decrease. In order to boost car sales, car sales at discounts and price cuts are inevitable. Therefore, auto parts, raw and auxiliary materials and other products, including our OEM aluminum alloy wheels, will inevitably be impacted by the price reduction requirements of OEMs; plus aluminum The competition of alloy wheel OEMs has intensified, and irrational price reductions are inevitable for manufacturers to compete for market share.

Third, the OEM market is solidified. During the period of explosive growth in automobile demand in the past few years, the attitude of OEMs towards component suppliers was "the carrot is fast and the mud will not be washed." As long as they can supply in time and prevent the OEM from "stopping", it is an excellent supply. In the future, with the shrinking of OEM orders, it will lead to overcapacity of parts manufacturing enterprises and intensified competition among enterprises, while OEMs will become more Enterprise reviews will be more rigorous and prudent. Unless there is a special relationship, it will be difficult for peripheral companies that produce traditional products to have the opportunity to enter the supporting system of existing automakers.

Fourth, reducing costs for aluminum alloy wheel companies has become an important task. Huge competitive pressure will force wheel companies to "unscrupulously" to reduce costs. I believe it will not be long before we will see things like abandoning the so-called "manufacturer designation" of the hell and actively reducing costs by using high-quality and inexpensive paint by the wheel manufacturers themselves. .

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