Caixin News Agency, December 11th (Reporter Liu Yang) - A joint venture automotive brand that has experienced the pains of intelligent electrification transformation from a market leader to a continuously shrinking market is entering the "deep water zone" of transformation in the Chinese market.
On December 11th, Beijing Automotive announced that BAIC Investment (Beijing Automotive Investment Co., Ltd.) and Hyundai Motor have entered into an agreement, agreeing to inject $548 million into Beijing Hyundai based on their respective equity ratios in the registered capital of Beijing Hyundai, totaling $1.095 billion (approximately RMB 8 billion), which will be injected in installments.
Beijing Hyundai plans to launch its first pure electric vehicle model by 2025, strengthening its research and development capabilities in electrification, intelligence, and forward-looking technology. Industry insiders close to Beijing Hyundai have revealed that on the basis of exceeding 50000 units in export volume by 2024, Beijing Hyundai plans to increase its export volume to 80000 to 100000 units per year. "In the future, all products produced by Beijing Hyundai will face the global market
Faced with a continuously declining market share, this is the second time in nearly two years that Chinese and Korean shareholders have injected capital into Beijing Hyundai. In March 2022, BAIC Investment and Hyundai Motor reached an agreement to jointly increase capital by $942 million (approximately RMB 6 billion) to Beijing Hyundai Motor based on their respective shareholding ratios.
Unlike Beijing Hyundai, which has acquired shareholders and adjusted its business strategy in China, SAIC Volkswagen, which has just completed its joint venture renewal, continues to compete in the Chinese market through a more localized product strategy.
On December 10th, senior executives of SAIC Volkswagen revealed that by 2030, SAIC Volkswagen will launch 18 new models, of which 15 will be specifically developed for the Chinese market. Meanwhile, SAIC Volkswagen Anting Automotive Plant 2 will become the exclusive production base for the new brand AUDI (Audi) by 2025.
According to the plan, the first high-end intelligent connected electric vehicle model of AUDI brand will be launched in the market by mid-2025; Starting from 2026, two compact electric vehicles developed based on the CMP platform specifically designed for the Chinese market, as well as three plug-in hybrid models and two extended range versions, will be launched successively.
On November 26th, SAIC Group and Volkswagen Group signed an agreement to extend the joint venture contract, extending the joint venture period of SAIC Volkswagen to 55 years until 2040. The experience accumulated in the Chinese market will inject momentum into Volkswagen Group's accelerated transformation, "emphasized Volkswagen Group Chairman Obomu, highlighting the importance of the Chinese market.
Behind the shining of independent brands, joint venture car companies are suffering from declining sales and shrinking market share. On December 4th, General Motors announced in a securities filing that it expects to write down the value of its joint ventures in China by $2.6 billion to $2.9 billion, and will also incur an additional $2.7 billion in expenses to restructure its business in China by closing some of its factories and reducing unprofitable vehicle models. It is reported that during the investor conference call, General Motors Chief Financial Officer Paul Paul Jacobson said that the restructuring work has entered the final stage and believes that SAIC GM can carry out the restructuring without using additional funds.
The Chinese business is a high-quality asset for General Motors both now and in the future. "The next day, General Motors China responded that since the fourth quarter, General Motors and its joint ventures have sold over 200000 new energy vehicles, with high-end models including Buick GL8 Land Cruiser PHEV significantly driving profit performance. With the continuous efforts in on-demand production and terminal sales, General Motors' profitability in China is expected to be optimized
In the era of electrification, the price system and brand potential of joint venture car companies in China are gradually collapsing, and this trend seems irreversible at present. According to a research report by CITIC Securities, according to data from the China Association of Automobile Manufacturers and announcements from various companies, from 2020 to 2023, as the penetration rate of domestic new energy passenger vehicles rapidly increased from 6.0% to 34.5%, the market share of joint venture car companies decreased from 61.1% to 41.9%.
The latest data from the China Association of Automobile Manufacturers also shows that mainstream joint venture brands sold 600000 vehicles in November, a year-on-year decrease of 9% and a month on month increase of 6%. Among them, the retail share of German brands was 15.6%, a year-on-year decrease of 3 percentage points; The retail share of Japanese brands was 12.4%, a year-on-year decrease of 3.1 percentage points; The retail market share of American brands is 6.4%, a year-on-year decrease of 1.5 percentage points.
Most joint venture brands will not give up on the huge market of China. Industry insiders believe that joint ventures, especially foreign parties, need to have a strong sense of crisis, firmly establish confidence in the development of electrification, strengthen technological innovation and introduction in electric vehicle research and development, stand at the forefront of global electrification technology, in order to ensure their relative development space in China. If there is no effective innovation and forward-looking research in technology, and if we always maintain a following attitude, the days of joint ventures will be extremely difficult in the face of comprehensive and deep competition in the domestic market