China's auto industry accelerates mergers and reorganizations

Recently, the Ministry of Industry and Information Technology, the National Development and Reform Commission and other ministries jointly issued the "Guidance Opinions on Accelerating the Promotion of Mergers and Acquisitions in Key Industries," and it is hoped that by 2015, the industry concentration of the top 10 automobile companies in the auto industry will reach 90%, and 3 to 5 companies will be formed. The core competitiveness of large-scale automotive enterprise groups.

In addition to domestic mergers and acquisitions, the government will also support domestic auto companies to “go global” and seize the opportunity to conduct cross-border mergers and acquisitions, optimize resource allocation globally, and enhance international competitiveness. At the same time, the government will support large-scale automobile companies to extend their service areas through mergers and acquisitions, and realize the integration of services and manufacturing.

The industry believes that if only from the digital perspective, the implementation of the New Deal is not difficult. "The market share of the top ten vehicle manufacturers in the past year has reached 87.3%, and this year's concentration will definitely continue to increase this year," said Cui Dongshu, deputy secretary-general of the National Passenger Vehicles Association.

Especially in the current sharp decline in the economic benefits of the entire automotive industry, the industry consolidation process will accelerate. Statistics from the China Association of Automobile Manufacturers show that from January to November 2012, the total industrial output value and operating income of 17 key enterprises (groups) only increased by 4.4% and 3.5% respectively over the same period of last year, and the growth rate fell by 1 compared with the same period of 20111 Percentage point and 6.1 percentage points; total profits and taxes realized increased by 5.8% over the same period of last year, and the growth rate dropped by 7 percentage points over the same period of last year.

In the "Auto Industry Adjustment and Revitalization Plan" promulgated three years ago, it was proposed to form "Four Big" (Shangqi, FAW, Dongfeng and Changan) "Four Small" (Beiqi, Guangzhou Automobile, Chery and China Heavy Duty Truck) through merger and reorganization. Industrial structure, however, the structural problems of the auto industry are still outstanding.

According to the data from the Ministry of Industry and Information Technology, the Chinese automobile industry is characterized by small, weak and scattered industries. There are more than 1,300 vehicle manufacturers of various types in the country, of which 171 are automotive vehicle companies, 120 are motorcycles, and 900 are special-purpose vehicles. 135 cars and low-speed trucks. Among these 1,000 companies, a number of companies have been in production or semi-discontinued state for many years. The output is very low or even without output, and survival is very difficult.

People in the industry believe that after the introduction of the New Deal, the auto industry is expected to set off a new round of reshuffling, and some automakers with production qualifications will be eyeing the big group. The reorganization of Dongfeng and Fuqijian on the string is expected by the automotive industry. This will be the first reorganization of the local automobile groups by major central auto companies. Including Jianghuai, Jiangling, even Huatai, ZTE, Zhongtai and other small-scale automobile companies, may face difficulties in the future competition, or will become a new goal of mergers.