Capacity Expansion and High Inventory Paradox

According to a sample survey conducted by the China Automobile Dealers Association for more than a thousand 4S stores of the Top 100 Dealer Group, car dealership stocks continued to climb in June. There are 10 brands with high inventory (inventory coefficient greater than 2.5), namely, hippocampus, yangko, and Cadillac. Zhengzhou Nissan, Guangzhou Automobile Chuanqi, Chery, Infiniti, FAW Car, Guangzhou Automobile Honda and Geely. Among them, the brand with the highest inventory coefficient is hippocampus, and its inventory coefficient is as high as 6.71. For a time, the inventory alarm in the automotive industry was sounded again.

In fact, since the auto industry has maintained a single-digit low growth this year, and auto manufacturers have set certain sales growth targets at the beginning of the year, the inventory pressure of auto dealers has never been too small. The China Automobile Dealers Association proposed the "inventory early warning system" as early as March 2010, and began conducting regular inventory surveys of car dealers in July 2010. Why now the pressure from car dealers will become more and more Big? What revelation should we get from our auto market?

Let's take a look at the actions of car manufacturers. On May 28, the foundation of Shanghai Volkswagen's plant in Xinjiang was laid; on the 2nd of June, the new plant of Shenyang Brilliance Shenyang was laid; on June 6th, the foundation of Shanghai GM Wuhan plant was laid; on June 25, the foundation of Dongfeng Nissan’s Dalian plant was laid; on June 29th, Dongfeng Yueda Kia (Weibo) laid the foundation stone for the three factories in Yancheng... In recent months, the news of the expansion of car companies has come one after another, and there has been a momentum of expansion for all people. When the automotive consumer market hits a cold winter, while auto manufacturers continue to increase production capacity, the pressure from auto dealers is on the increase. We can't help asking whether China's auto market is overcapacity. In the face of the continued downturn in the auto market, why do automakers also buck the trend?

Regarding this issue, Wu Yingqiu, a veteran of the automotive industry, believes that for those companies whose performance has maintained steady growth and strong resistance to risks, the auto market adjustment period may be a good time for expansion and a good time for the future. The author agrees with his point of view. Indeed, after the fierce competition in the market in recent years, the Chinese auto market is now showing a stronger stronger and weaker weaker trend. However, the author believes that the problem of overcapacity in the entire automobile industry cannot be ignored. According to statistics, by 2015, the production capacity of the top 10 auto groups will exceed 35 million, and the total vehicle production capacity in the country will reach 40 million. According to the current development trend, the domestic sales scale can reach 25 million even if it is good. . In addition, KPMG's report shows that China's auto spare capacity in 2011 was 6 million vehicles, which is equivalent to twice the size of the German automotive market. It is estimated that by 2016, idle capacity will increase to 9 million vehicles.

Obviously, if the "micro-growth" of China's auto market since last year continues, it cannot support such a huge capacity expansion. It is no wonder that distributors are under increasing pressure on their inventory. Nowadays, many dealers are under intense pressure due to inventory pressure, but they are forced to sign an "unequal treaty" with car manufacturers at the beginning of building a store. They can only dare to be angry and cannot speak up; Do not dare not, some dealers can not reach the monthly purchase index will be punished.

Just think about it, if the dealer's capital chain suddenly broke some days, dealers will continue to be a problem even if they survive. Automobile manufacturers must pay attention to maintaining the interests of dealers in order to maintain the overall development of stability. It is time for car manufacturers to "feed back" dealers. Only when the car manufacturers face the inventory problem together with the dealers, can it promote the healthy and sustainable development of the auto market.