Sales of Commercial Vehicles Ranked No. 2 in the World, Target Sales of 800,000 Globally in 2010
"China Economic Weekly" reporter Hou Tong/Beijing coverage

As the largest manufacturer of commercial vehicles in China, Beiqi Foton Motor Co., Ltd. (hereinafter referred to as “Futian Automobile”) announced its 2007 annual report on February 2. The annual report shows: In 2007, Foton Motor sold a total of more than 400,000 vehicles, an increase of 16.9% year-on-year, and a net profit of 380 million. Among them, the sales of light trucks reached 319,000 units, an increase of 11% over the same period of last year. The market share in China was 28.9%, ranking first in the country for nine consecutive years.

“In the field of commercial vehicles, Foton sold more than 400,000 vehicles a year, ranking first in Asia and ranking second in the world after only being a Mercedes-Benz commercial vehicle company.” Sohu “2008 China Made in China” During the visit, General Manager of Foton Motor Wang Jinyu told the China Economic Weekly that Foton Motor will carry out a series of overseas expansion plans in 2008 to “display and enhance the commercial value and status of commercial vehicles in China on a global scale”.

Rapid overseas expansion

According to Foton Automobile News spokesman Zhao Jingguang, Foton Motor has not only established an overseas R&D center, but also established CKD (Completely Knocked Down), which is a proprietary term for all imported vehicle models in the form of spare parts, referring to the zero produced locally. Parts, using the local labor force to assemble a complete vehicle sales) factory, making its overseas market development achieve phased results, becoming China's largest export vehicle for commercial vehicles, and is also negotiating with a Russian company on cooperation in plant construction. The plan is for the end of this year. Before the completion of the establishment and production of a Russian factory.

According to reports, Foton Motors is also stepping up its efforts to enter the Japanese and South Korean markets. The 50%-owned engine plant jointly built by Foton Motor and Cummins will be completed in August this year. The goal is to become the world’s largest engine factory. The annual profit will reach more than 1 billion yuan, and the products will be exported to high-end markets such as Japan. In addition, relevant person in charge of Futian Automotive Overseas Division also told China Economic Weekly that Foton Motor will further develop the African market this year and take Angola as a breakthrough to comprehensively enhance Foton's after-sales service capabilities in Africa.

As for the cooperation between Foton Motors and Mercedes-Benz, it has been revealed that both sides are still discussing specific cooperation models.

Since 2002, Foton has started negotiations with Mercedes-Benz on commercial vehicles, but it has not yet achieved results. Beijing Automotive Industry Holding Co., Ltd. ("Beiqi Group") and Daimler Chrysler Automotive Co., Ltd. jointly established Beijing Benz-Daimler Chrysler Automotive Co., Ltd. in August 2005 to produce Mercedes-Benz cars and Chrysler. 300C and Platinum Core. Foton Motors is a subsidiary of BAIC Group and has always wanted to cooperate with Mercedes-Benz in the field of commercial vehicles.

Although the sales volume of commercial vehicles in Fukuda reached 400,000 units in 2007, which is second only to that of Mercedes-Benz (700,000 vehicles), the profit of Mercedes-Benz in the same year was 2 billion euros, and the profit of Foton was less than 500 million yuan. Can see it." At present, Foton commercial vehicles are sprinting into the high-end market, and cooperation with Mercedes-Benz is undoubtedly of great benefit.

According to the planning of Foton Motor, 2006-2010 is the third startup phase of Foton Motor. Its business goal is to engage in global operations and make Foton Motor a world-renowned automobile brand. So starting last year, Foton Motor began to implement its overseas expansion plan.

For example, on April 28, 2007, Foton Motor and Weichai Power (Italy, Quotes, Information), Germany's BOSCH, and Austria's AVL formed an international strategic alliance. Weichai Power is currently the largest diesel engine manufacturer in China; German BOSCH company is an industrial company engaged in automotive technology, industrial technology and consumer goods and building technology; AVL Austria is a collection engine research, development, design, consulting and engine testing. Equipment production of multinational groups. According to the concept of Wang Jinyu, Foton Motor must implement the business strategy of “technological value creation, quality wins the market”, “walking the path of business expansion based on intensional growth, making both domestic and overseas markets fly together and achieving the third takeoff of Futian”.

Cost pressures still

According to German automotive grading standards, cars are divided into four levels: A-class cars include A, A0, A00-class cars, generally referred to as small cars; B-class cars are mid-range cars; C-class cars are high-end cars; and D-class car fingers are It is a luxury car. China currently adopts German grading standards. In the field of automobile exports, the current domestic automobile companies are mainly economical sedans or mid- and low-end brand sedans, that is, commercial vehicles.

Regardless of the automobile industry policy that has already been promulgated, or the “Eleventh Five-Year Plan” of many auto companies, it is an important goal to cultivate auto companies that produce more than one million vehicles a year, but people in the industry believe that the growing Chinese auto companies are temporarily It still does not have the strength to fully confront the international giants.

According to the statistics of the China Association of Automobile Manufacturers, in 2007, the United States’ domestic auto production exceeded 12 million, and 15.3 million new cars were sold, of which more than 3 million were imported cars, which is still the world’s largest auto market; Japan’s domestic market demand is less than 6 million vehicles, but a large number of cars exported to the international market; China's domestic market is strong demand, basically self-produced and sold, in 2007 China exported nearly 600,000 vehicles, imported cars about 300,000. In 2008, the national automobile production and sales scale is expected to exceed 10 million vehicles, but the industry's concentration is not high. At present, there are more than 140 vehicle manufacturers in China, which are more than the sum of the United States, Europe, and Japan. Most of the Chinese auto companies exporting overseas adopt overseas plants, build R&D centers, and establish regions. Sexual headquarters, such as Futian, Yutong, etc.

“The strategy of Chinese car companies to go global is inevitable, but we must pay attention to the market strategy and product quality in the competition with traditional strong countries.” Dong Yang, Executive Vice President and Secretary General of China Automobile Industry Association, expressed to China Economic Weekly .

Yuan Gangming, a researcher at the Institute of Economic Research of the Chinese Academy of Social Sciences, believes that the domestic auto industry cannot pursue one-sided pursuit of economies of scale and ignore the benefits of growth. He believes that: "For many years, the Chinese auto industry has been pursuing large-scale production, but there has been no fundamental change in the situation in which auto production has been disrupted. In particular, some domestic companies are pursuing economies of scale in a one-sided manner and cannot achieve enterprise scale production and reduction. Cost and the role of improving corporate competitiveness."

For these views, Foton Motor Chairman Wang Jinyu told the China Economic Weekly that the Chinese automobile's internationalization strategy must have a sequence, give full play to its existing advantages, and avoid weaknesses. “Fukuda's plan to achieve sales of 800,000 vehicles in 2010 is still certain to achieve domestic sales of 600,000, but 200,000 foreign vehicles is a great challenge. If this is achieved, it means that the Foton Global Network The construction of the platform has made breakthrough progress."

In addition, from the beginning of 2008, the price increase of steel products caused by a 65% increase in iron ore price has affected the automobile manufacturing industry, especially for self-owned brand enterprises that mainly produce low-end and middle-end products. The cost has been rising and the price competition has been increasing. Enthusiasm is stepping closer to their bottom line.

It is understood that the low value-added light truck product prices of Foton Ao Ling, Jinbei, Jianghuai and other brands have started to increase by several thousand yuan before the iron ore price increase, but Auman et al. No significant change has occurred.

Regarding the cost issue, Wang Meichen, deputy general manager of Foton Motor’s business in charge of production, procurement, and plant construction, introduced that Foton Motors has reduced procurement costs by 200 million yuan since 2007 and promoted TPS (lean management model) at low levels. Structural adjustments are made between parts and components with high added value to minimize costs, and Futian Automotive's low-cost, high-quality strategy is implemented.

Wang Meichen believes that in addition to raising the prices of low-end products, enterprises can further increase the added value of high-end products as an effective way to ease cost pressures. “And at present, the profit margin of high-value-added products is still relatively large, and the pressure of increasing costs can still be self-digested.”
View related topics: Beiqi Futian, Futian Automobile brand value of 22.157 billion yuan


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October 12, 2023