The decline in profit margins, high consumer prices, and the volatility of the stock market, and whether it will become the “turning point year” or “adjustment year” of the auto market in 2008 under the interference of various complicated economic factors?

“I expect the automotive industry in 2008 to have a neutral outlook,” said Ye Lin, Asia Automotive and Infrastructure analyst at Cazenove, speaking to reporters on June 4.

Passenger Cars - Impact on the Low-end Market

According to data provided by Cazenove Asia, the growth rate of low-end compact cars (A0 class) is negative by 11% in the case of an average growth of more than 20% in the passenger vehicle market in China in 2007; the growth rate of compact cars is 10%. . Ye Lin believes that this situation will continue in 2008 and the low-end auto market will be affected.

Ye Lin believes that one reason is that most of the Chinese market is car or family car. The size of the car is the main consideration; on the other hand, the self-owned brands are mostly concentrated in low-end product lines, engines, and safety. The technology is not very satisfactory, and the fuel consumption has not reflected the advantages of small cars.

Ye Lin is more optimistic about Dongfeng Motor. From 2008 to 2009, Dongfeng had 6 to 7 new models on the market, and it will also have a high-end product platform, which will help the profit margin, and the profit per share will exceed 35%.

Heavy trucks - vertical integration soon

Ye Lin predicts that the overall weight of the heavy truck industry in 2008 will increase by about 10%. She believes that the heavy truck Euro III standard emission policy that began in July this year will not lead consumers to purchase in advance. Because from the perspective of the vehicle price, the increase of 4,000 yuan to 5,000 yuan is not a lot. The idle cost of a 20-ton heavy truck will reach 4,000 yuan to 5,000 yuan per month.

Ye Lin suggested that before the implementation of the Euro III standard, we would sell Weichai power on a rallies basis; in the fourth quarter of this year, the Euro III emission standard would be used to buy into China National Heavy Truck Group after netting out the net.

She said that China's heavy-duty truck industry is highly integrated, with the top three companies accounting for 60% of the market, and companies have the ability to vertically integrate suppliers. For example, Sinotruk, SAIC Iveco Hongyan and other companies have their own plans to make engines.

It is understood that China National Heavy Duty Truck and its parent company is China's largest heavy truck manufacturer, with a 21% market share. Among them, China National Heavy Duty Truck has a 17% market share. Weichai Power is China's largest engine supplier of heavy-duty truck engines and construction machinery. It holds a majority stake in the fourth-largest truck manufacturer in China. After announcing the bright 2007 results and 59% growth in industry sales in the first quarter of 2008, the stock prices of the two companies surged.

Parts - Mergers and Surprises

The continued sluggish auto market in developed countries such as the United States means more opportunities for China’s auto parts industry.

According to U.S. media reports, both General Motors and Ford Motor Co. have reported that sales in the United States have fallen sharply in May. General Motors fell 30% year-on-year, with sales of cars down 17%. Ford's sales in May decreased by 15.9% year-on-year. "The world's auto giants will be better watching the Chinese market. In the past few years, multinational auto companies have only introduced products in China, but now they have put key spare parts, engines, and research and development centers in China." Ye Lin said, "Part manufacturers There will be more opportunities to go out and overseas acquisitions will usher in a good opportunity."

According to the purchase price Ye Lin Jieshao, China's largest manufacturer of construction and decorative parts Minth negotiations this year in Germany is half of last year, and there will be more acquisitions. Minth Group had acquired a loss-making American peer in the first half of 2007 and turned losses at the end of 2007.

"Chinese auto parts companies need to pay attention to formulating a clear strategy and focus on different phases during overseas development. In addition, we must consider the details of implementation, such as whether or not to shut down local factories." Ye Lin said.

It is understood that China's auto parts industry is more fragmented than the entire vehicle industry, with more than 5,000 parts manufacturers, and the survival status of autonomous zero-step enterprises is worrying. Anbang Consulting analyst recently pointed out that foreign investment in China's auto parts market has accounted for more than 60% of the market share, accounting for more than 80% in the car parts industry


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