According to statistics from the China Association of Automobile Manufacturers, from January to September, a total of 3.198 million automobiles were produced nationwide, an increase of 35.77% year-on-year; a total of 3,183,300 automobiles were sold, an increase of 30.16% year-on-year. It is worth noting that the difference in the number of production and sales across the industry has increased month by month: from the balance of production and sales at the beginning of the year to the end of September, it has expanded to 80,000 vehicles. The corresponding increase in the difference between the number of production and sales is the increase in automobile inventories. This trend should attract the attention and attention of relevant parties.
Why inventories increase
The rapid expansion of production capacity. Due to the high profit margins of China's auto industry and the tremendous driving effect on the regional economy, many regions have focused on the development of the automotive industry as a pillar industry. Since 2002, the boom in the auto market has strengthened the confidence of all investors and led to the development of the entire industry. The rapid expansion of production capacity, and the growth of production capacity is greater than the market demand growth.
A report from the National Information Center in May said that the national automobile production capacity has reached more than 5.5 million, and the production capacity of cars has reached more than 2.5 million, which is much higher than the market capacity, making the issue of overcapacity the focus of attention of all parties in the market. Since then, the National Development and Reform Commission has repeatedly expressed concern about the overheating of auto investment in public places, but the investment enthusiasm of auto projects across the country has continued to increase.
Foreign institutions also paid attention to this. Michael Doune of Asia Automotive Resources Consulting predicts that foreign and local automakers will reach 7 million cars by 2008, and sales will only be met even if estimated on the basis of "most optimistic demand growth." 4.7 million vehicles. According to Goldman Sachs estimates, by 2006, the total capacity of the Chinese auto market will reach 6.9 million units, and the sales volume is estimated to be hard to exceed 2.2 million.
Some products are not right. From the inventory model analysis, most of the models with large inventory are old models.
Automobile consumption policies have limited market stimulation. The recent policies affecting market demand mainly include the “Administrative Measures for Auto Finance Companiesâ€. However, the industry generally feels that this approach is more restrictive than encouragement; at the same time, there is a process from the introduction of measures to the establishment of related companies, and in the short term, the consumption of automobiles. The promotion is limited. In addition, the increase in the statutory deposit reserve ratio by the central bank from September 21, 2003 has also restrained the consumption of auto loans to some extent.
Consumer psychology has become more mature. Because the annual reduction in tariffs on imported cars will lead to price cuts for cars, the overall decline in car prices in recent years has led to consumer expectations for future car market prices to decline.
In addition, the introduction of new models is getting faster and faster, product replacement cycle is getting shorter and shorter, price wars are frequently staged, and car prices are declining, making it difficult for consumers to grasp the market trend, resulting in the psychology of holding money to buy, to a certain extent, suppressed Immediate consumption.
Concerns come from the psychological level
Generally speaking, companies in any industry should have a certain amount of finished product inventory in order to prepare for smooth sales.
Foreign companies believe that inventory is less than the manufacturer's two months of production is normal. The domestic automobile market is currently better than the international overall level, and the stock turnover is fast. The manufacturer's approved stock standard is half month production. Based on this calculation, the 150,000 inventories of the entire industry should be within the normal range, and the above standards have not yet been reached. Concerns about the current stocks are more from the psychological level. Compared with the previous zero inventory level, it is temporarily unacceptable for the current gradually increasing stocks.
The zero inventory of China's auto industry in the early period does not indicate that the quality of auto products is good and the level of enterprise inventory management is high, mainly because the buyer's market is not fully formed by market competition. As the country has always implemented a strict market access management system for the automotive industry and the market is not fully competitive, the supply of products in the society is increasingly in short supply. This has resulted in a blowout market since last year, and the manufacturers have basically digested the past years. Backlog of inventory.
Digestion inventory is imminent
Although the inventory level is still at normal level, taking into account the particularity of the automobile market after tariff reduction in China's accession to the World Trade Organization, the work of digesting inventory is still urgent. Although the tariff reduction directly affects the price of high-grade imported cars, the price of high-end cars will be passed on to medium and low-end vehicles in turn, thus affecting the price level of the entire automobile market. Judging from the annual rate of decline in car prices in recent years, the basic rate is consistent with the rate of tariff cuts, indicating that tariffs have a significant impact on China's auto market.
According to China's commitment to join the World Trade Organization, the total import quota for automobiles and key parts in 2004 was 10.494 billion U.S. dollars; the tariff level is expected to decline by about 5% from 2003, and about 37% of the total.
In addition, at the end of the year, digesting and processing inventory is the financial need for manufacturers to withdraw funds. It can also free up pricing space for new product launches next year. Judging from the timing of price adjustments, the loss caused by the price adjustment at the end of the year is less than the beginning of the year.
Therefore, it is necessary for manufacturers to plan ahead and take measures to handle inventory as soon as possible so as to gain more initiative for themselves.
High profitability and high price cuts
Enterprises can usually use limited production or price cuts to deal with inventory. However, the effect of limited production measures is somewhat lagging, and it is less likely to adopt such measures. At present, it seems that the most effective and convenient means of handling inventory is to cut prices. Although manufacturers are jealous of price cuts and believe that price cuts are the next best thing in business strategy, price cuts are a realistic option for promotion.
The development and accumulation of China's auto industry has offered the possibility of reducing inventory and compressing inventory. The automotive industry has a high profit margin and there is more room for price cuts. The data released by the State Development Planning Commission shows that in 2002, the auto industry’s sales revenue was 151.5 billion yuan, and the profit realized was 43.1 billion yuan. The average profit rate of the entire industry was 28.45%. At present, the average profit rate of the whole society is between 10% and 15%. The profit of the auto industry is more than double the average profit rate of the whole society, and it is much higher than the average profit rate of the international industry from 3% to 5%. Take GM as an example. The profits of its Asia-Pacific subsidiaries (mostly from China's profits) increased to US$162 million in the third quarter, and the average profit per vehicle was approximately US$1,200. The North American subsidiary’s profit was US$128 million. The average profit per vehicle is only $102. The ultra-high profit rate left a huge space for the price cuts of Chinese cars.
In addition, although the prices of steel and rubber products for automobiles have risen this year, with the increase in automobile output, the economies of scale have begun to appear, and the cost of a single vehicle has been declining, which has also made it possible to reduce prices.
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