Import substitution of auto core parts is an opportunity.

    With COVID - 19 under effective control, the Chinese auto market is gradually improving.Reporters from China securities journal have learned that auto companies have been working overtime and production capacity has not become an important factor restricting industrial development, but consumer confidence on the demand side is still insufficient and it will take time to recover.

    Analysts pointed out that due to the spread of the overseas epidemic, the risk of the overseas auto parts supply chain will be increased, the mainstream vehicle enterprises to the domestic parts of the relevant enterprises to increase the support, auto core parts import substitution opportunities.

    Overseas supply chain, components, import substitution

    Welding, painting and assembling, more than 2,500 workers are cranking out pickups at Great Wall's chongqing plant to clear the backlog.An yuhe, director of the public relations department at the chongqing plant, told the China securities journal that the first-quarter production plan was affected by the outbreak.Since returning to work, the company has been ramping up production, which has now surpassed last year's peak.

    Data released on April 10 by the China association of automobile manufacturers show that key enterprises are returning to work and production more quickly than expected.According to the latest survey statistics on the resumption of work and production of 23 enterprise groups mastered by the association, the vehicle production base has fully resumed work, with 86% of employees returning to work, and the resumption of production has reached 75% of the average level of last year.

    But the impact on many auto and parts makers is profound.

    "Almost two hundred million orders were lost."An executive at an auto parts supplier in hubei province told the China securities journal that the company is still facing the problem of lost orders during the outbreak.

    The head of the industry is not immune.Ningde time on April 10 released a forecast for the first quarter, the report period is expected to be attributed to the shareholders of listed companies net profit fell 20% to 30% year on year.The company said that in the first quarter of 2020, due to the epidemic and market factors, the amount of new energy vehicle installation decreased significantly, the company's revenue from power battery sales declined in the first quarter, and the net profit attributable to shareholders of listed companies decreased compared with the same period last year.

    The China association of automobile manufacturers expects the auto industry to recover to the same level in the second half of last year, taking only domestic factors into account.

Dangerous cooking machine

    How to survive in the "winter", is a number of automobile industry chain manufacturers need to face the problem.From the current situation, high-end, differentiated product positioning and sound business strategy, so that some enterprises are relatively small impact.

    According to the unified requirements of the epidemic prevention and control work in hubei province, danjiangkou dongfa crankshaft co., ltd. just recently returned to work.But the company's chairman, huang guoguo, believes that this has brought a rare period of rest for the development of the company."It will take at least a decade for the industry to fully understand the technology.Technology is not qualified, can only do low-end products to fight the price war, in the long run is not conducive to the development of the enterprise.

    Dongfa crankshaft is mainly engaged in the manufacture and production of engine crankshafts.The company is dongfeng motor company 4H crankshaft products exclusive suppliers.Through the dongfeng company this big customer, the company locked a part of the order.In addition, the company produces some high-end crankshaft products, mainly to meet the high-end customization needs of the overseas market.

    Huang told the China securities journal that upgrading technology requires constant investment in new equipment, and that human factors are difficult to achieve by business management alone."There are fewer and fewer young people who are willing to go into factories because of the intensive work in traditional manufacturing.Before returning to work, we have been doing online training, many employees have the right attitude, after returning to work a lot of practical work.Huang said your country.

    Changes in overseas situations bring growth opportunities for breaking through high-tech barriers.An executive of a large domestic private equity fund told the China securities journal that some independent core auto parts suppliers are facing opportunities."In the past, due to high technical barriers and scale disadvantages, domestic core auto parts suppliers did not have the opportunity to adapt.This supply chain risk will increase the support of mainstream vehicle manufacturers to relevant domestic enterprises."

    Pacific securities research report, according to the current domestic vehicle's basic localization rate over 95%, still relies on imported parts and components are mainly concentrated in the core of the engine, transmission, fuel injection system control unit, the core of the stability system chip, connectors and other units, some manufacture high accuracy requirement of mechanical product.

Gradual recovery in consumption

    As the situation of epidemic prevention and control continues to improve, automobile consumption is gradually recovering.

    According to the data released by China automobile distribution association, the retail sales of passenger cars reached 1.045 million units in March, down 40.4 percent year on year and down 38 percentage points from February, showing a good v-shaped trend at the bottom.Cui dongshu, secretary general of the association of China automobile dealers association, said dealers' orders have basically returned to more than 65% of the normal level.However, the recovery of after-sales business is the first, the recovery of terminal retail is slow, new car sales are more dominated by online accumulation of orders.

    "In the last two weeks, there has been a significant increase in the number of people coming into stores.On Saturday and Sunday, 30 to 40 batches of customers arrive at the store, and 10 to 15 cars can be sold in a day."Zhao baozhong, head of Beijing posse, told the China securities journal that the source of customers recently has clearly felt different."Most of the consumer groups are just demand, and many of them come to the store directly after full communication through the live broadcast platform, with a clear purpose."

    Since the beginning of this year, many local governments have issued policies to support the healthy development of the auto industry.According to incomplete statistics from the China securities journal, zhejiang, jilin, liaoning, hunan, guangzhou, foshan, zhuhai and nanchang have successively introduced policies to promote automobile consumption, including the introduction of automobiles to the countryside, subsidies for new-energy automobiles, and encouragement of the purchase of new cars of the "state six" standard.

    Yu dong (not his real name), who works at a public institution in nanchang, jiangxi province, has been waiting around for a year to buy a Volvo XC60.The city of nanchang recently introduced an incentive policy to promote automobile consumption, and consumers who buy new cars in the city during the epidemic period can get a subsidy of 1,000 yuan per car.

    However, in the winter is still not moved."Compared to the total purchase price, the 1,000 yuan subsidy is not very attractive."Yu told the China securities journal that he wants to wait and see for a while, and that more brands may follow with more aggressive profit-making measures.

    A salesman at a Great Wall auto 4S store told the China securities journal that many consumers are still waiting for the policy, with more people holding money and watching.Second-quarter auto sales are expected to be clearer than in the first quarter.

    Notably, many cities require the purchase of locally made and sold cars in order to receive local government subsidies.For example, policies introduced in ningbo and changchun require that new cars purchased by consumers must be manufactured, sold and licensed locally.Changsha city requires that consumers need to buy vehicles produced by saic Volkswagen changsha factory, byd changsha, gac mitsubishi, gac fick, hunan cheetah and other auto companies in designated dealers, and can enjoy certain subsidies in changsha.

    "The ultimate goal of local governments in encouraging car consumption is to promote the development of the local auto industry."Xu haidong, deputy chief engineer of caam, said the phenomenon was understandable.It would be to everyone's benefit to suggest that local policies take full account of the circulation of the national market.

    Mr Xu says the car market is not just about policy stimulus, but also about macroeconomic development.Rising consumer incomes and steady growth in fourth-and fifth-tier cities and rural incomes will support the industry.