Independent Brand Further Differentiation: Head Car Enterprises Die High

In December 1st, the seventeenth Guangzhou International Automobile Exhibition (hereinafter referred to as the "Guangzhou auto show") came to a close. The sluggish car market and slightly deserted venues have written commentary on the whole year's record of car companies.

All along, the Guangzhou auto show is a gathering place for heavy vehicles. It is only a month away from the end of the year, and the car companies are also hoping to sprint their year-end goals with the help of the Guangzhou auto show.

For the independent brands with frequent market share, the desire to rush at the end of the year is particularly urgent. According to the data released by the China Association of automobile manufacturers, sales of independent brands were about 770 thousand in October 2019, down 9.6% from the same period last year. In the first 10 months of this year, the sales volume of independent brands was about 6 million 672 thousand, down 17.5% from the same period last year, and the decline was higher than that of the whole market. In terms of market share, the independent brand declined for the 15 consecutive month, and this year it dropped to 39.9% in the total sales volume of the passenger car market in October.

"The future competitor of Chinese brand is not the independent brand itself, but the joint venture brand. Independence and joint venture must be a war. So we are now trying to compete directly with the joint venture. " During the Guangzhou auto show, Zhu Huarong, President of the Changan automotive industry, told reporters in an interview with the twenty-first Century economic report.

Independent brand "all sentient beings"

In the Guangzhou auto show, which has the significance of "China's automobile market vane", every move of car companies has become the focus of attention of the industry, and to some extent, it reflects its future development. This Guangzhou auto show has also become a portrayal of the polarization of independent brand cars.

Among them, Guan Zhi, Zhongtai, Li Fan, Huatai and other car companies are absent from the auto show. Over the past year, sales of these car companies have fallen sharply, falling into production rumors, arrears of wages or even bankruptcy.

According to the China Automobile Industry Association's data, the sales of independent brand passenger cars including Zhongtai, Huatai, Weichai (Chongqing), Sichuan wild horse, Chongqing speed, Li Fan and so on in the first three quarters of this year are not good, resulting in their brands and products gradually moving to the edge. The total sales volume of these brands in the first three quarters fell by more than 30%, and some even close to 80%. The disadvantaged brands, whose sales volume was not large, appeared to be more fragile in the overall downturn of the market. The sales volume of some independent brand car companies in the first three quarters was even less than 10000 vehicles.

When sales volume is weak, capital chain is tight and new products are not enough, they choose not to participate in the auto show, which is also a way to reduce costs. But on the other hand, the second tier car companies represented by the Great Wall, Geely, Beiqi, Chery and so on have been advancing vigorously, and have been distributing high-end products, hoping to break the market pattern by brand and get new increments.

Behind this is the rapid improvement of the concentration of the independent brand market. According to a recent data provided by McKinsey, the concentration of Chinese independent brands has changed significantly in the past three years. The market concentration of the independent brand head brand (8) in 2016 was 64%, while in the first 5 months of 2019, the data became 79%, and increased by 15 percentage points in three years.

Such a situation also indicates that the "head effect" of the independent brand is becoming more and more obvious. In the future market competition, apart from a few head brands, more brands will face the fate of being eliminated.

"So there will be Matthew effect in the market, the stronger the stronger, the weaker the weaker. This year, we have seen that the car companies' "stop and ride" in the next 35 years is not news. I think more businesses may fail in the next three years. Instead, it will form a benign state. Zhu Huarong said, "next year the car market is still under pressure, but it also allows the whole industry to return to a healthy competition, and truly return to market orientation, customer orientation and product orientation."

Under the heavy pressure of the decline of overall sales volume and share, the distinct polarization seems to bring bright and hope to the future of the independent brand.

At present, the entire automobile industry has entered a period of deep structural adjustment. The independent brand car enterprises have accumulated many years, and have made progress in product competitiveness, brand influence and compression capacity. Despite the overall decline, with the survival of the fittest and structural adjustment, some independent brands seek to change in the face of adversity and stand out.

Independent brand "strive for the upstream"

In the face of market shuffling and the disappearance of SUV growth dividends and the cooling of the new energy market, the second tier car companies represented by the Great Wall, Geely, Changan, Beiqi and Chery collectively compete for the upper reaches. They have arranged high-end products, hoping to break the market pattern by brand and get new increments.

In Zhu Huarong's view, the development of independent brands is an inevitable trend, and the opportunity to turn over their own brands will always exist. "China's auto market has difficulties in the short term, which is related to the big environment and the big situation. But in the long run, China's automobile market is very huge capacity. I still insist on the existence of 35 million -4000 capacity new cars."

In fact, as early as 2014, a new round of high-end brands has begun. From Haff H9, GB to GA6, and Geely Boli, independent brand car companies have launched high-end models to enter the high-end passenger car market.

In addition to the launch of its high-end flagship models, Geely and the Great Wall are "starting a new business" to create a brand new high-end brand. Almost simultaneously LYNK & CO and WEY also pushed the high-end brand to a climax.

At the just concluded Guangzhou auto show, the Great Wall automobile's high-end brand WEY hybrid vehicle VV7 PHEV and VV7GT PHEV world debut, while positioning the flagship luxury SUV new concept car WEY-X has also appeared. Chery insists on the high-end line, and EXEED star TX/TXL new models are listed on this Guangzhou auto show. In terms of Geely Automobile, this year's overall vehicle technology and high-end development trend is obvious. Geometric A, star and other products have been launched in succession. The high-end brand leader also resists the competition of the joint venture brand through brand building, strengthening brand differentiation and consumer experience.

Beiqi has released a new strategy for its high-end brand ARCFOX. "Now the major auto manufacturers are implementing the strategy of" product upwards "and" brand up ". From the perspective of product structure, they are involved from high end to low end and middle end, but only with different product combinations. Of course, the overall trend towards high-end development is industry trend. Beiqi new energy Party committee deputy secretary and general manager Ma Lei column told reporters, "Beiqi upward development effect is very successful, this year, the number of high-end cars, accounted for 80%."

Although the brand has always been viewed by the independent brand car companies as the way forward, it is undeniable that in the "cold current" market, the overall market is down, and the exploration of the joint venture brand has set up some obstacles and resistance for the high-end and upward trend of the independent brand. Some of the independent brand models, which are mainly in the high-end line, directly to the standard joint venture brand products, are experiencing sales decline. In the industry, the two high-end brands of WEY, the leading and the leading brands of the industry, which were highly anticipated and almost at the same time, began to feel a lot of pressure in 2019.

"The core of the group's requirement for the leader is the healthy growth of the brand. When we are exploring the joint venture, we can withstand the pressure and win the game." Lin Jie, vice president of Geely Automobile Group and general manager of the leading car sales Co., Ltd., said, "in 2019, the leader took brand building as the primary goal and took the initiative to reduce the sales target."

Data show that in 2019 1-10, the total sales volume of collar gram was only 103 thousand and 100, a slight increase of 0.8% over the same period last year, and the WEY brand also had to reduce its share price.

In fact, the adjustment of collar has started since the second half of 2018, paying more attention to the health of terminal retail channels, controlling inventory, adjusting marketing methods, positioning the final year in "sales" instead of sales figures.

For high-end products of independent brands, although sales volume is not the only criterion to measure the success or failure of high-end products, the scale is too small to mean the weakness of brand power.

"There is an old saying about doing business in Baoding:" prefer to work or sit. "The capital market should respect this statement." let me profit. " In the view of the Great Wall automobile chairman Wei Jianjun, China's auto enterprises lack the high-end method, but the high-end brand is also the way to choose.

In the view of the industry, the market environment is not good enough to become a trend of high quality development. The era of enjoying market dividends by relying on cheap products has ended. The key to high-end brands is to find advantages based on the industry.