The Cost Increases Foreign Investment in Beach Light Vehicles
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There are signs that China's light vehicle power market has begun to shuffle. On the one hand, the rapid development of the light truck market is not inferior to the heavy truck market. The rise of short-haul transportation and rural markets has brought a new turning point to the light engine industry. Only the output of light trucks will exceed one million vehicles, and it is expected that it will maintain a growth rate of about 8% in the future. On the other hand, foreign investors are optimistic about the light vehicle power market, and have already entered the board. Substantial progress has been made by giants such as Cummins, Wanguo, and Daouci.
In late April, the International Auto Show was held in Beijing. In the meantime, Zhao Zhuang, general manager of Dongfeng Chaochai Co., Ltd. (hereinafter referred to as Chaochai) told the China Industry News reporter: “The situation is very grim, and the company’s profit target this year is the same as last year.†Chaochao has the primary driving force for light vehicles in China. Said.
Recent concerns: raw material prices
Zhao Zhuang told the China Industry News reporter: "Rising raw material prices have caused the company's product costs to rise by 10% to 20%. It mainly comes from two aspects: On the one hand, the production of pig iron, coke, etc. required for the production of internal combustion engines has recently increased sharply. On the other hand, downstream industries with a larger proportion of raw materials accounted for the increase in cost, and procurement costs rose.
In fact, since 2008, a considerable number of vehicle manufacturers have made adjustments to product prices, but so far, diesel engine companies, which are parts of complete vehicles, have not enjoyed the benefits of vehicle price adjustment. There are two basic reasons: objectively, the engine is a technology-intensive product and the urgency of price adjustment is not in front of the components that make up the entire vehicle; subjectively, price adjustment must be negotiated with the OEM, in other words, unilaterally. The consequences of price increases are serious.
“The decline in profits has affected the R&D and production of the company.†Zhao Zhuang said, “Zhaochai is negotiating with the vehicle manufacturer and brewing price increases, which may rise by about 10%. Dongfeng and Fukuda have agreed to increase prices.â€
While lowering its profit forecast, Chaochao has lowered the cost of technology and lowered the cost of management on the agenda. Zhao Zhuang said that in the past, when it came to reducing costs, it was mainly based on lowering the purchase price. Now more consideration should be given to reducing costs through technology and reducing costs through management. However, it is also very difficult. For example, the use of new materials to reduce costs is a good idea, but new materials do not dare to be used without extensive scientific experimentation; management is not an overnight event. In addition, Zhao Zhuang said that due to the implementation of new labor laws and regulations, the cost of employing is on the rise.
Farsightedness: Foreign investment
The wind picked up and wrinkled a pool of spring water. On March 26, Beijing Futian Cummins Engine Co., Ltd. laid the foundation stone in Changping, Beijing. The Foton Cummins Engine joint venture project has attracted much attention since its inception in 2006. The two parties to the joint venture are the Cummins, one of the world's largest independent car engine manufacturers, and Futian, the largest commercial vehicle manufacturer in China. According to reports, Foton Cummins is not only the first Sino-foreign joint venture of Foton Motors, but also Cummins's only light diesel engine production base outside the United States. The investment from both sides also created an unprecedented hit in the history of China's light wood.
In the long run, the Foton Cummins project may change the pattern of China's light vehicle power market and become the biggest opponent of Chaochao. Talking about this, Zhao Zhuang told the China Industry News reporter that a little-known news, due to the special status of Dy Chai in China's light vehicle power market, Cummins had previously intended to cooperate with Chaochai, but in the end the two sides found it difficult to find a combination of points . From the perspective of Cummins, because the joint venture company had previously been formed with Dongfeng, the strategic cooperation with Dongfeng has been quite solid and cooperation with Chaochai cannot expand its supporting resources. From the point of view of Chaochai, Cummins's technology source is later than that of another US engine giant, the IWC.
August 16, 2007, Dongfeng Chaoyang Diesel Engine Co., Ltd. announced that it has obtained authorization from Navistar NV of the United States and will begin production of a new type of NGD 3.0 litre diesel engine. This 3.0-liter in-line four-cylinder turbo diesel engine is designed to use an electronically controlled high-pressure common rail fuel system with piezoelectric nozzles. It currently meets Euro III standards and has the ability to upgrade Euro IV and Euro V emissions regulations. It is estimated that the factory's annual engine output will reach 40,000 to 50,000 units.
Zhao Zhuang told the China Industry News reporter that the project in cooperation with IWC has completed vehicle matching, and individual vehicles have completed the three-high calibration. Now it is necessary to carry out reliability tests in accordance with the entire vehicle specification. It can be said that the same type of product is the first to go. In one step, vehicle products can be listed more than one year ahead of others. In spite of this, the future market pattern is still difficult to predict. Because, the competition of light vehicle power is much fiercer than that of heavy vehicles. It is reported that in the light engine field listed company Quanchai Power was not idle in 2007, the company jointly with the German ELS é„„ BETT company, BOSCH company, Shanghai Internal Combustion Engine Research Institute cooperation, the development of the European III series small bore diesel engine. Among them, the first Euro III emission 4D22E diesel engine is expected to complete all research and development work in August 2008, and an annual sales income of 600 million yuan will be realized.
Coping: Active preparation
Some economists predict that the Chinese economy may turn a corner this year. As for Chaochai, there is also an inflection point. Because this year, in addition to unfavorable market factors such as rising raw material prices and foreign land grabs, the light vehicle power industry will also face the country's three major exams. Zhao Zhuang believes that the previous two emission upgrades have no significance for this visit. Because the implementation of the country 3 emissions must use electronic control systems instead of mechanical systems, has a strong external characteristics. The first two upgrades were not obvious due to the external features of the product. The so-called upgrade products were mixed, and this time the full realization of electronic control and strict announcement management, and the impact on the market is currently difficult to predict.
Zhao Zhuang told the China Industry News reporter that in the face of many unfavorable factors, the DPRK’s response measures are all-encompassing. First of all, despite the market's profit is not as expected, Chaochao is still focusing on R&D. It is reported that Chaochai will complete the infrastructure at the end of the R&D center in Shenyang. In the Dongfeng Group, Chaochai is the only subsidiary company with complete diesel engine R&D. It has experienced a complete evolution of independent development, cooperation consulting, and technical cooperation. In addition to learning advanced management experience, the cooperation with IWC is mainly based on its own difficulties in R&D. Because there are essential differences between electronically controlled diesel engines and mechanical diesel engines, the accumulated research and development of Chaochao Diesel has been concentrated on mechanical diesel engines.
In terms of management, Chaochai's ERP system is well-known in the industry. According to Zhao Zhuang, Chaochai is learning the QCD production method of Zhengzhou Nissan, which is to grasp the production process through key points such as quality, cost and delivery date. This move will further transform Daw Chai’s relatively extensive business management model in the past, so that this company with a first-mover advantage in the field of light vehicle power will go further.