In the past 15 years, China’s auto industry has formed unique features and industrial structure. So, in the next decade, what will be the new features be as this industry develops? What will the industry structure be in 2025?
On the afternoon of June 8th, at the closing ceremony of the 2017 Global Automotive Forum, industry leaders discussed how the future auto industry will evolve from the perspective of OEMs, policy makers, dealers and parts suppliers.
As the closing session of the Global Automotive Forum this year, the theme was, “2025 auto industry outlook: opportunities, challenges and forward direction”. Some of China’s auto industry’s top leaders gave their own predictions. The VIPs who participated were, President of Changan Automobile Co., Ltd, Zhu Huarong; President and CEO of Geely Auto, An Conghui; Senior VP of BYD Co., Ltd, Lian Yubo; Assistant President of SAIC Motor Cooperation, Cai Bin, etc.
Zhu Huarong: The Growing Pain in an Era of Experience-oriented Economy
First, with the progress of Intelligence plus, Internet plus, New Energy plus and other technologies’, automobiles will become the next smart terminal device of intelligent mobility. He said: “There will be an ecosphere based on automobiles in less than ten years.”
Second, the future car companies will encounter changes in product and service transformation and will need to explore new business ecological models. He also said, “In today’s economy, the consumer’s demands are upgrading, therefore, the consumer’s pain points will be amplified, and the demands will be strengthened. Therefore, the car companies that cannot produce products to meet users’ needs will eliminate.
Third, China’s auto industry will begin the integration of resources. Internet companies have to get involved in the field of automobile manufacturing. With the growing trends of internet car manufacturing, intelligence, autonomous cars, the car companies need to focus on integrating resources.
Forth, the future market of the automobile industry will be re-shuffling. There are still some market segments that are not covered by traditional car companies, but the competition will be more intense in next five years. He said: “Chinese brands had 46 passenger car manufacturers in 2016, but in next five years, there will be ultimately left about 5 car brands developing better due to intensified competition in China’s auto market.”
Mr. Zhu also said Chinese car enterprises should have a deep understanding of the new trends, should have the ability to create classic products and services to meet consumer needs. Additionally, they need the ability to integrate the industry chain and multi-channel profitability. Zhu Huarong added, “The current high cost, inefficient model of operation of traditional 4S car shop will soon be abandoned.”
An Conghui: Geely Will Compete Face to Face with Joint Venture Brands
Will China need self-owned brands? An Conghui gives a direct answer:”When there is a market space, with the differentiation of competitive advantage and customer needs, there is a need for the existence of Geely. The position of Geely is to occupy the absolute advantage in the Chinese brand, and to compete with second – line joint venture brands.”
So, in the face of the new era of competition under the new environment, what is Geely’s business layout in order to sell 2 million cars and gain top ten ranking in the world?
According to An Conghui, Geely will focus on four aspects of work in a solid and efficient manner: First, focus on the market and the user to create top products for each market segment to meet the consumer’s personalized needs. Second, make a foundation of world-class technology, and research and development system. Additionally, companies need in house technology capacity to train high-quality R&D and technical personnel, through continuous R&D investment. Third, strengthen the integration and coordination of internal and external resources. Fourth, increase the training of personnel and the structure of corporate culture.
An Conghui said: “The sustainable development of the enterprise is a systematic and global issue. We are still in the stage of continuous exploration and constant revision. We are well aware that only if the Chinese auto companies collectively achieve the sustainable development, then the Chinese automobile Industry can truly gain a firm foothold on the global stage.”
Lian Yubo：Passing on the Outside Lane Requires More Strength
China’s auto market is the worlds largest and the fastest growing market, the future of China’s auto market may become the most bold and the most leading market. The new energy market segments are most likely to transcend the market, this being the case, how will the Chinese car companies seize these opportunities?
“In the field of new energy vehicles, if companies don’t pay enough attention, they will make the same mistakes of traditional fuel vehicles.” Senior VP of BYD Co., Ltd, Lian Yubo said: “In a car race, the corners provide a chance to the driver to pass on the outside lane. However, the corners also require higher performance from both the car, and the racing driver.”
Lian Yubo pointed out that the integration of intelligence, networking, new energy technologies into vehicles is an inevitable trend. The Chinese market is still growing. The new and old technologies are cross-converging, so both new and old car companies need different breakthroughs.
According to Lian Yubo, research shows 52% consumers in China are willing to buy pure or hybrid electric vehicles. At the same time, China’s “13th Five-Year Plan” proposes that the number of new energy vehicles in demand will reach 2 million by 2020, and Chinese self-owned brands’ share will reach 60%. From the economic level, “the Belt and Road” provides Chinese auto companies with new opportunities to seek global opportunities, which is a potential development opportunity for the auto market in the future. Therefore, the Chinese auto companies must both enhance internal strength and concern about the consumer.
Opportunities coexist with challenges. Lian Yubo thinks China’s new energy vehicles still face many challenges, such as the state refunds and subsidies. He said the subsidies help both sides. The subsidies encourage Chinese auto companies to improve the product competition, to master the core technology of the whole industrial chain, and to improve efficiency and reduce costs. Thus with the current lack of subsidies, BYD masters the core technology, improving the efficiency of the whole industry chain, reducing costs. BYD specifically work on the aspects of battery, motor, electric control, namely the development of the whole electric vehicle industry chain.
Cai Bin: Automotive Industry Will Experience Three Changes.
Cai Bin, Assistant President of SAIC Motor Corporation, China, said the changes of Chinese economic development trends will determine and influence the future direction of Chinese cars. During this period where the traditional industry investment is almost saturated, the new technology, new industries and new industrial models are appearing. The past wave of consumption way is gradually being replaced by diversified and individual consumption. Chinese economy is transforming into an innovation-oriented one, and the future of the Chinese auto industry will be differentiated.
Cai Bin said: “In the Chinese auto industry, although innovation is a common term, it is the topic of the development for the future of Chinese auto market. To be innovation-oriented, we need to break through the original development model, to expand the innovative room, and to seek and create new market opportunities in uncertain environment.
He said: “The change of users and technology are bound to influence the development of Chinese auto industry. Therefore, the trend of the auto industry in the future will be mainly reflected in three aspects: First, R&D, the integration of new energy, internet and intelligence will not only change the automotive evaluation standards, but also the direction of the improvement of traditional automotive technology. Second, manufacturing, mobile connectivity and big data make smart manufacturing possible, thus, traditional cars are experiencing pressure to change. Third, consumption and service, thanks to the change of new consumer spending patterns, as well as the rapid development of Internet technology, the role of service experience in the industry becomes more significant.
Cai Bin frankly said, along with the deep integration of financial and auto service, ownership and usage for cars will also reform in the future, and car sharing will lead the new business model.
-Published on pages#44-46 July-2017 edition of MOBILE WORLD Magazine