Geely once won the title of the strongest “disk catcher” in 2020 due to the restructuring of marginal enterprises and the incorporation of idle production capacity. In 2021, this title may be “robbed” by Great Wall Motor Company Limited(601633) .
The latest news shows that Great Wall Motor Company Limited(601633) is taking over the Hanlong car under Zhongtai. According to the public data, Great Wall Motor Company Limited(601633) recruitment work in Hubei Daye, where Hanlong automobile is located, has started, and the transformation projects of Great Wall Motor Company Limited(601633) Daye plant, plant 1 and plant 2 are under bidding, which are regarded as the signal of “restart” of Dazhi Hanlong plant. At the end of 2020, the red headed document marked “Hanlong political development” on the Internet showed that Hanlong automobile stopped production due to serious difficulties in operation.
On December 29, 2021, the reporter of the Economic Observer interviewed Great Wall Motor Company Limited(601633) public relations personages on matters related to the revitalization of Hanlong automobile by the Great Wall. As of the press release, no reply has been received.
In fact, as early as October 2021, great wall and Daye people’s government signed a low-key “framework agreement on vehicle and parts project cooperation”. According to the agreement, Great Wall will take the original Hanlong automobile plant as the base, integrate existing resources and revitalize existing assets. It is expected to be reinstalled and put into operation in January 2022 and the first vehicle will be officially offline in May.
If there is a weak sense of involvement, Hanlong will not be noticed. According to the data, Hubei Daye Hanlong automobile was established in January 2016 with registered assets of 1 billion yuan. As the division plant of Zhongtai automobile, it once produced Zhongtai’s models. In 2019, Hanlong automobile was stripped from the Zhongtai system with capital chain problems and launched its first model, Hanlong, but the sales volume of the car was very small due to the appearance of “Shanzhai” and quality problems.
In addition to Hanlong automobile, many factories that have stopped production or are about to stop production have been pocketed by Great Wall Motor Company Limited(601633) . Before taking over Hanlong factory, Great Wall Motor Company Limited(601633) has reorganized cheetah Jingmen factory and hanteng Shangrao No. 2 factory. The Great Wall has become the main force to clean up China’s inefficient automobile production capacity.
Before taking over these idle capacity, Great Wall Motor Company Limited(601633) itself had multiple production bases. According to public statistics, Great Wall Motor Company Limited(601633) currently has a production capacity of about 2.5 million vehicles. In 2020, the annual sales volume of the Great Wall will be 1.1 million. In 2021, great wall set the goal of selling 4 million vehicles a year in 2025, which has become the most reasonable explanation for its frequent purchase of factories. However, how to quickly absorb and utilize these new production capacity will become a topic facing the Great Wall.
frequently takes over idle factories
Before Hanlong automobile, Great Wall Motor Company Limited(601633) has laid out production capacity in Hubei. At the end of 2020, Great Wall Motor Company Limited(601633) announced that it had officially acquired Jingmen vehicle production base, that is, cheetah’s Jingmen factory. Cheetah automobile fell into business crisis in recent years, and the factory began to be disposed of. Among them, Changsha factory was entrusted to Geely and Jingmen factory was returned to the local government. Then the Great Wall cooperated with the local government to take over the cheetah Jingmen factory.
After being taken over by the Great Wall, the cheetah Jingmen factory has been revitalized. Statistics show that after the transformation of Jingmen factory, great wall has put into operation its best-selling product tank 500. The latest data show that there are more than 22000 valid orders on the first day of tank 500 pre-sale. As of November 30, 2021, the cumulative number of orders exceeds 40000. In addition to tank 500, Jingmen factory also produces P04 and P05 pickups, as well as two MPVS and the production capacity of 700 and 81200 tanks that have not been launched may be insufficient.
In Daye, 350 kilometers away from Jingmen, Great Wall Motor Company Limited(601633) reached cooperation with Daye municipal government to pocket Hanlong automobile production capacity. According to the data, Hanlong factory has four processes of stamping, welding, coating and final assembly, as well as an engine factory, with a planned capacity of 100000 units, which can be further improved after transformation and upgrading. For Daye municipal government, it also hopes to have the entry of large vehicle factories, revitalize the discontinued Hanlong automobile and improve the local automobile industry.
According to relevant media reports, Great Wall Motor Company Limited(601633) only acquired the production capacity of Hanlong factory this time, and will not participate in the deeper level of the company. In this cooperation, Great Wall Motor Company Limited(601633) chose to sign a contract with Daye municipal government rather than Hanlong automobile directly. One of the reasons is that Great Wall Motor Company Limited(601633) doesn’t want to involve subsequent debt repayment, that is, only buy the factory and don’t take over the debt. Previously, Hanlong automobile has been exposed to problems such as arrears of employees’ wages, and the specific amount is unknown. Zhongtai automobile, the parent company of Hanlong automobile, is in the stage of bankruptcy and reorganization.
According to official news, since December 2021, Great Wall Motor Company Limited(601633) has conducted four rounds of interviews in Dazhi public employment service center, employing 224 people. The recruitment enterprises are great wall Seiko, honeycomb power and ant logistics. The three subsidiaries are respectively responsible for the body, power system and logistics of Great Wall Motor Company Limited(601633) . Among them, the employees employed by Great Wall Seiko will go to Jingmen factory for technical training for 4-6 months. According to the statement of the recruitment department quoted by the media, the recruitment of Great Wall vehicle business is about to begin, and the talent gap is about 2000-3000.
First Jingmen, then Daye. The frequent production capacity layout in Hubei is considered to be Great Wall Motor Company Limited(601633) interested in the automobile supporting capacity of Hubei. Hubei is a very important presence in China’s automobile territory. As the fourth largest automobile production base in China, it not only sits on many companies of Dongfeng Group, SAIC GM factories, but also many parts enterprises. In addition, Hubei has a unique location advantage, and logistics and transportation are very developed. Some media quoted sources as saying that Great Wall Motor Company Limited(601633) Chongqing Yongchuan base also intends to transfer some products to Hubei for production.
In addition, in June 2021, the great wall also signed a contract with Jiangxi Shangrao economic and Technological Development Zone to bring the phase II plant of hanteng automobile into its own production layout. Due to poor operating conditions, hanteng had previously stopped production. It is reported that based on the production base of Shangrao Economic Development Zone, Great Wall Motor Company Limited(601633) will mainly produce Haval brand SUV models, form a production capacity of 120000 SUV vehicles per year in the future, and invest in supporting projects such as interior and exterior decoration, seats, chassis and 150000 engines per year.
private independent “one brother” dispute
If the capacity of Hanlong automobile incorporated this time is added, Great Wall Motor Company Limited(601633) will form 11 production bases in China, which are located in Baoding, Hebei, Xushui, Tianjin, Rizhao, Shandong, Taizhou, Jiangsu, Zhangjiagang, Zhejiang Pinghu, Chongqing Yongchuan, Jingmen, Hubei Daye and Shangrao, Jiangxi. According to the available data, the total production capacity of these bases has exceeded 2.5 million. This does not include the production capacity of the Zhangjiagang base of “beam automobile” jointly invested by great wall and BMW.
In 2013, Wei Jianjun, chairman of Great Wall Motor Company Limited(601633) , once said that Great Wall Motor Company Limited(601633) will base its production expansion on Baoding and Tianjin, and will not build new plants in other regions. However, in recent years, Great Wall Motor Company Limited(601633) ‘s production capacity layout strategy has changed significantly. Besides Baoding and Tianjin, it is widely involved in the Middle East and south.
Great Wall Motor Company Limited(601633) is obviously ahead of the layout of production capacity. In 2020, Great Wall car sold 1.11 million vehicles in total. Based on this figure, its reserve capacity utilization rate is less than half. In this case, the Great Wall’s series of moves are considered to be preparing for the sales target.
In June 2021, the Great Wall announced its strategic goal for 2025, that is, to achieve an annual sales of 4 million vehicles worldwide by 2025, of which 80% will be new energy vehicles, with an operating revenue of more than 600 billion yuan.
This goal is considered more radical. If we take the sales volume and revenue of Great Wall Motor Company Limited(601633) 2020 as the benchmark, in order to achieve the strategic goal of 2025, the annual compound growth rate of automobile sales volume and revenue from Great Wall Motor Company Limited(601633) 2020 to 2025 needs to reach 29.09% and 42.17%.
In order to achieve the strategic goal of 2025, Wei Jianjun once said that Great Wall Motor Company Limited(601633) will adhere to “excessive investment”, and it is expected that the cumulative R & D investment will be 100 billion yuan in the next five years. Now it seems that the Great Wall has been increasing investment in production capacity and needs to continue to expand.
From the perspective of the industry as a whole, Great Wall Motor Company Limited(601633) expanding production capacity is also the need to deal with market competition. Before 2014, Great Wall Motor Company Limited(601633) ranked first among private independent brand car enterprises (Note: Chongqing Changan Automobile Company Limited(000625) was also the sales champion for a period of time, but Chang’an was a central enterprise). However, since Geely’s annual sales exceeded the Great Wall in 2017, Geely’s monthly sales have been overwhelming the Great Wall for a long time. Since then, the sales volume of great wall and Geely in a single month has changed one after another, which makes the “first brother” dispute between Geely and great wall become the focus of continuous attention in the industry.
Based on this, it is considered more necessary for great wall to make early preparations for production capacity. In fact, Geely Automobile is still expanding its production capacity through restructuring and consolidation when China’s total production capacity is about 3 million vehicles. In addition to great wall and Geely, many independent brands are accelerating the reserve capacity. For example, Byd Company Limited(002594) also took over the production base of Dacheng automobile in Fuzhou this year, and the capacity arms race of “weixiaoli” among new car manufacturers is also continuing.
In the case of overall overcapacity in the automotive industry, with the continuous improvement of concentration, the production capacity is also concentrated to the leading enterprises represented by great wall and Geely. On the one hand, it is in line with the policy to encourage the automobile industry to solve the backward idle production capacity through merger and reorganization, so as to improve the overall utilization rate of the industry, and help the leading enterprises to quickly realize the production capacity landing. It can be expected that the competition among leading enterprises marked by the capacity reserve arms race may be more intense.
(Economic Observer network)
