In 2006, the profitability of the automotive industry maintained a recovery growth trend. Based on the situation of “low before and after high†in 2005, the profit growth of the auto industry in 2006 has shown a trend of falling month by month (see Figure 1 for details). In the historical record of high sales and production, the industry’s profitability has not been able to hit a record high at the same time. The main reason for this is that, with the adjustment of the automobile product structure, passenger cars, especially cars, account for more than half of the current The share; and the car's inherent "small profits but quick turnover" feature determines that the expansion of the scale can only stabilize the absolute amount of profit, and to improve profitability is quite difficult. In contrast, commercial vehicles, especially large and medium-sized ones, have the characteristics of “high added valueâ€. Although their production and sales growth rate is far faster than that of cars, their profitability is much stronger than passenger cars such as passenger cars. product.
In 2005, the operation of the auto industry presented a trend of “low before and after highâ€. By 2006, it showed a pattern of “high before and after lowâ€. In 2006, the cumulative reduction of tariffs by up to 10 percentage points, together with the appreciation of the renminbi and the commitments made by the related companies when the stock reforms were made, has been crucial to improving the profitability of the auto industry in 2006. By 2007, the Chinese auto industry will still be affected by a number of factors, and it is expected that the profit growth rate is likely to further narrow, and the overall trend of "wave-like" operation.
Cost pressures slowed further
Although domestic nonferrous metal prices such as copper and aluminum have shown rapid growth since 2006, their application in automobiles is not dominant, and therefore their influence is not as good as that of ferrous metals such as steel. Since 2005, the prices of domestic automotive main steel products have basically shown high levels of volatility and steady declines. The appreciation of the renminbi has greatly offset the negative impact of rising iron ore prices. At present, the domestic self-sufficiency rate for steel used in automobiles is about 40%. With the successive formation of domestic auto sheet capacity represented by Baosteel, the domestic self-sufficiency rate in 2007 is expected to increase to around 60%. In view of the fact that international iron ore may have a price reduction of 5% to 10% in 2007, the price of domestic automotive steel products should not rise in 2007, but may continue to decline slightly. Based on this, it is expected that the pressure on raw material costs faced by the domestic automobile manufacturing industry in 2007 will be further reduced.
In addition, from the perspective of the country's electricity supply and demand situation in 2006, although there are still partial and seasonal power shortages in 2007, the overall power supply tension has been fundamentally improved. In the future, the price fluctuations of electricity prices due to coal price fluctuations will be mainly faced, and the basic adjustment will be the main one. This will undoubtedly increase the cost pressures of related industrial enterprises. However, the auto manufacturing industry has greatly increased its ability to withstand increases in electricity prices. Therefore, in 2007, the automotive industry was under pressure from rising electricity prices.
Financial Policy Should Pay Attention to Industry Impact
Since the RMB exchange rate against the U.S. dollar has risen more than 5% since the exchange rate reform in 2005 (as of November 30, 2006), the cumulative increase in the yuan against the U.S. dollar since 2006 has been close to 3%. The appreciation of the yuan against the U.S. dollar in 2007 is expected to increase. It will still be around 3% or even higher. In the same period, the increase in the yen against the yuan was 10.16% and 2.59%, respectively. Therefore, the import of automobiles and auto parts and components from the Yen area can enjoy great benefits from the appreciation of the renminbi. In contrast, due to the increase in the euro against the RMB in the same period of 0.09% and -2.64%, especially in 2006, the RMB has also been depreciated against the euro. Therefore, the import of automobiles and auto parts from the euro area will increase the company's cost pressures. .
In view of the fact that the proportion of imported cars and auto parts from the Yen area has risen to about 40%, the proportion of imported cars and auto parts from the Euro area has dropped to about 35%, and the dollar-settled auto and auto parts have been reduced. The proportion of imports is basically stable at around 25%. Therefore, the continued appreciation of the renminbi still requires a large number of imported key parts and high value-added parts. In the case of the Chinese auto industry, which mainly focuses on import and assembly, overall, it can still reduce the number of manufacturers. The role of cost; but for the export of the Chinese auto industry, which has shown structural overcapacity, it is a less favorable news.
It is worth noting that if the country adopts a rate hike measure to further strengthen macroeconomic regulation and control of inflation, its impact on the auto industry will be more pronounced and sensitive than that of the exchange rate. Because the auto and auto parts industry is a capital-intensive industry, under the circumstances of insufficient self-owned funds, most of the funds needed for production and construction are resolved through bank loans. Statistics show that the debt ratio of the automotive industry has risen rapidly since 2006, from 53% at the beginning of 2006 to 58% at the end of the third quarter. Although the listed companies can directly raise capital from the capital market, a large amount of production and operation funds still need to be resolved through borrowing from the banking system, because current corporate liabilities have accounted for more than 90% of all liabilities. Therefore, if the central bank raises interest rates in the first half of 2007, even if it raises interest rates continuously, it is bound to have an adverse effect on the relevant automobile manufacturing and distribution companies and even consumers. On the one hand, it will increase the financial burden on the company and affect the profitability; on the other hand, it will increase the interest burden on consumers and curb their desire to purchase cars. This must be given enough attention.
The impact of fuel prices varies from person to person
Under the combined influence of the depreciation of the US dollar, turmoil in the international situation, strong market demand, and speculation in international speculative capital, international crude oil prices have been rising in recent years. Although the fourth quarter of 2006 began to erode at below US$60/barrel, domestic oil prices did not fully integrate with international oil prices. According to relevant statistics, besides the decline in the ex-factory prices of crude oil, the prices of gasoline and diesel were not fluctuating. Did not follow the tone. While the domestic refined oil pricing mechanism is facing reforms and fuel tax may be introduced, the future of domestic auto fuel prices may continue to rise, which will inevitably constrain and affect domestic users' enthusiasm for car consumption and purchase.
However, with the continuous advancement of technology in the automotive industry over the years and the market's early preparations for fuel price hikes, the increase in fuel prices is more likely to be a step-by-step increase rather than a step-by-step approach, coupled with the current domestic sales of cars. There are 20%~30% of new cars, taking into account the reasons for renewing the user habits of cars, although consumers will be affected by high oil prices to reduce the frequency of use of cars, but overall its sensitivity to oil prices is relatively new. Car users are lower. In addition, compared with the owners of mid-to-high-end models, owners of economic vehicles are more sensitive to high oil prices, and their affordability is relatively weaker.
In 2007, the industry as a whole showed "waves"
The trend of the operation
Accompanied by the scale of China's auto ownership reached 37 million by the end of 2006, and will continue to expand rapidly in the next few years, on the basis of the current domestic auto renewal rate of 20% to 30%, the future is expected to continue to be improved; If it can reach the level of 30% to 40%, although it is still far below the 70% update rate of foreign developed countries, the annual scale of 3.5 million to 4 million vehicles can fully ensure that the development of the Chinese automotive industry is in a healthy orbit. .
It is expected that the total national automobile production and sales volume in 2007 is expected to reach a new level - reaching 8 million vehicles (see Figure 2 for details). Despite the impact of new environmental protection regulations (the National 3rd emission standard) and the obligatory installation of on-board diagnostic systems (OBD) by passenger vehicles, the company’s costs have increased (in the range of 5% to 15%), and this It is completely passed on to consumers; therefore, the profit growth rate of the auto industry in 2007 may be significantly lower than the increase of around 40% in 2006. However, due to the large geographical differences, relevant policies in major cities such as Beijing, Shanghai and Shenzhen will be far more powerful than those in the western regions. Therefore, they still leave a certain buffer and transition time for the relevant automobile manufacturing enterprises. And space. Overall, the profitability of the auto industry still maintained a stable growth of about 20% in 2007.
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