In recent years, Jianghuai Automobile has experienced a “labor pain” in its strategic transformation: After the transition from a single manufacturing “commercial vehicle” to a “commercial vehicle + passenger vehicle” integrated automobile manufacturer, its performance has dropped sharply, and it has reported losses in the first quarter of this year. However, as the traditional business MPV and light truck market share and gross profit margin increase, the self-owned brand car will achieve profitability, and the profitability of the company is being substantially restored. The company’s director secret Wang Min said: “The worst period of Jianghuai has passed.”

Regarding the reorganization of Jianghuai Automobile and Chery Automobile, Zuo Yanan, chairman of the company, made it clear: “As of now, there has been no public exchange of opinions.”

Strong complementarity with Chery

Recently, various speculations about the “restructuring of the Jianghuai Chery” came out, and the rumor was triggered by the Anhui Provincial Government’s “Automobile Adjustment and Revitalization Plan of Anhui Province” announced on May 12th. The plan pushes Chery, Jianghuai, and Valin, Changhe, Yangzi, Quanchai and other auto companies have jointly reorganized in the province according to market principles, and strive to form an auto enterprise group with a capacity of more than one million cars. Due to the business complementarity of JAC and Chery, and the ability to reach 1 million units after the combined production capacity, all kinds of conjectures have been triggered.

In this regard, Zuo Yanan stated that he favors reorganization and respects the industrial restructuring proposed by the industry planning in the country and the province. If the reorganization enterprises have similar cultures and complementary advantages, the reorganization will avoid duplication of construction and will be conducive to the implementation of the Anhui automobile industry in a large scale.” The "going out" strategy is conducive to exerting the clustering effect of Anhui automobile industry. However, the reorganization should be guided by the market and promoted by the government. The form of reorganization and alliance is diversified, including project cooperation, business restructuring and joint reorganization. The premise of joint reorganization is that both parties reach consensus.

Zuo Yan'an said: "As far as the restructuring with Chery has not yet been discussed, all are state-owned enterprises. The dominant power is in the government. The Anhui government is cautious and secure about the actions of big companies." But he also pointed out that the company and Chery Industry complementarity is very strong. All are state-owned enterprises. They are all self-owned brands. The greatest complementarity lies in the complementarity of style: Chery’s youth are full of vigor and vitality. JAC has experience in both product and capital markets, and its style is robust and it can handle well. The overall situation.

Traditions and Accumulation

It is reported that JAC's traditional businesses include MPVs and light trucks, which are also the company's main source of profits. Among them, Ruifeng MPV ranks first in the industry, with a market share of approximately 21.66%. Since its product sales revenue accounted for about 35% of the company's total vehicle revenue, and its profit contribution rate was about 70%, it was the company's true “cash cow”. JAC's sales and sales report in May showed that from January to May 2009, the company sold 18,126 units of Ruifeng commercial vehicles, which exceeded the second place by nearly 6,000 units. From the perspective of the sales growth of the industry, the MPV in the first five months fell by 10.25% year-on-year, while the same period Refine wind MPV rose by 7.06%.

With the increase in sales volume, the gross profit margin has also increased. According to Wen Xiang, division manager of Guoyuan Securities Automobile Industry, in 2008, due to the downward movement of the sales structure of Ruifeng, the sales volume of low-end Ruifeng accounted for more than 50%, making Ruifeng's gross profit margin drop to around 25%, which was also a substantial profit in 2008. An important reason for the decline. In 2009, after the sales structure of Ruifeng was stable, the reduction in the cost of raw materials and components helped Ruifeng's gross profit margin stabilize at around 28%. Therefore, the double rise in sales volume and gross profit margins still makes Refine the pillar of the company's profit source.

The second pillar of JAC's performance is the light truck business, with a profit contribution rate of about 20%. The company's light trucks are mainly located in the mid-market, with a market share of around 10%. In terms of product structure, the company currently launches high-value-added products such as Shuailing and Bosestone. Its monthly sales of high-end light trucks have exceeded 1,000 units; on the other hand, it has introduced products adapted to rural markets and expanded rural markets. The report of United Securities pointed out that the recovery of light truck profits exceeded expectations. The average gross profit margin for light trucks from January to May is expected to be 18%, and the monthly gross margin for May will exceed 20%. Although there are factors in the second half of the year to switch the country's three standards, with the introduction of the light-card direct subsidy policy, it is expected that the young card sales volume in the second half will show rapid growth. The gross profit margin is expected to be around 15% for the full year.

Passenger car is expected to break even at the end of the year

Passenger car is a new business created by Jianghuai Automobile. It started pushing new cars in 2008. It was precisely because of the company's important transformation during the peak period of performance that a single car manufacturer converted into a commercial vehicle or passenger vehicle integrated car manufacturer, which led to a sharp decline in its performance in recent years. However, the company placed a premium on passenger cars. Great expectations.

Zuo Yanan said that investment in passenger cars is not to achieve someone's "sedan dream," but the general trend. Commercial vehicles are closely related to economic growth. When GDP declines, there will be a surplus; while cars will enter millions of households, there will be opportunities for entering the products of millions of households.

To this end, Jianghuai Automobile has made huge investments in passenger vehicles, including R&D and fixed investments that currently exceed 3 billion yuan. The company plans to issue 1.6 billion yuan of separable bonds in the past year is also intended to escort the sedan project. As the main growth point of the company's future development, JAC has formed a comprehensive car product system of Yueyue (A00), Tongyue (A0), Heyue (A), and Binyue (B). According to reports, the engine of the company's Tongyue sedan is now outsourced. In July, the 1.3L and 1.5L engines produced by the company will go offline, which is expected to ease the cost pressure of the engine.

Expressing that from January to May, the company sold a total of 22,503 cars, an increase of 316.87%. What is even more valuable is that since the beginning of March, the company’s sales of passenger vehicles have continued to break through the 10,000-unit mark for three consecutive months, ensuring that the overall monthly sales volume has remained stable at a record high of 30,000 vehicles. According to Wen Xiang, an analyst at Guoyuan Securities, the breakeven point of the sedan project is expected to be 70,000. Assuming that Ruiying SRV sells 10,000 vehicles throughout the year and the sales volume of cars reaches 58,000, it is very close to the balance point of the sedan. The company is expected to achieve a monthly break-even of the sedan by the end of 2009. The sedan project will be profitable in 2010.
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