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The automotive joint venture has been stationed in China for 21 years and has achieved leaps and bounds in the development of automobiles, but it has still not reduced the dependence of auto companies on joint ventures.
At the 2013 China Automotive Forum, a person in charge of SAIC Group admitted that while SAIC Group is doing large-scale operations, its growth in performance is mainly dependent on Shanghai Volkswagen, a joint venture.
This was again confirmed by SAIC's 2013 interim report.
In the 21st Century Network, it was found that the other three major auto companies listed in the mid-year report found that Changan Automobile, Dongfeng Motor, FAW Group's profit growth also depends on joint ventures. In particular, Changan Automobile’s over-reliance on the source of profits of the joint venture company comes from Changan Ford, its joint venture, and Jiangling Holdings, an associate. The combined net profit of the two companies is 3.483 billion yuan, while Chang’an Auto’s net profit attributable to listed companies is only 1.33 billion yuan.
Self-profitability is too weak to rely on joint ventures
The operating revenues of SAIC, Changan Automobile and Dongfeng Motor in the first half of 2013 were 280.928 billion yuan, 19.75 billion yuan, and 10.079 billion yuan, respectively. The net profit was 11.466 billion yuan, 1.33 billion yuan, and 43.185 million yuan respectively. FAW Group did not achieve overall listing. The operating income of its four listed companies was superimposed at 21.221 billion yuan.
However, looking through the annual report of the major car companies will find that the above-mentioned contributors to the net profit of car companies mainly come from joint ventures, whose performance is directly affected by the joint venture.
In the first half of 2013, SAIC Motor sold 2.474 million units of domestically-made complete vehicles, an increase of 15.3% year-on-year. The growth rate was 4.3% higher than the national average. The domestic market share increased by 0.6% from the end of last year to 23.2%, achieving total operating revenue. 280.928 billion yuan, an increase of 19.26% over the previous year; the net profit attributable to shareholders of listed companies was 11.466 billion yuan, an increase of 6.33% over the same period of last year.
For the sales growth rate higher than the market average, SAIC Group mainly benefited from the good sales of its joint ventures Shanghai Volkswagen, Shanghai GM, SAIC-GM-Wuling. At the same time, the spare parts, service trade, and auto finance sectors are centering on the needs of vehicle companies and provide a strong system support for vehicle sales.
Changan Automobile relies more on the joint venture than SAIC.
In the first half of 2013, Chang'an Automobile achieved a revenue of 19.75 billion yuan and a net profit attributable to shareholders of listed companies of 1.33 billion yuan, an increase of 40.6% and 133.5% respectively year-on-year.
All of Changan Automobile's net profit comes from its joint venture company, Chang'an Ford, and its joint venture Jiangling Holdings: Changan Ford's first-half net profit was 3.168 billion yuan, an increase of 189.83% year-on-year; Jiangling's net profit was 315 million yuan in the first half of the year, a year-on-year increase of 20.17%; The combined profits of the two are 3.483 billion yuan.
However, Changan Automobile's combined business still suffered a loss of 497 million yuan, which was mainly due to the fact that the loss from self-operating business was still very serious.
Dongfeng Motor’s reliance on joint ventures is even more pronounced.
In 2013, Dongfeng Motor’s profit sources mainly depended on the joint venture Cummins Engine and Zhengzhou Nissan. The light-card unit that occupies more than one-third of the main business of Dongfeng Nissan is facing severe market challenges. In the first half of 2013, Dongfeng Motor sold 91,000 light trucks, a decrease of 4.3% year-on-year.
Dongfeng Motor's light truck business has been questioned. On the last day of 2012, Industrial Securities analyst Li Gangfa researched and developed a topic entitled "Is active investors asleep? The research report stated that Dongfeng Motor's light truck business devoured its business. In 2011, Dongfeng Motor's light truck business lost 450 million yuan, and in the first three quarters of 2012, it lost 330 million yuan. Cummins and Zhengzhou Nissan made the money, and they all suffered from the light truck business. The reduction of staff and efficiency of light and light truck companies is imminent, and they called on shareholders holding more than 3% of Dongfeng Motor to submit proposals to remove the management of the light truck business.
Dongfeng Cummins Engine Co., Ltd. (hereinafter called Cummins Engine), a joint venture company with 50% shares of Dongfeng Motor, has been another major contributor to Dongfeng Motor's profits. Cummins Engine's profit contribution to Dongfeng Motor in 2010, 2011 and the first half of 2012 was 693 million yuan, 516 million yuan and 176 million yuan, accounting for 121%, 111%, and 184% of the company's net profit attributable to the company. However, in the second half of 2012, the overall downturn in the commercial vehicle market, Dongfeng Cummins engine sales fell significantly.
In the first half of 2013, Dongfeng Motor’s investment income also increased by 3.18% year-on-year due to Cummins’ engine sales, while net profit increased year-on-year. Cummins Engine contributed a net profit of RMB 200 million to Dongfeng Motor, which is approximately 5 times of Dongfeng Motor’s net profit.
The listed companies of FAW Group are also greatly affected by the joint venture. For example, FAW Cars, which was able to turn losses in the first half of 2013, believes that due to the recovery in domestic auto market demand, sales and sales of FAW sedan products have increased, new vehicles have been introduced and the exchange rate of Japanese yen has benefited, which has reduced the cost of imported parts and components of the company. To.
UBS Securities analysts believe that the depreciation of the yen is the main reason for FAW sedan turnover to a large extent. FAW Car, one of the major contributors to the main profit of FAW Cars, is a joint venture company, FAW Mazda, which accounts for 56% of its shares. The depreciation of the yen has caused raw material costs to drop substantially. Mazda's models need to import a large number of components from Japan. The analyst estimates that in the case of a 15% depreciation of the yen, the devaluation of the yen in the first half will contribute RMB 450 million to the profit of FAW Car.
FAW Dongfeng shrouded in Japanese wind wave shadow profits greatly reduced
The growth of the performance of listed companies of Dongfeng Motor and FAW Group is also directly affected by the joint venture. Unlike SAIC Motors and Changan Automobiles, the listed companies of Dongfeng Motor and FAW Group are more affected by the Diaoyu Island incident last year, and the joint ventures have failed to contribute enough revenue, which has caused the profits of the listed car companies to be greatly reduced.
Most of Dongfeng Motor’s profit growth this year was due to blood transfusions from joint ventures, while most of its other self-owned brand businesses were in a micro-profit or loss situation. The first half of 2013 was no exception.
Another major contributor to Dongfeng Motor’s profits is Zhengzhou Nissan Motor Co., Ltd. (hereinafter referred to as Zhengzhou Nissan), which is also a joint venture company, of which Dongfeng Motors holds 51% of the shares.
In 2011, the net profit of Zhengzhou Nissan reached 236 million yuan, accounting for about half of Dongfeng Motor’s net profit that year. However, due to the impact of the Diaoyu Islands incident in 2012, the sales volume of Zhengzhou Nissan dropped rapidly in the second half of 2012, and 20,000 sales in the second half of the year. Although the sales volume exceeded 100,000 units in 2012, it still fell by 9% compared with the 116,000 units in 2011.
However, in the first half of 2013, Zhengzhou's Nissan still performed poorly. Affected by the Diaoyu Island incident, the Zhengzhou Nissan Nissan product brand has not fully recovered to the level of the same period of the previous year. The SUV and MPV sold a total of 28,000 vehicles, a year-on-year decrease of 5.0%. It is understood that in response to the brand crisis brought about by the Diaoyu Island incident, Zhengzhou Nissan is strengthening its own brand, Kai Chen, through the application of a dual-brand strategy.
FAW Group's listed companies are also subject to FAW Group, which is known as the "Republic"'s eldest son, and the only one of the four major auto groups that does not have an overall listing. The four listed companies under FAW Group are: FAW Car, FAW Xiali, FAW Fuwei and Qiming Information. In addition to the wholly-owned subsidiary Qiming Information, the profit growth of the other three companies is affected by the joint venture. Among them, FAW Xiali and FAW Fuwei are also affected by Japanese car sales.
In 2013, FAW Xiali produced 79,381 passenger cars in the first half of the year, a year-on-year decrease of 26.32%, and sold 71,526 cars, a year-on-year decrease of 32.46%. FAW Xiali's operating income was 3.065 billion yuan, a year-on-year decrease of 24.24%, and net profit attributable to shareholders of the parent company was 4.58 million yuan, a year-on-year decrease of 94.92%. After deducting non-recurring gains and losses, FAW Xiali lost 191 million yuan in the first half of this year, and non-recurring gains came from the restructuring of FAW's debt restructuring.
In recent years, FAW Xiali's profits have been mainly attributed to the joint venture FAW Toyota's contribution of major profits. Affected by the Diaoyu Island incident last year, FAW Toyota has not recovered its strength since September last year, causing a serious decline in FAW Xiali's performance.
It is also worth noting that in the first half of 2013, the gross margin of FAW Xiali's products was only 0.53%, and the corresponding sales gross profit was 16.3362 million yuan. In the current period, the investment income and non-operating income of FAW Xiali were as high as 552 million yuan and 198 million yuan respectively. As a result, it contributed most of the profits of FAW Xiali.
FAW Fuwei is the first listed company of FAW Group. In the first half of 2013, FAW Fuwei's main business was auto parts, which did not increase profits.
FAW Fuwei’s operating income for the first half of the year was RMB 4.28 billion, a year-on-year increase of 16.7%, and investment income of RMB 170 million, which represented a decrease of 12% from the same period of last year. The net profit attributable to shareholders of the parent company was RMB 176 million, a year-on-year decrease of 15.9%. Among them, the second-quarter income was 2.45 billion yuan, a year-on-year increase of 25.9%, and the single-quarter investment income decreased by 7.7% year-on-year to 110 million yuan. The wheel business income was 3.28 billion yuan, a year-on-year increase of 18.6%, and the gross profit margin was 1.7%, down 0.5% year-on-year, and a decrease of 3 million yuan over the same period last year.
Affected by the declining sales of Japanese cars, the profitability of Fuwei Johnson Decorations and Tianjin Intai Decorations of FAW-Fuwei JV has dropped drastically, and the net profit margin of Fawway Johnson Decorations decreased by 2.5% to 4.2% in the first half of the year, resulting in a contribution to investment income. Only 82.41 million yuan, a year-on-year decrease of 14.1%. The sales of the Toyota models, which were initially categorized by Indo-China, fell by about 20%. Tianjin Inteck's revenue fell by 33.7% year-on-year, resulting in a significant drop in investment income of 43.6%, only 35.42 million yuan.
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