Guangzhou Automobile's expansion strategy lacks efficiency

On June 3, a paper announcement by GAC Group opened the largest personnel adjustment in GAC's history. The scope of adjustment involves the conversion of a number of Chinese companies, including Guangqi Honda, GAC Toyota, GAC Fiat, GAC Mitsubishi and other Chinese leaders. For this unprecedented scale adjustment, the industry has also given a very high concern, until August, Zhang Youyou, chairman of the return of the holiday, said in an interview with the media, the group boldly enabled the management of the rich and powerful, focusing on strengthening the sales force.

Zhang Fangyou released a signal: Although GAC Group has been quick to expand its strategy in recent years, it is somewhat “indigestion”. Therefore, it is necessary for companies to focus on strengthening their sales force in order to change the current situation of being big but not strong.

Guangzhou Automobile's radical expansion
As the sixth-ranking enterprise group in China, GAC Group has achieved unprecedented scale growth through mergers and acquisitions, joint ventures and cooperation in recent years.

The most recent cooperation was at the end of last year. On December 18th, 2012, Guangzhou Automobile Group jointly signed a memorandum of strategic cooperation with China Auto Parts Industry Corporation, Hebei Zhongxing Automobile Manufacturing Co., Ltd. and Yichang Municipal Government, aiming to adopt a strategic cooperation approach. Make Yichang an important domestic automobile industry base. Just one month before this, GAC and Chery Automobile also signed a strategic alliance agreement in Beijing. Both parties also agreed to “intensify cooperation and sharing” in areas including vehicle development and powertrain.

Pushing time forward by two years, that is, in December 2010, GAC Group acquired a 51% stake in Zhejiang Geo Automobiles in cash, intending to achieve GAC's eastward strategy through holding Gonow. If it takes one year in advance, that is, in May 2009, Guangzhou Automobile will start the expansion strategy of Guangzhou Automobile by reorganizing Hunan Changfeng Automobile (a listed company).

It is from the beginning of 2009 that despite numerous twists and turns, GAC eventually achieved the goal of bringing Mitsubishi Motors by absorbing and consolidating Hunan Changfeng; on the other hand, the joint venture between GAC and Fiat also successfully landed, which makes the overall asset scale of GAC During this time, there was a sudden surge. Regarding the future strategic direction, GAC still believes that "as long as there is an opportunity, it will continue to implement strategic expansion so as to become the first group of domestic automobile fleet soon."

However, Guangzhou Automobile's expansion ambition may be squeezed by peers. At present, BAIC Group, which is ahead of GAC, has not shown any weakness. Facing the aggressive strategic expansion of GAC Group, BA Group Chairman Xu Heyi also did not hesitate to “trace”, this time when GAC was still looking for the next target. Beiqi successively merged with Tianjin Meiya Automobile and Zhenjiang Automobile. Moreover, Beiqi stated that “there will be big moves.” Dongfeng Motor Co., one of the “Big Three” companies, could not restrain the impulse of mergers and reorganizations. In the first half of this year, Dongfeng Motor Co., Ltd. achieved a blessing through the acquisition of the Fujian Automobile Co., Ltd. (hereinafter referred to as “FuCheng”) held by the Fujian Provincial Government. The result of this move is to incorporate Fuqi into the large map of Dongfeng Motor.

However, through the acquisition of mergers and acquisitions or strategic alliances, only the “big” is done quickly. This point cannot be avoided regardless of the group. Therefore, during the half-year period of the acquisition of the shares, no further news emerged regarding the strategic integration between Dongfeng Motor and Fuqi Group. GAC also has the same problem. After the acquisition of Gonow, Gio Motors has not received much support from GAC Group as an important member of GAC's independent strategy. In the past few years after the acquisition was completed, GAC Gonow was still on the edge of the market. From January to July 2013, GAC Gonow achieved sales of only 17,566 vehicles, a year-on-year drop of 26%. Another typical example is that after the formation of a strategic alliance with Chery, the declarations of “developing deep cooperation and sharing” that both parties once issued are constantly questioning the year when there has been no substantive progress. Obviously, this result made the industry doubt the integration ability of Guangzhou Automobile.

“Bigger” and “Not Stronger”

In fact, only from the perspective of Guangzhou Automobile's strategic expansion, this expansion strategy is very necessary. However, Guangqi should do more than just expand to be “big” but also “strong”. Moreover, when GAC Group has demonstrated its capabilities in capital markets and mergers and acquisitions, it should also take the same force to change the market structure. In the first half of this year, GAC Group achieved sales of over 500,000 vehicles, while SAIC Motor sold 2.92 million vehicles in the same period. Even though compared with the 1.12 million vehicles of BAIC ranked fifth, GAC has lagged behind. As chairman of GAC, Zhang Fangyou is in the eyes and is in a hurry. “There can only be one interpretation of the information on the personnel adjustment, that is, Zhang Fangyou hopes to strengthen the leadership of the group and accelerate the pace of development for all companies,” said industry sources.

GAC Group started from Guangzhou Automobile Honda and was interested in Guangzhou Automobile Honda. With the establishment of GAC Toyota, Guangzhou Automobile Group reached its peak in 2007 and 2008. During this period, it is the best time for Guangzhou Automobile Group to gather capital. However, with the continuous changes in the market competition pattern, the Japanese car's competitive advantage is no longer obvious. The complexity and variability of the Sino-Japanese relationship have caused the damage to the Japanese brands, and there are also the products of Guangben and Guangfeng. Strategic hesitation and conservative reasons. The above reasons have caused Guangben and Guangfeng to step into a period of slow growth. According to statistics, the sales of Guangzhou Automobile Honda and GAC Toyota from January to July this year were 209,197 units and 168,249 units respectively, all showing slight growth, but they also experienced a significant decline in the average net profit of bicycles. Although both Guangben and Guangfeng are reversing this trend by adjusting and accelerating product introduction, in the short-term, it is expected that Guangben and Guangfeng will usher in a period of high-speed development.

The key point of the new round of expansion strategy is that although multinational car companies such as Fiat and Mitsubishi have entered into a joint venture, they are still in the market incubation period. Among them, from January to July this year, GAC Fiat achieved sales of 21,291 units, and GAC Mitsubishi achieved sales volume. 17061 vehicles, it is difficult for such sales to boost GAC Group's performance in a short period of time. “Actually, GAC Fiat and GAC Mitsubishi are still in the stage of continued investment and they cannot achieve profitability in the short term.” Industry insiders said that this is why Zhang Fangyou must emphasize the need to strengthen the sales force of the vehicle companies. Where This year's performance was slightly better for GAC passenger vehicles. The Chuanwei brand achieved a gross profit of 150 million yuan in the first half of the year with a record of 53,016. However, Wu Song, general manager of Guangzhou Automobile Passenger Vehicle, also admitted that this was not a result of the calculation of the previous R&D investment.

For GAC Group, there is still a clear strategic flaw, which is the lack of commercial vehicles. Earlier, Guangzhou Automobile had considered establishing a commercial vehicle joint venture with Hyundai Motor to make up for this strategic shortcoming. However, after several twists and turns, it eventually chose to enter into a joint venture with Hino Motor Co., Ltd., which had 50.1% of Toyota Motor Corporation. For this reason, Guangzhou Automobile Group had left 30 Billion yuan has entered the commercial vehicle sector. However, compared with Dongfeng, Volvo Trucks, BAIC, Daimler, and other international heavy truck giants, GAC Group's performance in the commercial vehicle sector is unpredictable and competitive. In GAC Group's financial reports over the years, it is hard to see GAC Hino and Guangzhou buses. And other companies can provide profit contribution. According to the statistics, from January to July this year, the total sales of GAC and Hino were only 2,534 units, which was a significant year-on-year decline. The sales volume of Guangzhou buses was only 691 vehicles.

In the link of the component industry chain, GAC has some layouts, including approximately 20-odd parts such as Guangzhou Denso, a joint venture with Japan Denso, GAC Toyota Engine Factory, a joint venture with Toyota, and Gwang Hing Hing, which is in-depth support for GAC Honda. Home parts business. At the same time, because GAC Group's joint-venture car companies are mostly Japanese brands, their parts and components companies are also closely related to Toyota and Honda. GAC has not formed its own core competitiveness in this field. Therefore, in GAC's expansion strategy, we are more likely to see mergers, reorganizations, and joint ventures and cooperation in vehicle projects, but we rarely see joint ventures and acquisitions of key component companies. Last year, Dongfeng Motors made frequent attempts in the international market. It first acquired a 70% stake in tEngineeringab, and then signed with GETRAG International, a subsidiary of the world's largest independent provider of transmissions for passenger cars and light commercial vehicles. The joint development agreement. This move is driving Dongfeng Motor to take a full supply chain system with core competitiveness. This happens to be the most lacking of Guangzhou Automobile.

“Guangqi’s ideas of “negotiating on lighter business” and “restructuring light-zero” on the road to reorganization make it lack some necessary support points for future development. This will also be the next step that GAC Group must consider.” According to industry insiders, to achieve “from big to strong”, Guangzhou Automobile must correct and achieve balanced development.