Disasters get out of business and change the mind: How to turn crisis into opportunity soon?

Disasters get out of business and change the mind: How to turn crisis into opportunity soon?

Great Wall Motor Factory resumes work

With the improvement of the epidemic situation, the resumption of resumption of production rate of auto companies has rapidly increased, and the rate of rework of auto companies has exceeded 90.1%. Among the many car companies returning to work, BMW Brilliance even jointly recorded "start-up" videos with executives, dealers and employee representatives in China, injecting a hint of positive energy into the automotive industry.

But at the same time, the test of auto companies continues. In March this year, SAIC Group's news of salary reductions has caused public concern. As one of the "most profitable automobile groups" in China, although SAIC is the largest domestic sales company, SAIC will inevitably bear a heavier cost burden than other companies. However, is the current "salary reduction" the "optimal solution" to the dilemma?

In the long run, while reducing expenditures, SAIC Group should work harder to stop losses and open source. It is worth noting that SAIC Volkswagen has always been regarded as the mainstay of SAIC's profitable “blood-making”. However, in 2019, SAIC Volkswagen surrendered the sales champion after four consecutive years of success, and was replaced by FAW-Volkswagen. In January 2020, SAIC-Volkswagen sales fell by 40%, and the gap between FAW-Volkswagen sales expanded to 72,000 units. How to make SAIC Volkswagen stop the loss of "blood back" should be the top priority of SAIC. At the same time, from the perspective of the company's long-term development and operation, the problem of SAIC's excessive reliance on joint ventures has yet to be resolved.

Reunite together, don't be fooled by "pay cuts"

On March 5, 2020, a document on SAIC Chase's "Notes on Adjustments to Salary and Benefits in 2020" was circulated on the Internet. The document states that "February 2020 is the first time in Chase's history that sales have grown negatively year-on-year, and it will be the same in the first quarter, with companies facing losses."

It is reported that the adjusted employee salary is mainly adjusted in the performance bonus distribution ratio. According to different positions, the adjusted monthly performance bonus distribution ratio is discounted according to different positions, which are divided into 43%, 71%, and 83%. In addition, annual leave subsidies and technical center clothing fees were cancelled.

SAIC Chase responded by saying that the move was not a temporary behavior affected by the epidemic, but a time window for the company's annual salary adjustment, which coincided with the epidemic situation and attracted special attention from the outside world. SAIC Chase wrote in a "letter to all employees": "Having broken the inertia thinking of the" iron rice bowl "and having a strong mechanism for survival of the fittest, only in this way can we face the severe competition in the automotive market."

So far, SAIC Group, SAIC Huizhong, SAIC Passenger Cars, and SAIC-GM Pan-Asia have been slashed to take pay cuts. Even SAIC-Volkswagen and SAIC-GM have faced salary cuts. It is reported that SAIC Volkswagen may cancel double salaries. In terms of basic salaries, management decreased by 25%, employees decreased by 15%, and the overall reduction was about 40%. Some SAIC Volkswagen internal employees revealed: "Although documents have not been issued like Chase and Huizhong, some colleagues said that the verbal notice will depend on the level of salary reduction and is still awaiting notice of salary reduction."

Responding to the news of salary reduction, SAIC Volkswagen responded: "It is normal for employees' income to correlate with corporate performance. This adjustment has increased the positive correlation between corporate performance and personal income. In the same direction as performance changes. "

The industry believes that SAIC Group, as the largest automaker in China, has a star halo and a huge human burden. According to the 2018 annual report, the total number of employees of SAIC's parent company and subsidiaries is 217,000, of which 12,900 are parent companies and 204,000 are subsidiaries.

It is not difficult to find out that the first SAIC Chase that reported news of salary cuts. In 2019, SAIC Chase sold a total of 153,024 vehicles throughout the year, a year-on-year increase of 21.36%. In the past year, SAIC Chase achieved 12 consecutive months of sales growth. Against the background of the decline of the entire industry, why do employees still "salary reduced" when submitting transcripts that have grown against the trend? This brings us back to the original question. Enterprises want to make money. Wang Rui, general manager of SAIC Chase, said in an interview last year: "It is expected that it will take 2-3 years for self-financing, and Chase has already undertaken some technical development and marketing expenses internally." In other words, although sales of SAIC Chase have increased, No profit has been created for the enterprise.

At the same time, the epidemic situation is now improving, at a critical time for the resumption of production and auto production. SAIC's salary reduction and efficiency improvement should be seen as a necessary measure to resolve short-term difficulties in the industry, as SAIC Chase wrote in a "letter to all employees": "There is a habit of breaking the" iron rice bowl " , Has a strong survival of the fittest mechanism. Only in this way can we face the severe competition in the automotive market. "

Turn crisis into opportunity, revive sales need to repair the image first

Judging from the current situation, the plight of SAIC Group is the result of the overall decline of the company, but in more depth, it may be closely related to the sluggish realization of SAIC Volkswagen. Should SAIC reduce wages and increase efficiency, or boost SAIC Volkswagen's "profit cow" market performance?

In 2019 before the epidemic, SAIC Group has seen a decline in sales and profits. In 2019, SAIC Motor's cumulative sales volume was 6.23 million units, a year-on-year decrease of 11.54%. According to the "2019 Annual Results Preview" issued by SAIC Group, SAIC Group's net profit attributable to shareholders of listed companies in 2019 will be approximately 25.6 billion yuan, compared with the same period of the previous year, it will be reduced by approximately 10.4 billion yuan and 28.9% ; Net profit after deduction is approximately 21.4 billion yuan, a year-on-year decrease of approximately 11 billion yuan, a decrease of about 34%.

As we all know, SAIC Volkswagen has always been the sub-brand that contributes the most to SAIC's profit. In the first half of 2019, SAIC Volkswagen's total revenue was 112.889 billion yuan, accounting for 29.97% of SAIC's total revenue in the first half of the year. The parent company's net profit was 9.883 billion yuan, accounting for 71.80% of the total net profit in the first half of the year.

But at the moment, SAIC Volkswagen is facing a cold spell. Data show that the total sales of SAIC-Volkswagen for the whole year of 2019 fell by 3.07%. In January this year, the sales volume was 113,000, which was a 40.53% decrease from the sales of 190,000 units in the same period last year. February sales continued to decrease by 91% year-on-year to 10,000 vehicles. The Association believes that in addition to the epidemic situation, SAIC Volkswagen's poor performance is inseparable from the "shenqi" Passat caused by the shock of sales of China Insurance Research Institute. Secondly, the Skoda brand of SAIC Volkswagen has been shrinking.

In December 2019, Passat, who has been a B-class car sales champion for many years, encountered problems such as deformation of the A-pillar, intrusion of the front compartment firewall, and "offside deviation" of the airbag in the 25% small-area crash test of CPIC IASI. The test results ranked last among the joint venture brands and independent brands participating in the test.

Such test results soon affected the terminal market of SAIC Volkswagen. According to statistics from the China Federation of Automobile Manufacturers, Passat, who once won the top spot in sales, did not rank in the top 15 in the car sales list in January this year. It should be said that the impact of Passat's "collision door" on SAIC Volkswagen's sales has been prominent, and it is difficult to estimate whether the scope of the incident will expand? How long will it last?

It is worth noting that many products under SAIC Volkswagen have fallen. Among them, in the field of passenger cars, the sales volume of New Langyi in January was 43,000, a year-on-year decrease of 20.5%; the former sales model Santana also dropped out of the top 15. In the SUV field, Tiguan sold 15,000 vehicles in January, a year-on-year decrease of 41.6%, falling out of the top five in the sales list. In contrast, FAW-Volkswagen, the main competitor, ranked first in the wholesale sales ranking with sales of 186,600 vehicles, compared with SAIC-Volkswagen's 72,000 units.

Two months after Passat's sales experienced a decline, SAIC Volkswagen responded to the "collision door": "SAIC Volkswagen has always been very concerned about vehicle quality and active and passive safety, and all its Volkswagen brand products have been developed in accordance with the Chinese C-NCAP five-star evaluation standard , And obtained a good evaluation in a number of detailed tests. C-NCAP is derived from the NCAP global system and has been adaptively improved according to China's traffic and road conditions, which is currently the most common safety standard in China. "

However, in response to SAIC Volkswagen's response, some consumers believe that its response lacks sincerity. SAIC Volkswagen emphasized that its products were developed in accordance with China's C-NCAP five-star evaluation standard. So, does it mean that SAIC Volkswagen only uses the C-NCAP test as the sole standard for product manufacturing? From the perspective of ensuring the safety of vehicles, should car companies maintain an attitude of being responsible to consumers, or should they meet the requirements of crash test?

In fact, SAIC's "slimming" is just an epitome of the industry. After the news of "salary reduction" from SAIC Group, the new forces of automobile manufacturing, Bo County Automobile and Weilai Automobile, were also caught in the "salary reduction". In response to the "self-rescue" behavior of salary reduction, Cui Dongshu, secretary general of the National Passenger Car Market Information Association, believes that it is actually "scratching the symptoms but not the root causes." Cui Dongshu said that the most effective self-help method is still to drive consumption and increase sales.

It should be said that from the perspective of the enterprise, early resolution of the negative impact of SAIC Volkswagen's "collision door" is undoubtedly an effective means for SAIC to boost sales and improve sales.

Shuffle soon, auto industry competition will become increasingly "lightweight and heavy"

From the current point of view, saving SAIC Volkswagen's image as a domestic consumer will have a driving effect on SAIC Group, but at the same time, the problem of imbalanced profits should also attract SAIC Group's attention.

For the full year of 2019, the SAIC Group's joint venture segment saw the most significant decline, with cumulative sales of 62,379,500 units, down 11.54% year-on-year, SAIC Volkswagen down 3.07%, SAIC GM down 18.78%, and SAIC-GM-Wuling down 19.42%. In terms of profit, in the first half of 2019, SAIC Volkswagen's attributable net profit fell by 36.14% year-on-year; SAIC-GM's attributable net profit was 7.114 billion yuan, a decrease of 30.59% year-on-year; SAIC-GM-Wuling's attributable net profit was 843 million yuan , A year-on-year decrease of 58.68%.

In view of the previous decline in 2019 performance expectations, SAIC Group believes that it is affected by multiple factors such as the conflict between supply and demand caused by the switch between "National Five" and "National Six" models, and the decline in domestic new energy vehicle subsidies. From the perspective of enterprise operation, some analysts in the industry pointed out that the profit of SAIC Group relies heavily on joint ventures. The three joint ventures, SAIC Volkswagen, SAIC-GM, and SAIC-GM-Wuling, often contribute more than 65% in profit, becoming the backbone of corporate profits and cash flow However, the SAIC Group's sales and profits are now declining, which should be said to be closely related to the situation of the three joint ventures.

Challenges come from market competition, luxury brands are under pressure, and domestic private car companies are attacking. In this context, reducing prices to become competitive has become one of the main means for many joint venture brands to stabilize their market share, but price reductions will come at the expense of profits. The above Volkswagen Volkswagen is taken as an example. The data shows that SAIC Volkswagen's bicycle profit in 2018 was 15,188 yuan, but in 2019, the bicycle profit was 10662 yuan, a decrease of 4,526 yuan.

Next, market competition is bound to be more intense. The China Automobile Association had predicted that the annual sales of the Chinese automobile market in 2020 would fall by 2% year-on-year. Affected by the epidemic, this goal is difficult to achieve. Xu Haidong, assistant secretary general of the China Automobile Association, said, "In 2020, car sales will decline by more than 2%. However, due to the uncertainty of the epidemic at home and abroad, the China Automobile Association cannot temporarily give clear expectations. Previously, the National Passenger Car Market Information Joint Conference has Adjust passenger car sales forecast for 2020 to fall by 8%. "

Last year, the sales volume of SAIC Group ’s independent and joint ventures both declined. Although its own brand, SAIC Chase, has grown against the trend, the current sales volume is relatively limited and it has not been able to reduce costs through large-scale production. It is still relying on SAIC Group. The stage of "transfusion" development. Next, in the face of the old rival FAW-Volkswagen's aggressive attack on Japanese brands and the rise of independent brands, compared with the practice of betting joint venture brands to occupy the market, SAIC Group should pay more attention to improving the profitability of independent brand teams.

On the whole, SAIC Group chose to rely on "salary cuts" to reduce costs in accordance with the actual situation of the company. This is in line with the current market imbalance in supply and demand and may also improve the company's operating status to a certain extent. From the perspective of short-term stop loss, SAIC Volkswagen should give domestic consumers a responsible approach to Passat's "collision door" to restore word of mouth, otherwise it is difficult to ensure that other products of SAIC Volkswagen will not be implicated. From the perspective of corporate development, SAIC Group's operating conditions are highly related to the profit level of its joint venture brands. If SAIC Group can improve the current situation of over-reliance on joint ventures and balance income to strengthen the anti-risk capability of corporate operations, then whether it faces Fierce competition or sudden outbreaks can be calm and calm.

In addition, the current trend of liberalization of joint venture shares among domestic auto companies is actually a "spur" on Chinese auto brands. In the future joint venture relationship, how can China keep the bottom line of the joint venture's equity ratio? In the words of Zhang Shulin, former executive vice chairman and secretary-general of the China Automobile Industry Association: "Long-term or excessive reliance on foreign companies will inhibit independent development and it will not be possible to strengthen the industry. We must continue to attach importance to the development of core technologies for automobiles, especially the original comparison Weak links, such as internal combustion engine technology. Although we have accumulated a relatively good R & D strength, we must continue to accumulate. "

After two months of hard work, the epidemic in China is ending and various industries have resumed work in an orderly manner. However, the end of the epidemic is the critical period to test the choice of car companies. The current "throttling" may be inevitable, but how to take the scale, SAIC Group needs to consider carefully. Although, compared with the ruthlessness of layoffs, salary cuts are more like "staffing the times" with employees, but they are also more likely to hurt capable employees. Only the balance between cost reduction, employees, and performance is balanced. In order to avoid the "sequelae" caused by the brain drain of enterprises.

No "winter" is insurmountable, but only by doing enough homework can we welcome "spring".

By Zhang Yuhao