Back to second place: changes in Chongqing’s automobile industry
Author: Xu Ran
Published in the 1129th issue of "China News Weekly" magazine on February 26, 2024
The competition in the Auto City is facing changes again.
On the afternoon of January 21, 2024, at the second session of the Sixth CPPCC Chongqing CPPCC, Jiang Tao, director of the Economic Committee of the Chongqing CPPCC, said that Chongqing’s automobile production will reach 2.32 million units in 2023, ranking second in the country. This is also the time when Chongqing After 7 years, it returned to the second position in the country.
In the past few years, the automobile production of Guangzhou and Shanghai was far ahead among the cities in the country, and they were called the "two heroes" of domestic automobile cities.
Today, this pattern has been broken by Chongqing.
Chongqing once clamored to become the "Detroit of China" and has been the "largest automobile production base in the country" for three consecutive years. When the wave of automobile revolution hit, it also fell into a slump with production and sales halved. However, this old automobile city still remains. Try to tell the story of transformation.
Dropped to "seventh"
In China's automobile manufacturing landscape, Chongqing is an important automobile industry center.
In 1958, the first Jeep in New China was designed and produced by Changan Automobile.
After the reform and opening up, Chang'an Machinery Factory "transformed from military to civilian" and began to enter the mini-car industry.
"Chang'an Group used to produce military vehicles, but it is technically relatively easy to transform into civilian vehicles. And relying on the country's large-scale industrial investment during the third-line construction period, Chongqing has become one of the seven largest automobile production bases in the country, and it also has a comprehensive range of products from complete vehicles to parts. Components, a complete automotive industry chain from R&D to production." Li Ran, associate professor at the School of Economics at Chongqing Technology and Business University, told China News Weekly.
After entering 2000, with the help of Changan Suzuki, Ford, Mazda and other joint venture brands, as well as local brands that followed the route of small profits but quick turnover, Chongqing's automobile production and sales continued to rise, ushering in a golden age of high spirits.
From 2014 to 2016, Chongqing’s automobile production ranked first in the country for three consecutive years.
During this period, one out of every eight vehicles in the country was made in Chongqing.
However, after the peak, Chongqing's auto industry fell into a downturn that lasted for several years - local auto companies went bankrupt and reorganized, joint venture brands retreated, and the city's auto output was cut in half.
In the national automobile industry map, Chongqing has been slipping. From 2017 to 2019, the former "number one city" was successively overtaken by Shanghai, Jilin, Hubei, Guangxi, and Beijing, falling to the "seventh city in automobile production".
The automobile industry has suffered a setback, and the pressure on Chongqing is self-evident.
The relevant person in charge of the Chongqing Economic and Information Technology Commission at the time stated in public that if Chongqing’s automobile industry does not pursue transformation, it will not only face the problem of whether the pillar industry can sustain the industry in the future, but also the employment problem of hundreds of thousands of people.
At that time, Chongqing was facing a dual transformation dilemma.
On the one hand, the low-end route of “seeking quantity rather than quality” no longer works under the trend of consumption upgrading.
The radical Lifan once put forward the "cars are sold by the pound" argument that "cars will cost 100 yuan per kilogram this year and 40 yuan per kilogram in five years." However, they were eventually abandoned by the market due to low price and low quality.
Similarly, a number of Chongqing brands such as Xiaokang, Yinxiang, and Sway have also been labeled as "mid- to low-end, with poor quality and slow product iterations." They have to withstand the market torture of plummeting sales and find it difficult to get rid of low efficiency. The curse.
In 2012, the value of bicycles in Chongqing was 74,000 yuan, 60,000 yuan lower than the national price, and bicycle profits were less than 1/3 of the national average.
On the other hand, the automobile industry is undergoing electrification changes, but Chongqing has not caught on to the train of change in time.
In 2018, BYD's sales doubled, and Tesla is preparing to build a Shanghai Lingang factory. However, by 2020, Chongqing's new energy vehicle output will account for less than 3% of the country's total, which is far lower than Chongqing's overall automobile sector's national share. Compare.
Regarding the slow transformation of Chongqing's automobile industry, the mainstream view is that the reason is that the ship is in trouble to turn around.
Min Zhaoyuan, vice president and secretary-general of the Chongqing Automobile Industry Chamber of Commerce and general manager of China Merchants Automobile Research Institute, added that local car companies in Chongqing mainly produce mid- to low-end models, which not only makes companies less sensitive to new technologies than coastal cities, but also means that The profits are meager and the manpower and material resources that can be invested in the research and development and application of new technologies are limited.
"Around the end of 2018 or the beginning of 2019, the Chongqing Municipal Government convened car companies, associations and research institutes in the city's automotive industry to hold meetings to discuss the transformation and development of the industry and guide the entire industry to upgrade in the direction of new energy and intelligent connectivity." Min Zhaoyuan remember.
Introduce or transform?
The direction is set, and then comes the question of how to turn.
Relevant information provided by the Chongqing Municipal Economic and Information Technology Commission to China News Weekly shows that there are 20 complete vehicle companies in Chongqing, including leading domestic car companies such as Changan, SAIC, Dongfeng, Geely, and Great Wall.
In terms of parts and components, there are thousands of auto parts companies above designated size, with complete supply systems for engines, transmissions, braking systems and other major assemblies.
After nearly half a century of development, Chongqing has formed a huge automobile industry cluster. Therefore, the main line of Chongqing's transformation is not to introduce new car manufacturing forces, but to rely on the original car companies to transform into new energy vehicles.
"Based on the advantages of the original local supply system, Chongqing adopts a development strategy from 1 to N, integrating development with the whole belt and zero parts." Feng Lei, deputy director of the Firestone Creative Industry Research Institute, gave an example, such as supporting vehicle companies to increase their cultivation. and procurement efforts, driving parts companies to become bigger and stronger, and promoting simultaneous research and development of vehicle companies and parts companies to develop new parts products.
With the start of the new energy vehicle war, Chongqing's determination to revitalize the automobile industry has become increasingly urgent.
In 2022, Chongqing issued 34 policies related to new energy vehicles. In the same year, Chongqing proposed to focus on building a "33618" modern manufacturing cluster system. The first "3" refers to the three major trillion-level leading industrial clusters, among which At the top of the list are intelligent networked new energy vehicles.
After the transformation, Chongqing's automobile industry has reversed its decline and returned to the track of strong rebound.
The growth rate of new energy vehicle production will reach 252% in 2021. In 2022, vehicle production will return to the 2 million echelon and rise to fourth place in the country. In 2023, it will continuously catch up with Jilin and Shanghai and return to second place in the country.
According to the Chongqing Municipal Economic and Information Technology Commission, in 2023, Chongqing's automobile manufacturing industry completed an output value of 480.29 billion yuan, a year-on-year increase of 8.9%. The city produced 2.318 million vehicles, including 500,000 new energy vehicles, a year-on-year increase of 30.3%. In the city The proportion of automobile production increased to 21.6%.
It is worth noting that in 2020, Chongqing’s new energy vehicles accounted for only 2.7% of the city’s automobile production, but three years later, this proportion has increased significantly to 21.6%.
Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, told China News Weekly that it is a very good result that Chongqing's automobile output has returned to second place in the country, especially as a major town in southwest China. If the automobile industry can remain at the forefront of the country, it will have Very important meaning.
Moreover, Chongqing’s production of 500,000 new energy vehicles last year was basically contributed by local car companies such as Changan and Thalys.
At present, Chongqing has formed a "1+10+1000" advantageous industrial cluster with Chang'an as the leader, more than a dozen vehicle companies as the backbone, and thousands of supporting companies as the support.
From the edge to the center, how did Chongqing's automobile industry emerge from the arc of a desperate counterattack?
Cross the river by touching others
From 2018 to 2019, it was a difficult time for Chongqing's automobile industry, and it was also a critical juncture for local automobile companies to make a difficult turnaround.
Changan Automobile, as the largest local leader, fell into a quagmire of net losses for the first time in 2018 after losing its position as the "biggest sales leader of independent brands". In the following two years, Changan continued to lose money, with an annual loss of more than 3 billion.
Xiaokang Motors, which had not yet changed its name to Cyrus at that time, was in an even more embarrassing situation. Although it made a big bet on transitioning to new energy in 2016 and threatened to compete with Tesla, it woke up early and failed to catch up with the morning market.
On the one hand, the research and development of new technologies needs to continue to burn money. On the other hand, the new energy vehicle SF5, which was launched with great efforts, has not caused any splash in the market. This makes Cyrus, which is already weak, even worse.
In the end, the two established car companies decided to give it a try and plan for a new life with "Three Entrepreneurships".
Changan has successively proposed transformation plans such as "Shangri-La", "Beidou Tianshu" and "Hainan Baichuan", and deployed three major new energy brands: Deep Blue, Avita and Qiyuan.
Xiaokang understands that it is difficult to reach the wilderness of new energy on its own, so it officially announced that it has reached a cooperation with Huawei and uses the "intelligent car selection model" to build cars for Huawei.
But it’s not easy for an elephant to turn around.
Feng Lei told China News Weekly that for traditional car companies such as Changan, the first thing they face when transforming from gasoline vehicles to electric vehicles is the problem of production line reuse. For example, the production line for chassis production needs to be transformed in the direction of new energy. It is necessary to change molds and processes, and adjust the selection of materials and technologies; secondly, it is the reconstruction of the supply chain. There are about 30,000 parts in a traditional fuel vehicle, while only about 10,000 parts are left in new energy vehicles. OEMs need to change the stable supplier system that they have accumulated over the years.
Therefore, in the shift from fuel vehicles to new energy, traditional car companies have to start over on the new technology track. The production processes, production lines and supply chain management of core parts manufacturers such as BYD and CATL that have been accumulated for more than ten years are all It’s not like traditional car companies can catch up just by working hard and fast.
An employee working in the Cyrus Power segment told China News Weekly that his department is currently mainly engaged in research and development in the field of motors and electronic control. The batteries are not developed in-house but are directly supplied by external suppliers such as Ningde.
But in fact, as the core component of new energy vehicles, the cost of batteries once accounted for half of the cost of the entire vehicle. OEMs such as SAIC and GAC are trying to develop and manufacture their own products to reduce costs. BYD can achieve a net profit margin comparable to that of Tetra Tesla, a major core of cost control lies in its strong battery self-control capabilities.
The employee explained that the reason why Cyrus did not follow the crowd and join the ranks of self-research is based on the consideration of input-output ratio. Not only the investment in self-research of batteries is huge, the latecomers do not have the technology accumulation and supply chain resources, and they will not be able to do so in the short term. It is difficult to catch up with mature manufacturers, and battery prices have begun to decline sharply starting in 2023. Currently, Cyrus will provide customized requirements and the battery manufacturers will exclusively supply batteries.
This approach is close to the impression that Cyrus has given the outside world in recent years: Cyrus is mainly responsible for the development and manufacturing of complete vehicles, and is deeply tied to Huawei, which provides product design and definition, core three electric and intelligent solutions , and is deeply involved in channels, marketing, retail and other aspects.
But voices of doubt also followed. Many people believed that Thalys had handed over its soul to Huawei and became a foundry.
"The foundry's statement is completely wrong," the above-mentioned Cyrus employee refuted. Huawei's strength lies in software, but Cyrus has more than ten years of experience in car manufacturing. In 2016, it laid out new energy research and development. At that time, it also started Tesla in Silicon Valley has poached many technical talents and has a solid foundation for building new energy vehicles.
Moreover, Cyrus is not completely "delivering souls." Cyrus is also building a talent team in the fields of artificial intelligence and big data internally. It is following Huawei, but if one day it leaves Huawei, it can go on its own.
“Salis initially made vans and mid-to-low-end SUVs, but now the average price of its models is 20,000 to 30,000 yuan, and there is also the M9, which is positioned as a high-end model. This was unimaginable a few years ago. ." he added.
In-depth binding of "foreign aid" is one of the transformation models of Cyrus.
Cyrus told "China News Weekly" that it will further deepen cross-border cooperation with Huawei, and will also work with leading supplier partners such as CATL and Wencan for division of labor and collaboration.
Cyrus is a representative of cross-border integrated car manufacturing, but Changan Automobile, which places more emphasis on strategic independence, has also embarked on the path of joining forces with external parties.
In November 2023, Times Changan officially put into production in Yibin, Sichuan. This is a battery factory jointly established by Changan, Shenlan and CATL.
An employee engaged in the battery business of Deep Blue Automobile revealed that this is a production line specially supplied to Changan Automobile. Changan’s team is doing battery research and development themselves, and also learns technology through external cooperation. “The electric drive and electronic control in the three electric vehicles, In fact, it is more in line with the original capabilities of the OEM, and the research and development transition is relatively fast. Electric drive is the strength of the OEM. Changan also released an original super-collector electric drive system before. Only in the battery field, although Changan and mature manufacturers no longer have There is a big difference, but Ningde has rich experience in cutting-edge technology, basic research, supply chain, and trial production lines. This is our gap."
In addition to hardware, Changan's cross-border cooperation in the field of intelligence is even more frequent.
In November last year, news broke that Huawei would spin off its car BU and Changan would invest in the new company, which immediately attracted widespread attention.
At the Changan 2024 Global Partner Conference on January 16 this year, Changan Chairman Zhu Huarong disclosed more details. The joint venture between Changan and Huawei is temporarily named "newcool" and will not produce complete vehicles but will focus on intelligent driving.
The above-mentioned Deep Blue Auto employees said that there have been many cases of cross-border cooperation between Changan and Changan in the past two years. In addition to Huawei, Changan has also established a joint venture with Horizon Intelligence, Changan Intelligence, to jointly develop car-grade chips. It has joined hands with Baidu to embed large model technology, and Tencent Develop smart cockpits, etc.
"Cooperation is a win-win situation for both parties. First, they can quickly occupy the market. Second, they share capital and spread risks. Third, they promote mutual technological growth. In particular, Huawei and Xiaomi are quite powerful in terms of ecological layout. We need to learn and integrate." He express.
“Compared with major automobile towns such as Beijing, Shanghai, Guangzhou and Shenzhen, Chongqing’s local supporting capabilities in the field of intelligence and connectivity are still weak. The intelligence and connectivity of automobiles is a more knowledge-intensive, capital-intensive and technology-intensive track. It requires both software and hardware. Improving the independent controllability of high-performance batteries, automotive-grade semiconductors, vehicle-mounted software development, cloud computing, pattern recognition algorithms and other electronics and smart network supply chains is the key to victory. Automobiles Manufacturers need to improve their 'open source capabilities' and 'self-research capabilities', and 'for my use' is more critical than 'for my place'." Feng Lei pointed out.
Return to the finals
“The overall feeling is that it’s boring.” When asked about his work experience in 2023, another employee working at Deep Blue Auto blurted out, “A few years ago, the new energy industry was considered a blue ocean, but in the past two years, I have felt that the whole The industry is developing very rapidly and the competition is also fierce. I am engaged in the technical line of the electrical and electronics business. As the iteration of products becomes faster and faster, there are more and more things to learn, and I often feel nervous about not having enough time. Every day When competitors release new products, the team will rent or buy some of their models for actual testing, and adjust the parameters of their own products accordingly."
But in fact, the automobile industry has always been not only a competition between enterprises, but also a battlefield for games between cities due to its high output value and long industrial chain.
From attracting investment and competing for automobile companies to allocating policy resources to cultivate industrial clusters, the government can be seen everywhere in the competition in the automobile industry.
When the gunshots are fired in the increasingly involved automobile elimination competition, the supporting role of local governments cannot be underestimated.
The aforementioned Thalys employee told reporters that Thalys' newly completed third factory in Chongqing is a joint project between the car company and the Chongqing Municipal Government. Liangjiang New Area invested billions of yuan in the construction of the factory.
From fuel vehicles to new energy, the improvement of supporting systems is also critical.
Data from 2023 shows that the localization rate of traditional fuel vehicles in Chongqing reaches 70%, while the localization rate of new energy vehicles is only about 30%.
Min Zhaoyuan said that when Chongqing's traditional car companies first started to transform into new energy sources, the order volume did not increase, and there was considerable uncertainty in subsequent development. OEMs did not have strong bargaining power to attract supporting suppliers.
Therefore, the Chongqing Municipal Government will work with car companies to attract investment and provide certain policy subsidies to attract supporting suppliers to improve the supporting system and reduce the procurement costs of OEMs.
Relevant persons from the Chongqing Municipal Economic and Information Technology Commission told China News Weekly that the local key supporting capabilities are continuing to increase, with the production of components such as Fudi power batteries, Qingshan electric drives, Longrun electric steering, Bosch hydrogen power, and Beidou intelligent cockpits. The technological level is domestically leading, and key projects such as ST Power Chip, Dayang Motor, Chengtai Millimeter Wave Radar, Xingheng Battery Aluminum Foil, and Hesai Software have been launched one after another.
In the field of intelligent networked new energy, more than 200 supporting companies have been established in Chongqing.
"As far as the upstream and downstream supporting facilities of new energy are concerned, Chongqing has now solved the problem of 'is there any', but 'is it enough' is still difficult to answer. The former means that the parts and components of new energy are basically laid out locally, while the latter means It depends on whether the local supporting production capacity can meet the needs of OEMs." Min Zhaoyuan further pointed out.
From a longer-term perspective, in the national automobile city map, there are traditional automobile towns represented by Guangzhou and Shanghai, and then there are new energy rising stars such as Shenzhen, Xi'an, and Changzhou. In the future, Chongqing can still maintain the second place in the country, and even Will it return to the "number one city in terms of automobile production"?
In Feng Lei’s view, the first half of the automotive revolution mainly revolved around power change, that is, electrification, which created leading battery companies such as CATL, Fudi Battery, Guoxuan Hi-Tech, and Sunwanda. Generally speaking, “ He who wins the battery wins the world.”
With the rapid development of artificial intelligence, the automotive revolution has entered the second half, and competition will inevitably revolve around intelligence and connectivity. Cars will also evolve towards intelligent mobile terminals, mobile computing centers and distributed energy sources.
At the same time, he believes that with the changes in the "new four modernizations" of automobiles, the relationship between the whole vehicle and the zero parts will also change. The traditional galaxy structure surrounding the entire vehicle will be replaced by a network structure that is less restricted by space. "Only the entire vehicle "Theory" will be redefined, and emerging industrial cities that can be embedded in high-value chain links will make great achievements.
In a word, the second half of the automobile industry finals is not only a competition of car manufacturing level, but also a comprehensive confrontation in the high-tech field.
From this point of view, Chongqing's strength lies in automobile manufacturing and there is not much advantage at all.
According to the Firestone Creation Industry Data Center, there are currently 111 intelligent connected car companies operating in Chongqing, surpassing Xi'an and Changzhou. However, compared with Shenzhen (1,531 companies), Shanghai (608 companies), and Guangzhou (345 companies), It is obviously not of the same magnitude.
Li Ran told reporters that although electronic information is another pillar industry in Chongqing, it is mainly concentrated in the laptop business rather than in high-precision fields such as semiconductors and sensors. Overall, Chongqing still lacks technology giants.
In addition, talent and higher education resources are also prominent constraints. The number of 985 and 211 colleges in Chongqing is far less than that in cities such as Shanghai, Guangzhou, and Wuhan. This has caused Chongqing to have considerable constraints on basic research and the development of key technologies.
Production value is another dimension of observation.
In 2022, the output value of Guangzhou's automobile manufacturing industry will be 611.8 billion yuan. Shanghai's automobile output is not as good as Guangzhou's but its output value can reach 758.6 billion yuan. Chongqing's automobile output value will only be 451.46 billion yuan. Even by 2023, Chongqing's automobile output value has not yet crossed the 500 billion level.
This means that although the gap in automobile production between the three cities is gradually narrowing, Chongqing's automobile companies are still at a disadvantage in terms of scale and economic value created, and have not yet completely shed the label of "big but not strong".
Continuing to climb to the mid-to-high end is still an issue that Chongqing cannot avoid.
Zhan Yi, an associate researcher at the Institute of Industrial Economics of the Chongqing Academy of Social Sciences, pointed out: “In the past, Chongqing car companies were positioned as mid- to low-end cars by the market. Now when looking at the country, Changan Automobile is still biased towards the mid- to low-end. In the future, it will still have to build mid-to-high-end models. To enhance the product quality and brand image of Chongqing Automobile.”
The average price of a bicycle is also a side reflection. In the first half of 2023, the highest average price of a bicycle among domestic cars was Ideal (323,000) and Weilai (305,000). BYD, GAC, and SAIC all had an average price of 150,000. Changan’s 83,000, ranking low among mainstream domestic brands.
"Compared with Shanghai, Chongqing is still relatively weak. The overall business environment and prosperity of the city are obviously better than Shanghai, which can also retain more innovative companies and talents." Xu Haidong analyzed, but the competition in the Automobile City is definitely not the same. In the final analysis, Changzhou relies on Ideal, Hefei has JAC and Volkswagen, Shenzhen, Xi'an and Changsha all rely on BYD. These cities are all in the growth stage and have not yet formed an absolute leading advantage. Chongqing has the foundation of established car companies and is in the new energy competition. If we don't fall behind, we should still be at the forefront.
As a "front wave" in the car manufacturing industry, Chongqing is also trying to build stronger competitiveness.
The profound history of car manufacturing corresponds to strong planned production capacity, mature manufacturing technology, and complete upstream and downstream supporting facilities.
Chongqing's 2024 government work report stated that Chongqing will accelerate the release of new energy vehicle production capacity and strive to achieve 2.6 million vehicle production in 2024.
Secondly, as going overseas has become a survival strategy for more and more car companies, Zhan Yi said that Chongqing is located at an important connection point between the "Belt and Road" and the Yangtze River Economic Belt. Cars can be shipped to the world along the Yangtze River directly to the seaport, and there are also China-Europe freight trains, The New Western Land-Sea Corridor will also help Chongqing vehicles enter the Southeast Asian, Central Asian and European markets.
In 2023, "Made in Chongqing" cars were exported to more than 80 countries and regions, with 368,000 units exported, a year-on-year increase of 29.8%.
Chen Xueqin, secretary-general of the Chongqing Automobile Trade Association, believes that "Japanese Toyota cars once occupied an absolutely important position in the world. How it went from domestic to global and became a highly influential international brand is also a textbook for Chongqing's automobile industry."
"China News Weekly" Issue 7, 2024
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