HONG KONG – During 2016, China’s economy moved to a new normal, with an estimated GDP growth rate of 6.7%. The stable economic operation advanced, which marked a good start of the 13th Five-year Plan period. In the beginning year of supply-side structural reforms, the policies of “addressing overcapacity, reducing inventory, deleveraging, lowering costs, and bolstering areas of weaknesses” received initial success with increasing economic growth factors.
After the closing of the two national meetings, the market has been concerned about this year’s economic situation. Among the many industries, automotive industry continues to flourish, extending last year’s strong trend.
According to Chinese Association of Automobile Manufactures (“CAAM”)’s report last week, China’s automobile sales volume in February reported 1.633 million units, representing an increase of 18.3% over last year, while automobile stocks generally recorded gains. As a leading passenger car manufacturer in China, BAIC Motor (1958.HK) achieved remarkable results in various business sectors, maintaining the overall standard of the industry.
BAIC Motor has recently announced its 2016 annual results#. From the results, the Company’s subsidiaries, namely Beijing Brand#, Beijing Benz, Beijing Hyundai and Fujian Benz, recorded sales of 1.929 million units of vehicles in total in 2016, representing a year-on-year growth of 16.4%.
Moreover, competitive new models have been put on the market, significantly increasing the Company’s business performance, as well as profitability level and profitability capacity. At the same time, the Company actively expanded the partnership network to achieve strong and deep strategic cooperation and develop industry chains.
After BAIC Motor’s acquisition of 35% shares of Fujian Benz, its number of whole vehicle brands has increased to four. As a high level of complementarity between brands and products was created, brand synergy and overall competitiveness were further strengthened.
In addition, BAIC Hong Kong entered into the Subscription Agreement and Shareholders’ Agreement with IDC, Investment Universe and BAIC Automobile SA, which was the first step and an important milestone of the company’s internationalization strategy.
In 2016, BAIC Motor continued its excellent performance and achieved sales of 317 thousand units of vehicles in total, representing a year-on-year growth of 26.7%, which was much higher than that of other joint venture premium branded passenger vehicle manufacturers.
BAIC Benz became the second largest premium passenger vehicle manufacturer in term of wholesale sales with a sales speed several times higher than that of competing enterprises, maintaining the strong lead in domestic premium passenger vehicle market. At the same time, BAIC Benz continued to optimize its product structure, with overall monthly sales exceeding 30 thousand units.
New models were recognized by the market, achieving rapid growth in sales. Since the launch of the new generation, Mercedes-Benz E-class long-wheelbase sedan, all series under Beijing Benz have completed their renewal and replacement, as such its competitiveness is further reinforced.
Future development was accelerated by the more outstanding product layout, and factories of whole vehicles and engines gained higher production capacity from the company’s vigorous promotion of new factories construction. In 2016, Beijing Benz won the title of “2016 Global Best Operating Factory- Best Manufacturer in Large Scale”, becoming the first vehicle manufacturing enterprise granted this award in China.
This Award was jointly organized by A.T. Kearney and Produktion, a being financial journal in Germany, with an aim to identify and recognize enterprise models in global manufacturing industry.
In 2016, the overall sales of Beijing Brand were also very outstanding. Its passenger car sales reached 457 thousand units, representing an increase of 35.6%, of which the growth rate was much higher than the industry average and the overall growth rate of domestic brands.
Overall sales showed quarter by quarter growths, especially Beijing Brand’s new energy vehicles which achieved the annual sales of 48 thousand units, representing a year-on-year increase of 138.7%. In this way, Beijing Brand continued to maintain its leadership in pure electric new energy vehicle industry.
At the same time, Beijing Hyundai also showed satisfactory performance with passenger car sales recorded 1.142 million units, representing a year-on-year growth of 7.5% and the fourth place among joint venture brands. Also, Beijing Hyundai’s product structure was further optimized.
Sales of SUV products increased by 30.1% year-on-year, and the proportion of D+S further increased to 50.3%. Fujian Benz recorded sales of 13 thousand units in 2016, representing a year-on-year increase of 87.5%, achieved a good momentum of development.
Looking ahead, BAIC Motor planned to enter the top three places among domestic proprietary brands in 2020, Beijing Benz strived to become the first in domestic premium vehicle market, and Beijing Hyundai planned to enter the top four places of domestic joint venture market.
The “π Plan”, with 314 being the keyword, will be the program of action for BAIC Motor in the next five years. In 2017, Beijing Benz will pay close attention to production-sales linkage, conduct thorough analysis and set out mid to long term development planning, maintain the market popularity of existing products, as well as seek for quick entry of high-end new energy market.
Market demand for premium vehicles in China is expected to remain robust, and development of Beijing Benz will continue to be the focus of concern. Beijing Brand will take charge of research and development of 2.0 model, so as to ensure that the strategic car model can win success.
Beijing Hyundai announced “NEW” Plan, under which Beijing Hyundai plans to launch nine notable new energy models by Year 2020. Fujian Benz will continue to pursue its goals of becoming the benchmarking company of high-end passenger vehicles in China, and position itself as an important production base of Mercedes-Benz products in Southern China.
In the future, BAIC Motor Group will continue to develop proprietary brands, take the lead of new energy vehicles, deepen international strategy, explore and innovate tirelessly, as well as lead industry development comprehensively. – BusinessNewsAsia.com