An COVID-19 epidemic has hit the pause button for the automobile manufacturing industry, whose annual revenue exceeds 8,111 billion.

The automobile industry, which has been falling for two years in a row, is once again facing a major test.

At the beginning of October, 2121, almost all forecasting institutions were cautiously optimistic about the forecast of China's automobile market this year. Although the automobile industry is experiencing an unprecedented initial stage of great change, it has lost its general pessimism as it did at the beginning of 2119. But no one can imagine that a sudden epidemic has pressed a pause button for the entire automobile industry.

during the spring festival, everyone should be most concerned about: how much impact will this novel coronavirus epidemic have on the entire automobile industry?

what is the size of China's automobile manufacturing industry? In 2118, the overall revenue of the automobile manufacturing industry was 8,337.26 billion, accounting for about 9% of the country's 91.9 trillion GDP. Every "shutdown" day means an economic loss of about 22 billion.

the impact of the epidemic on each automobile manufacturer is not the same. Car companies in different situations have different effects of the epidemic and coping strategies. For individual excellent automobile manufacturers, if they have made enough adjustments and strengthened their own strength in the past few years, such as establishing an optimized system of supply, R&D, manufacturing, marketing and after-sales, and successfully surviving a series of "grey rhinoceros" incidents, such as the switching of national VI standards, the decline of new energy subsidies and the evolution of consumption structure, then the epidemic of "black swan" at present, even if it has a great impact, is not fatal.

However, for most automobile manufacturers, the "lockout" of at least 21 days may amplify many internal problems covered by inertia and have unexpected effects. The seriousness of these internal problems may be far greater than the external epidemic challenges. Internal problems have been handled, and external risks and pressures are controllable and surmountable. On the contrary, if the internal problems are not handled well at this time, the ability to overcome external difficulties will also be greatly affected.

This means that it is very important and urgent for every automobile manufacturer to evaluate the impact of this epidemic.

According to Tong Jiren Auto Review, according to the duration of the epidemic, the impact may be divided into three stages: short-term impact on new car consumption, medium-term impact on supply chain coordination and long-term impact on users' purchasing power.

the impact of epidemic situation on the supply and demand of automobile market

1. Supply side: short-term balance of simultaneous freezing of supply and demand

In p>2121, the automobile market ushered in a good start. In the first eight days of October, the wholesale volume of domestic passenger car market increased by 4.59% year-on-year, and the retail volume increased by 11.81% year-on-year. Since the Spring Festival holiday is located in the last week of October, if the construction is delayed due to non-epidemic conditions, there should be a full working month in February. However, with the major car companies delaying the start-up time until at least February 11, it means that nearly half of the car production capacity will be lost in the whole month.

based on the automobile production during the Spring Festival in the past five years, the Spring Festival in 2115, 2118 and 2119 was in the first half of February, which had the greatest impact on the whole month's production. The automobile production in February in these three years was about 61% of that in October and March. Therefore, if the output of the same period in 2119 is taken as the benchmark, the domestic automobile output is expected to decline by about 31% in the first two months of 2121.

Hubei province, which suffered the worst epidemic, is the fourth largest provincial-level automobile production region after Guangdong, Jilin and Shanghai, accounting for 8.7% of the national automobile production in 2119. If the start-up of automobile factories in areas with serious epidemic situation such as Hubei continues to be delayed, it will further affect the annual automobile production.

on the dealer side, the key word of the auto market in 2119 was "destocking". By February 2119, the inventory of the auto market had dropped to the lowest level of 1.33. In terms of classification, the inventory coefficients of luxury/imported brands, joint venture brands and local brands after February last year were 1.11, 1.18 and 1.61, respectively, and the car company with the highest inventory was 1.75. In other words, according to the normal sales rhythm, the general inventory of dealers can be maintained for less than 2 months, and some Japanese car companies with lower inventory may be within 1 months.

however, considering the superimposed suppression of consumer demand by the Spring Festival holiday and epidemic, except for some popular models that are already in short supply, the dealer's inventory is enough to support most of the current consumer demand. As long as most car companies can resume normal production from March, there will be no imbalance between supply and demand in the market.

2.? Consumer side: there is great uncertainty in the first purchase below the third line

At present, the most uncertain factor is the consumer side, and the core is purchasing power.

compared with 2113 during the SARS period, the domestic economic structure has changed greatly. An obvious feature is that the proportion of the tertiary industry in the national economy increased from less than 1/3 in 2113 to more than half in 2118. The number of employees in the tertiary industry accounts for 46.3% of the total employment, exceeding 361 million. This epidemic, which occurred during the Spring Festival, has the most obvious impact on the tertiary industry, such as catering, entertainment, tourism and retail, and will directly affect the income and consumption expectations of all employees.

after SARS in p>2113, the rapid rise of private car demand and the stimulation of the epidemic on private car desire have contributed to the explosive growth of the automobile market in that year. However, in 2121, when the repurchase is basically the same as the first purchase, or even the repurchase exceeds the first purchase, this stimulating pull mainly appears in the cities below the third line with a high proportion of the first purchase, and has little impact on the first-and second-tier cities that mainly increase/exchange purchases, and the cities below the third line are precisely the areas where the economy is most affected by the epidemic. When the two phases are offset, it is more likely that consumer demand will decline in the short to medium term.

Based on the retail sales in the same period in 2119, according to the current epidemic situation and relatively neutral expectations, the retail sales of automobiles in the first quarter of 2121 may decline by about 31% year-on-year.

The deep-seated impact of the epidemic on the whole industry

In addition to the market supply and demand in the first quarter, the persistence of the epidemic will also have a chain effect on three aspects of the automobile industry: marketing, supply chain and cash flow.

1.? Marketing: the launch of new cars is disturbed, and stabilizing dealers is the key

If the epidemic lasts for a long time, affecting the car market in the second quarter, the new product launch plans of most car companies in the first half of the year may be seriously affected, including the delay in the launch time of new models, and the emerging new demands of consumers for product body forms and health configuration after the epidemic, which will also have an impact on the definition and positioning of new cars. At the same time, if there is still no downward turning point in the epidemic in late February, the Beijing Auto Show in April may also face the risk of delay or even cancellation, which will undoubtedly directly affect the pace of new car launch in the whole year.

all marketing activities and behaviors, especially the original plans around new cars and terminal channels, may increase uncertainties due to the persistence of the epidemic. At present, it is imperative for car companies to adjust the pace of launching new cars throughout the year in time according to the development and changes of the epidemic, and on this basis, adjust all relevant time nodes involving new products to minimize the extra losses caused by the disconnection between R&D, production, promotion and sales.

on the other hand, it is also very important to maintain the stability of dealers' operating status and cash flow, especially in areas with serious epidemic situation, which is one of the urgent tasks of major car companies. Faced with the uncertain consumer demand and the sharp drop in passenger flow, the dealers who are already short of funds need not only sufficient decompression support from manufacturers, but also the opportunity to improve their online marketing and customized service capabilities. In fact, whether there is an epidemic or not, these are the continuation of the switch between old and new kinetic energy at the marketing level.

2.? Supply chain: Short-term impact spreads to the global market

Manufacturing in China has become an important part of the global auto parts system. Compared with the situation that the whole domestic auto industry chain is shut down, the short-term shutdown affected by the epidemic has affected the stability of the supply of auto parts in the global auto market.

however, there are precedents for this kind of situation. Global auto giants are also looking for short-term alternatives and solutions to reduce the risk of downtime caused by parts supply.

Japan's "March 11" earthquake in p>2111 exposed the potential risks of the "zero inventory" management mode generally respected by Japanese car companies under certain circumstances. At that time, car companies that implemented zero inventory often established long-term and stable cooperative relations with only one supplier on some key parts. The closed supply chain weakened the ability to resist emergencies accordingly, and the break of a certain link would affect the whole supply chain.

however, it is precisely because of the experience of dealing with emergencies many times in recent years that even the zero-inventory management mode has corresponding emergency prevention and recovery mechanisms, such as multi-site production nationwide, multi-track system of suppliers and partial zero-inventory management, in order to ensure the balance between business continuity and production efficiency. Considering the temporary freeze of supply and demand in the terminal market, if the epidemic situation can be effectively controlled in the first quarter, the supply chain in the domestic automobile manufacturing field is expected to return to normal operation steadily in the second quarter.

3.? Cash flow: it is difficult for the new car-making forces to be robbed again

If the worst case is considered, such as the 25% or even greater decline in new car sales in the first quarter of 2121, can the cash flow of China car companies withstand such pressure?

for those traditional automobile manufacturers who have developed steadily and survived the decline of the automobile market in 2119, the cash flow problem in about half a year is not serious. However, for the new car-making forces that still rely on investment and financing to survive, especially those that expect to achieve mass production delivery in 2121, Tesla far exceeds the expected domestic delivery capacity, and the pressure of lockout and postponement brought about by this year's epidemic will make many new car-making forces suffer again.

This also means that 2121 will be a "life-and-death" year for most new car-making forces. Only when mass production is delivered, new car-making forces will generate cash flow and have heavy assets, and the financing structure of the capital market will be fundamentally changed. Before that, is there enough money to survive? Achieve mass production, sales and capital withdrawal? Every link is closely related to cash flow, and the interruption of any link will make a new car-making force disappear. This wave of new energy vehicles, which has lasted for five or six years, will usher in a real "final battle" in 2121. "game)"

The epidemic only changes the rhythm, but does not change the direction

Perhaps the whole automobile industry will return to a normal and stable state, and it may wait until the third quarter of this year, but the trend of "steady growth" of the overall economy will not change because of the epidemic. After the epidemic is lifted, the corresponding policies to ensure "steady growth" will also be strengthened. The automobile industry, which accounts for 9% of domestic GDP, must be one of the priority beneficiaries.

some people have calculated the loss and impact, so they can give you some reference: in 2117, Shanghai calculated the economic loss of Shanghai automobile manufacturing industry based on the data of the third economic census in 2113. The calculation results show that when the enterprise stopped production for 46 days, the total loss of production and industrial related losses was 146.14 billion yuan, accounting for 6.8% of Shanghai's GDP that year. Simply put, the impact of the shutdown of Shanghai's automobile industry on the total GDP is about 1.15 percentage points per day.

and if the scope is extended to the whole country, the impact of the short-term shutdown of the automobile industry on the economy will be further diluted. At present, the general situation of stopping production for an extra 11-15 days will not affect the new pattern of China's automobiles, and most automobile manufacturers have enough capacity to make up for the lost production figures in a short time.

Tong Jiren Auto Review believes that for most domestic auto companies, it is far more important to adhere to the adjusted direction, accelerate the internal transformation of enterprises, and strengthen the competitive advantages of products and systems than to deal with external emergencies. The "shutdown" loss caused by the current epidemic situation is negligible compared with the resulting changes in consumption expectations and purchasing power. Once the epidemic situation is relieved, with the help of policies, with the gradual recovery of consumption expectations and purchasing power, China's automobile market will still accelerate its adjustment along the previous market inertia.

what the epidemic situation can change is only the current development rhythm of the automobile market, not the future development direction of the automobile market. Practitioners should be more confident to see more business opportunities and new challenges brought about by the great changes in the automobile industry in the next decade.

This article comes from the author of Chejia, car home, and does not represent car home's standpoint.