Summary of Domestic Mainstream Autonomous Vehicle Enterprise Parts Industry Strategies
2024-05-15
Great Wall: The route of "dual threaded" components is becoming increasingly clear
Based on the business policy of "focusing on quality, transforming research and development, and deepening operations", Great Wall Motors has established a business model that integrates global component resources, surpasses international benchmarks, and builds technological development and product innovation capabilities. This seemingly simple 12 word policy is actually the experience of Great Wall Motors over the past 20 years. On the one hand, Great Wall Motors strengthens its vertical integration capability, improves its ability to produce key components, and enhances its cost competitive advantage; On the other hand, developing strategic partnerships with international core component suppliers, mastering core technologies, and ensuring that the quality and configuration requirements of vehicle products keep up with international trends. This has formed the unique "dual threaded" component development path of Great Wall.
International Component Enterprise Cooperation under the "Three Highs"
At the end of April this year, the Great Wall H8 announced its third listing. After more than 7 months of joint efforts with ZF in Germany, Great Wall Motors was able to solve the problem with the H8 rear axle main reducer. Faced with the ups and downs of the H8, Wei Jianjun, Chairman of Great Wall Motors, bluntly stated, "Independence must be challenged in order to have the opportunity to expand overseas." In fact, since the export of Great Wall pickup trucks overseas in 1998, Wei Jianjun has been planning Great Wall Motors' internationalization strategy. An engineer responsible for new product design and development at Great Wall Motors once said, "In recent years, we have had more and more opportunities to communicate with personnel from international parts companies, covering all aspects of new car development." On April 8, 2011, at the Great Wall Motors International Strategy Seminar held in Beijing, Great Wall Motors' international strategic development thinking based on international R&D strategy and characterized by product "three highs" strategy (high-tech, high-performance, and high-quality) was recognized by industry experts. Upgrading from general product supply to international strategic cooperation and synchronous research and development of new products has become a major feature of cooperation between Great Wall Motors and international component enterprises. In the following two years, Great Wall Motors worked hard and signed strategic cooperation agreements with more than ten international component companies, including Ricardo, Mahler, Autoliv, Pohang, Boze, Delphi, Trina Solar, Total, Hella, Schaeffler, 3M, and Dassault, covering powertrain, chassis control, body design, electrical systems, and interior and exterior components.
In fact, the successful listing of Great Wall Motors in Hong Kong in 2003 was the key to promoting its international cooperation, and the H-share issuance in 2007 once again enhanced Great Wall Motors' position in the international capital market, increasing its leverage to attract foreign investment cooperation. From a technical perspective, after several years of strategic cooperation with foreign countries, Great Wall Motors has the ability to assemble almost all of the popular fresh configurations for its new models. According to the 2014 annual report of Great Wall Motors, based on its future development strategy, it will launch more SUV models, forming large, medium, and small models; High, medium, and low-end; Urban and off-road; A matrix of products with different specifications and styles, such as gasoline and diesel.
Intention to divest component companies and establish independent component groups
On June 18, 2000, Great Wall Internal Combustion Engine Manufacturing Co., Ltd. was established, and Great Wall Motors became one of the earliest independent enterprises to have core power. For the past 15 years, Great Wall Motors has never stopped researching and developing core components such as engines and transmissions, especially continuously strengthening its independent research and development capabilities. The H8 incident highlighted the shortcomings of Great Wall Motors in its research and development system, which led to a transformation of the company's research and development system. The purpose of the transformation is to strengthen product early planning, focus on design sources, and improve product design quality. In 2014, Great Wall Motors' R&D expenses reached 2.571 billion yuan, accounting for 4.11% of its operating revenue, and R&D expenses continued to increase. This year, the New Technology Center of Great Wall Motors will be put into use, including five major areas: research and development center, trial production center, testing center, styling center, and data center, further enhancing research and development capabilities.
With the continuous strengthening of research and development capabilities, Great Wall Motors' self-produced parts production capacity is improving, and it has more than 30 holding subsidiaries. The H-share listing of Great Wall Motors in 2003 and the refinancing funds in 2007 were mainly used to build new factory areas, increase high-tech facilities for vehicles and engines, expand existing parts production factories, including front and rear axles, frames, interior accessories, and other accessories. In 2011, Great Wall Motors went public on the A-share market, raising 3.166 billion yuan to invest in a total of 7 expansion projects for automotive components such as engines, transmissions, axles and brakes, interior and exterior decorations, and headlights. These projects are built around the production bases of Great Wall Motors in Tianjin and Baoding. By the end of 2014, almost all projects had been completed.
Industry experts have stated that with the improvement of its parts business, Great Wall Motors has the possibility of divesting its parts enterprises and establishing an independent parts group to enhance business flexibility and generate order revenue outside the group. In fact, in 2001, when Great Wall Internal Combustion Engine Co., Ltd. developed the 491QE multi-point electronic injection engine, it began to support multiple domestic vehicle manufacturers. Nowadays, Great Wall Motors' parts business includes self-produced engines, transmissions, front and rear axles, air conditioning equipment, steering ball pins and rod assemblies, as well as other components for the production of whole vehicles. In 2014, Great Wall Motors' revenue from parts and other operations was 3.245 billion yuan, an increase of 8.61% compared to 2013.
BYD: In a state of change and invariance in vertical integration
For BYD, which has been in the automotive industry for 12 years, its parts business is in a state of vertical integration and change. What remains unchanged is that BYD still insists on vertical integration; What has changed is that there has been a significant change in the way vertical integration is carried out.
In 2014, BYD's operating revenue was 58.2 billion yuan, a year-on-year increase of 10.09%, and its net profit was only 434 million yuan, a year-on-year decrease of 21%. Among them, the revenue growth of automobiles and related businesses was only 3.03%. In order to meet the increased supporting funds for the development of new energy technologies and the launch of new car models, BYD did not distribute profits for 2014 and did not convert capital into equity. BYD seems to have not continued its "second takeoff" in 2013, but rather remains in the three-year reform process after 2010. In fact, since entering the automotive industry in 2003, BYD has adhered to technological innovation and mastered a large number of core technologies in vehicle manufacturing, mold research and development, and vehicle development. BYD interprets the "vertical integration" of the industrial chain.
Transition from cost reduction to integrated technology
In July 2002, BYD fully acquired Jichi Mold Factory; In 2003, BYD became the world's second largest manufacturer of rechargeable batteries; In the same year, Wang Chuanfu, who was determined to build electric vehicles, acquired 77% of Qinchuan Automobile's shares for 270 million yuan. With the help of capital strength and technological accumulation in the IT and battery industries, BYD has promoted "vertical integration". Its F3 launched in 2005 has gained a huge cost advantage since its launch, and several models developed in reverse have also maintained good sales. BYD quickly gained a stable market. "BYD chose vertical integration and quickly achieved success, but this also laid the groundwork for the subsequent market downturn," an industry expert told reporters. In fact, Wang Chuanfu, Chairman of BYD's Board of Directors, attempted to cooperate with component suppliers at the beginning of integrating the automotive industry chain. However, this newcomer did not have much appeal to most component companies, and the supporting prices were high. Therefore, BYD will replicate its vertical integration experience in the battery field to the automotive industry. Apart from glass, tires, and steel plates, BYD has made achievements in the manufacturing of various automotive components, especially in the mass launch of its independently developed 1.5T turbocharged engine and 6-speed dual clutch transmission. It is reported that more than half of BYD's components with value are still self-produced, in order to maximize overall vehicle profits.
In 2010, BYD's relentless pursuit of sales ultimately led to dealers withdrawing from the network and a significant decline in performance. In order to quickly improve product quality, BYD has also begun to strengthen cooperation with foreign enterprises such as Bosch and BorgWarner in areas such as wipers, brakes, turbocharging, and mold manufacturing. In 2013, after three years of contemplation and leading the company through three years of adjustment, Wang Chuanfu gained a new understanding of vertical integration of the industrial chain. He said that vertical integration is still the foundation of BYD's future innovation. In the past, it was to reduce costs and improve efficiency. Now, vertical integration is the integration of multi domain advantageous technologies and talents, which can ensure that BYD stands out in the process of technological transformation in the automotive industry in the coming years.
The vertical integration effect still needs terminal recognition
On June 4th this year, BYD released a non-public offering plan, planning to raise 15 billion yuan to invest in iron power lithium-ion battery expansion projects, new energy vehicle research and development projects, supplement working capital, and repay bank loans to meet the matching needs of the rapid development of new energy vehicles. In 2014, BYD's sales of new energy vehicles increased significantly by about 9 times, and its revenue from new energy vehicles increased by about 6 times. However, due to insufficient battery production capacity, BYD has already accumulated many new energy vehicle orders. All new energy vehicles produced by BYD are equipped with self-produced power batteries. The advancement of lithium-ion battery technology and cost reduction are important driving forces for the future development of the new energy vehicle industry.
Compared to other automotive companies, BYD's layout goals in the parts business are more clear. For example, this fundraising project includes a 6 billion yuan expansion project for lithium-ion batteries, which can achieve large-scale production of lithium-ion batteries and vertical integration of the industry chain, reducing production costs. BYD's investment in new energy vehicle research and development projects is aimed at accelerating the layout of various sub markets in the upstream and downstream of the new energy vehicle industry chain. Based on the "74" strategy, the new energy vehicle model will cover seven main target markets (private cars, buses, taxis, sanitation vehicles, intercity passenger vehicles, logistics light trucks, and construction engineering vehicles) and four special vehicle markets (vehicles for warehousing, airports, mines, and ports), achieving coverage of transportation vehicles. In fact, during the process of collaborating with Daimler to build the Tengshi, BYD shared a lot of experience in component manufacturing, integration and debugging, expanding its ability to develop and manufacture new vehicle models. This also gives BYD more confidence to face a wider range of segmented markets and promote mature electric vehicle technology.
The highly vertically integrated business model has become the core strength of BYD's competitive advantage. BYD has achieved control over upstream raw material costs, greatly reducing production costs and increasing efficiency, creating a low-cost operating capability. Industry experts believe that BYD's IT, new energy, and automotive industries can operate in a cross functional manner, and its research and development capabilities in the field of new energy technology are unmatched by other independent companies, giving BYD a greater advantage in market competition.
Geely: Using the "subtraction" method in the parts sector
Geely's component development strategy is clearly taking a new path.
At present, while many vehicle companies are continuously increasing their own component enterprise strength through joint ventures and cooperation, Geely is gradually selling traditional advantageous component enterprises, including DSI. Although Geely is also acquiring manufacturing and component companies for connected and new energy vehicles, various signs indicate that in the traditional component field, Geely is not hesitating to make a reduction.
In the 2014 Geely annual report, it was mentioned that the sale of traditional component enterprises was aimed at optimizing financial efficiency, focusing on building overall vehicle quality and enhancing image. In the past five years, Geely Automobile has invested a large amount of funds to revive Volvo Automobile. With the support of Volvo's advantageous technology module platform, Geely Automobile has continuously abandoned the traditional parts industry and gradually shifted to the technology reserves of future automobiles such as intelligence and interconnection.
Subtraction for parts business
Not long ago, Li Shufu, Chairman of Geely Group, released Geely Automobile's future development strategy.
Li Shufu pointed out that for the future, Geely Group has a unified deployment and has clearly planned a platform based and universal R&D strategy with KC and FE platforms and a CMA basic module architecture as the pillars. Targeting the target segmented market, it provides a product portfolio that is confident, dynamic, enjoyable to drive, and reliable and considerate in technology. At the same time, Geely will regard new energy technologies, especially hybrid and plug-in hybrid technologies, as important strategic fulcrums for the group's future development. In addition, Geely will continue to deepen its technical cooperation with Volvo, expand the synergies in multiple fields such as research and development, procurement, and manufacturing within the group, and promote Geely's automobiles to embark on a fast and sustainable development path, so as to achieve leapfrog development in product quality and image.
Obviously, Geely hopes that the future development of its enterprise can lead to a new path of local development in China by integrating international resources. This also determines that it must abandon the previous big and comprehensive development ideas, peel off its burdens, and go on the battlefield lightly. This year, Geely Group sold its 5-speed and 6-speed manual transmission assets to Wanliyang. Last year, Geely successively completed the sales of three companies: DSI, Hunan Jisheng, and Shandong Transmission. In 2013, Geely Group sold all equity of Shanghai Huapu Automotive Mold Manufacturing Co., Ltd. and sold 51% indirect equity of Shanghai Yinglun Dihua to Huapu Automobile. At the same time, it divested 50% indirect equity of Qufu Karen Automobile. These market behaviors serve the overall development strategy of the enterprise.
Recently, Yang Xueliang, the Public Relations Director of Geely Holding Group, stated that whether a parts company will become independent of the automotive group mainly depends on the overall development strategy of the vehicle company. In Geely's 2014 annual report, the company stated that the main purpose of selling transmission companies such as DSI was to more effectively concentrate and integrate resources, avoid duplicate costs and investments, achieve synergies, and in the long run, improve Geely Group's profitability.
Technology Moving to Intelligent Vehicles
Five years ago, Geely Automobile acquired 100% equity of Volvo for $1.8 billion. Over the past 5 years, Geely has continuously invested $10 billion in research and development in the field of intelligent vehicles, developing high-level XC90 modules. Li Shufu stated that in the future, Geely can share various vehicle models and technologies developed on this infrastructure module, and Geely cars will also be highly intelligent vehicles that are modular, lightweight, and intelligent. Ten years ago, Volvo began researching connected cars; Two years ago, a large-scale and long-distance test of autonomous driving was completed; The newly launched XC90 has achieved highly automated driving and has been put into mass production. Once Geely masters the core technology in connected cars, it will also correspondingly promote the development of China's automotive industry and cultivate the coordinated development of connected car components.
From the 2014 annual report of Geely Automobile, it can be seen that Geely Group attaches great importance to the reserve of technology and components in the fields of connected vehicles and new energy vehicles. At the beginning of 2015, Geely Group established a joint venture with an independent third party, New Ocean Electric Vehicle Co., Ltd., each with a 50% stake, to engage in research and production of automotive parts and powertrain, production of electric vehicles, and provision of related after-sales services in China. Geely is currently in preliminary negotiations with multiple international companies to develop core technologies related to new energy vehicles, striving to develop various types of new energy vehicle products for market entry. Geely Group will also leverage Volvo's hybrid electric vehicle leadership technology to gradually transition from hybrid to pure electric technology.
Focusing on global procurement to optimize supplier management system
Yang Xueliang pointed out that previously, Geely Group did have some wholly-owned, joint venture, and joint-stock component companies, but currently, its component companies are gradually decreasing. At present, we do not have a particularly clear automotive parts strategy, but we are implementing a global parts procurement strategy to optimize and integrate global resources with an open mindset. To ensure product quality, Geely Automobile has taken various measures, including optimizing supplier management system, improving manufacturing process level, and resolutely eliminating suppliers who are not suitable for quality improvement needs, in order to achieve the goal of improving product quality. This is reflected in the Borui model, where a large number of global suppliers such as Harman, Fareo, and Continental Automotive are providing spare parts for Borui models.
In recent years, the cooperation between Geely Group and Volvo has made significant progress. The research center CEVT jointly established by both parties was officially established in September 2013. The task of CEVT is to develop a new generation modular architecture and related components for future C-class sedans to meet the needs of both Volvo Cars and Geely Group. The modular strategy will bring the necessary advantages for Volvo Cars and Geely Group to assist each other in competing with their competitors. Modular architecture and related components can not only create product technology and quality, but also save a lot of development, testing, and procurement costs.
Chery: Cultivating independent component support and improvement
Currently, Chery is adopting a new posture of "new standards, new power, and new Chery" to compete with the joint venture level, strengthening Chery's image and position in the market. As the components strategy and supply chain strategy gradually become clearer, Chery will effectively support the achievement of the company's strategic and product strategy goals.
Enhancing value is currently the top priority for all autonomous vehicle enterprises. By utilizing global resources and strengthening cooperation with component suppliers, vehicle companies will not give up on cultivating the market competitiveness of independent component enterprises. Chery is gradually realizing the essence of sustainable development, and its component procurement strategy is becoming clearer. The person in charge of Chery stated that Chery has established related component enterprises such as Chery Technology, gradually forming a strategic layout for automotive seat systems, electronic control systems, chassis systems and other components. With the development of Chery, these component companies have also grown into adults, with significant improvements in development, testing, manufacturing, quality, and other aspects. Some companies have achieved revenue exceeding 100 million yuan. These growing component companies have become Chery's core suppliers and advantageous suppliers for many joint venture vehicle companies.
Turning to cultivating the competitiveness of independent suppliers
Chery's component strategy is the integration of component technology strategy, quality strategy, cost strategy, and supplier strategy. It is not simply a pursuit of cost advantage, but a combination of advantages after QCDD comprehensive balance, especially quality performance. Chery has always been committed to improvement, and the key to improvement is the improvement of quality level. In recent years, combined with its component strategy and current situation, Chery has formed a competitive advantage in core/key systems, modules, and components. At the same time, it has established strategic joint ventures with major global component suppliers, fully utilizing mature technologies, innovative technologies, and platformization, standardization, generalization, and modularization to strengthen joint ventures with core technology components, enhance various capabilities, and become one of Chery's core competitiveness. At the same time, it also encourages some joint ventures to explore external markets and promote overall capability improvement.
Based on global procurement, Chery's component categories are divided into strategic categories, bottleneck categories, leverage categories, and general categories. Chery's component strategy is based on category division, such as deep technology and resource sharing in strategic category procurement strategy, promoting core technology development, forming core competitiveness, and ensuring supply; The leverage category utilizes the competitive environment to achieve economies of scale by integrating supply chain resources. At present, Chery has established a core supplier cultivation mechanism to support the implementation of the company's strategy and product strategy. In addition, in order to enhance supplier capabilities, Chery has also established a cross departmental team to conduct in-depth on-site inspections of suppliers and systematically enhance their capabilities from the five dimensions of QCDDM (quality, cost, delivery, development, and management).
At present, Chery suppliers are increasingly involved in the entire process of vehicle factory development, production, sales, and service, and organic integration and integration of supply chain resources and capabilities have become key capabilities for vehicle factories. The procurement management module has become a value creation department for the operation and development of vehicle enterprises; Transitioning from passive transactional to proactive strategic, from procurement execution to full supply chain management, has become an important link between the supply chain and internal value chain. Chery's relevant leaders stated that with the strategic transformation of Chery, procurement management has also undergone continuous and in-depth transformation, gradually implementing a deep transformation from procurement execution to procurement management, from supplier management to supply chain management, from domestic to global procurement, from cost focus to quality centered supply chain costs, and from business negotiations to focus on supply chain capacity building.
The strength of the parts sector cannot be underestimated
Chery Automobile has its own parts company - Chery Technology, which will be an important platform for the planning and development of Chery's parts industry in the future.
Chery Technology, established in 2011, is responsible for investing and managing Chery's automotive parts industry chain, participating in the design, development, manufacturing, and after-sales service of automotive parts. At present, Chery Technology has a total of 27 component companies, including 4 wholly-owned, 7 holding, and 16 participating, gradually forming a coverage of automotive chassis, electronic appliances, body/safety, powertrain and other component systems, as well as automotive equipment design and manufacturing. Through nearly 15 years of development, a parts group with an annual sales scale of over 7 billion yuan has been formed. It has established joint ventures with enterprises such as Magna, Bosch, Hanna, and Fuzhuo, and has two level laboratories, 8 provincial-level technology centers, a total of over 1000 projects, and undertakes 21 key technology projects.
Li Lizhong, Executive Vice General Manager of Chery Automobile, stated that currently, most of Chery Technology's component companies not only meet Chery's internal supply needs, but also continuously explore external markets, based on high technological content and high added value, to provide product layout and positioning for mainstream car models, and have cooperated with multiple large domestic and foreign OEMs. Chery component companies such as Bertelli, Tonghe, Etec, Genory, and Bonaire have grown together with Chery over the years and continuously expanded their external markets, becoming component companies with technological and talent advantages, and have a certain degree of presence in the industry.
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