European car reshuffle pressure largest dragon how to get out of 540 million loss


“The accurate figure for the loss of Shenlong Motors in 2004 was 540 million yuan.” On January 12, Liu Weidong, general manager of Shenlong Motors, confirmed to the reporter. At the same time, he also stated that the goal of this year's layoffs for Dragons is 5%-8%, instead of the 20% previously claimed by outsiders. In the winter, it is not just Shenlong that feels the chill of the car market. According to the data from the National Passenger Vehicle Market Information Association, in 2004, the average profit of the Chinese auto industry fell from 8.6% in 2003 to about 5%, and there were more than 10 auto companies that were in a state of deficit. Correspondingly, in 2005, the new production capacity of the auto industry will climb to a new peak, and the auto industry has ushered in a year in which there has never been a serious overcapacity. Analysts in the auto industry said that the industry-wide reshuffle may kick off this, with the first European cars being the first. According to statistics from the National Bureau of Statistics in late 2004, Shenlong’s 2004 loss amounted to RMB 623 million. In response, Liu Weidong explained: “Official statistics data as of the end of November 2004, our internal statistical data is 350 million yuan, plus the factors of the euro's appreciation, the loss of more than 600 million yuan. But the last three months of the dragon The overall sales volume rebounded. In December, sales volume offset some of the losses. In 2004, the accurate loss amount was 334 million yuan. Coupled with the factors of the euro's appreciation, the full-year loss figure was 540 million yuan.” “Actually, 2004 In 2001 and 2005, I had predicted in 2001 that not only was the cooling downturn in the auto market in 2004, but more importantly because the PSA (Peugeot Citroen Group) had been busy with the European market and had no regard for China. This led to the emergence of new products in 2004 and 2005. Liu Weidong said. According to statistics provided by the National Passenger Vehicle Market Information Association to this newspaper, in 2004, the production and sales volume of Shenlong Motors had the largest decline among all passenger car companies. From January to November, the production capacity of the Shenlong sedan was 82,753 units, and the sales volume was 77,761 units. Compared with the same period of last year, the output of the Shenlong sedan was reduced by 16.01%, and the sales volume was reduced by 17.14%. In 2004, the product that accounted for 55.6% of the total sales volume of Shenlong was still Fu Kang. In the full range of Fukang's products, the 1.4 litre hatchback Fukang accounted for almost one-third of the total sales volume of Shenlong. In 2004, it sold 24,994 vehicles, an increase of 2,000 vehicles, but a substantial price reduction is the main factor driving sales growth. Liu Weidong calculated an account: The cost of 1.4 liters of Beverly was more than 40,000 yuan, plus 22% of taxes (17% of value-added tax + 5% business tax), "the car sold more than 60,000, and the cost is close to 60,000, The profit was thin.” Saina and Picasso were the new models introduced by Dragon in 2003. However, these two vehicles did not contribute much to Shenlong. Liu Weidong said: "Saina and Picasso are actually test-water models. Picasso's total investment is only 80 million yuan." Unlike Elysee's localized design, Saina and Picasso did not make localized changes to their appearance before introduction. The reason is that the French side believes that its products are highly competitive in China and therefore have been reluctant to give in on cost control. Therefore, the localization rates of Saina and Picasso have been below 40% so far. In addition, the imported components are imported in the way that each car is packaged, which also leads to high costs. In April 2003, the mid-size sedan was listed. When the Chinese auto market grew at a rate of 30%, Saina's annual sales were only about 4,000. In 2004, at the time of major price cuts for major brands, Senna’s sales fell to 70 units in the lowest single month. Liu Weidong’s understanding of this is: “Chinese users have a 4-5 years later understanding of automobile modeling than Europe. Everyone wants to be avant-garde, but currently in the field of automobile manufacturing, the avant-garde is not moving in China!” according to Liu Weidong The data from the Peugeot 307 on April 21, 2004 started. The funds for the initial network construction and advertising were basically equal to the losses of the Dragon in 2004, which was approximately 330 million yuan; Shenlong was in the second phase of 300,000 yuan. The construction of the car base also invested 4 billion yuan in 2004, which offset the 2004 sales of Shenlong. The key reason for the loss of Shenlong from 334 million yuan to 540 million yuan is the exchange rate. Some of Shenlong's key components are imported from France's PSA Group. Chinese companies buying foreign products must first be converted into euros through the State Administration of Foreign Exchange, and then buy spare parts. The price of French parts and components is calculated in euro terms to maintain its euro area price. As the renminbi was pegged to the US dollar and the US dollar continued to depreciate in the past year, Shenlong lost a lot in this process. "The average value of the US dollar against the Euro during the year of 2004 was 1.3. If it fell below 1.45, Shenlong would not be able to afford it," said Liu Weidong. Four years of change Liu Weidong, who took over as general manager of Shenlong in April 2001, has his own understanding of the partners. He said that in addition to romance, the French who respect romance are arrogant and self-confident. Such self-confidence expands to a certain extent and leads the Frenchman to go too far in pursuit of details. Although the French are very rigorous in their work, this self-confidence and rigorousness have become stubborn and unreliable in China. Thanks to the insistence of the French side, the company's corporate structure was initially based on the PSA Group's model in France, with two divisions, Dongfeng Citroen and Dongfeng Peugeot, managed by two managers. Dongfeng also has a management team involved. The core finance is divided into two parts, one part is responsible for Dongfeng Citroen and the other part is responsible for Dongfeng Peugeot. However, "French has become a minister, and Chinese subordinates simply do not know how to implement it concretely, because the degree of French knowledge of the Chinese market is limited." Liu Weidong said. The change came after Senna encountered Waterloo in China. On July 16, 2004, PSA Group held a board of directors in France. It has been reported that one of the meetings is to help Citroën improve its profitability in China. PSA Peugeot Citroen issued an ultimatum to Shenlong: The loss cannot exceed RMB 300 million, and immediately implements "order-style" production of medium-sized vehicles. Liu Weidong told this reporter: “After PSA held the board of directors, China began to take the lead, and Kearny’s reform plan that had been tailored for Shenlong in 2001 was able to be implemented initially.” He said, “French is working with experts. Type changes, put forward effective proposals, while the Chinese side is more biased toward the division of labor at the operational level.” On September 18, 2004, Shenlong made major adjustments to the Dongfeng Citroen Commerce Department's institutions, and adjusted the number of large areas in the management regional market from 20 to In addition, the number of headquarter institutions was reduced from eight to five; the financial systems of Dongfeng Peugeot and Dongfeng Citroen were also consolidated into one. In terms of personnel, Liu Weidong believes that 3% to 5% of the last phase elimination system can form a market-oriented optimization of the personnel system. In 2002, Shenlong had reduced 10% of its employees. In 2003, it was determined that it would cut 5% in 2004. “The target for layoffs this year is 5%-8%, and the claim that 20% of the layoffs will be made is completely nonsense,” said Liu. According to the 5,200 employees who signed a labor contract with Dongfeng, Shenlong will lay off 260-416 people this year. According to Liu Weidong's plan, in 2005, without a new car, the cost reduction became the primary goal of Shenlong. "This year is definitely more sad," he said. Liu proposed the "P2+2 plan." According to this plan, Shenlong Motors will achieve a target of reducing costs by 2 billion yuan this year and controlling the use of inventory by 2 billion yuan and total sales of 8%. Accordingly, Shenlong will reduce commercial expenses such as advertising and public relations, and control manufacturing costs, mainly through the increase in production of two factories and the reduction of hydropower; at the same time, Shenlong will also reduce financial expenses, reduce parts and vehicle inventory, and accelerate Turnover rate. Liu Weidong said: "Three aspects can allow Shenlong to cut spending of about 2.5 billion yuan in 2005, and the implementation of 'P2+2' is actually paving the way for 2006's lean production." According to the plan, Shenlong will launch a new model every year starting in 2006. The new car, Liu Weidong, said that in 2006, the first new car launched by Shenlong and Passat B5 was at the same level, and the name was not yet determined. Through cost compression, Shenlong plans to achieve a sales target of 115,000 vehicles in 2005, including 40,000 Peugeot brand plans and 75,000 Citroen brand plans. The reporter was informed that the main adjustment of today's Shenlong is: "through the reduction of management levels, the integration of superior resources, in order to achieve effective marketing services and improve market competitiveness," it is from Kearney in 2001 to develop an optimized program. According to information provided by the source to the newspaper, Kearney Company put forward seven core strategies. The first place is “Comprehensively improve the competitiveness of Shenlong”. The main measures include improving the operation level of sales and marketing, and broadening products. Lines, using price levers to seize market share, and further reduce costs by increasing capacity utilization. These ideas are reflected very clearly in the combing of Shenlong since 2004. Did Dragon's preparation for this really help break it? A middle-class person of Shenlong stated that although Shenlong has already made hardware preparations, it still lacks a clear, bottom-up, market-oriented concept. In particular, Shenlong is faced with even more fierce fighting. In 2001, Shenlong's sales were 6.1 billion yuan, ranking fourth in the Chinese car market. Kearney set a goal for Shenlong to rise to the third place in the industry in 2005, occupying 11% of the car market. Currently, Shenlong's market share is less than 4%. China's auto industry began to shuffle? Shenlong is not the only innovator in the automotive market. According to the statistics of the China Association of Automobile Manufacturers, in the first 10 months of 2004, the profits of vehicle manufacturing industry fell by 11.74% year-on-year, and 3 out of 15 key enterprise groups have suffered losses, and 6 of them suffered negative growth. In 2005, the auto market's climate did not begin to show signs of warming. National Bureau of Statistics data show that in 2005, sales of cars will increase by 8% to 2.48 million vehicles, and increase by 10% to 2.73 million vehicles in 2006. In 2005, the new production capacity of the automotive industry will be at the peak stage of expansion in recent years to 970,000 vehicles, but the capacity utilization rate reached a record low of 52.5%. In 2004, the annual sales of Chinese automobiles were 2.25 million. According to the data calculated by the National Bureau of Statistics, it means that the estimated output of the automobile industry in the next two years will be 3.22 million vehicles and 4.05 million vehicles, and the total sales volume of two years will be 5.21 million. The overcapacity in 2005 and 2006 will reach 2.06 million. The analysis report of Everbright Securities stated: “In 2005, the profits of the sedan industry fell by at least 50%, and it was not even possible to rule out the loss. In 2006, the industry’s profits may have improved to a certain extent on the basis of 2005. The degree of improvement depends on the speed of the localization process. "Chinese automobile manufacturers have obviously felt chilled. Just after the New Year in 2005, 20 manufacturers have joined the ranks of price cuts. The entire industry shuffles or will come. People in the industry believe that consumers in the Chinese market are still at a price-driven level, and that the markets with the fastest growth in the next few years will be middle- and low-end markets. This kind of consumption structure will push the European joint venture to the cusp of a big reshuffle. An industry expert said that in the Chinese market, the main force of the European car is Volkswagen, and the weakness it faces is the follow-up of follow-up middle and low-end products. Shanghai Volkswagen has already developed Santana 3000 on its own, but that is not a strong product that the Volkswagen Group can rely on to seize market share after all. Moreover, the perfection of the European automotive market and its demanding requirements for the level of automotive technology have made Volkswagen's product quality excellent, but the cost has remained high. In this way, Volkswagen faces strong pressure from Japanese and Korean cars in the main mid- and low-end sedan market. Toyota has 150 models, of which more than 50% belong to this range of models. The Hyundai follow-up product line will also be introduced in the next two years, and has a price advantage. For PSA Group, 2005 and 2006 were the key period for grabbing market share. However, Shenlong did not have new products in 2005. With the increasingly diversified products in the low-end market, Beverly could continue to maintain its market share. It is also hard to say. This gave Japan and South Korea and the US Department models a chance to breathe and erode the market. In 2004, Fiat sold 24,783 vehicles in the Chinese market, a decrease of more than 12,000 vehicles, accounting for 1% of the car market in 2004. The popularity of its brand in China’s consumer tier is limited, and it is difficult to capture more market share. It can only wait for GM to integrate again in China. U.S. cars have also outperformed European cars in China. Based on its successful localization, Shanghai GM continuously introduced low-end sub-brands to China. After Ford took root in Changan, it also learned from GM and continuously introduced its sub-brands to China. An industry analyst said that the European market is relatively closed, Japan and South Korea is entirely its own brand, the Chinese market is more like the US market, for the brand itself, completely free and open. The ranks and pattern of the auto giants in the global market may be their future position in the Chinese market. Baidu "Dragon Dragon Motor" has 117,000 related pages. High labor costs, problems with supporting manufacturers, and high purchasing costs have resulted in high production costs for Shenlong Motors. If it continues to rise, Shenlong Motors will face the risk of delisting.

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