Under the Shadow of BMW, Hua Chung Chung Saves Brilliance

Brilliance Auto’s first high-end 7-seat MPV-Hua Song 7 was sold at a starting price of 237,700 yuan, causing an uproar in the industry and beyond.

In addition to the LOGO marked with Huasong, the words “Supported by BMW Group Technology” are engraved on the engine's hood and become the biggest selling point of the model. It is reported that Hua Chung 7 is the first BMW Brilliance vehicle to carry the N20 series engine authorized by BMW. BMW's Designworks design studio is involved in the exterior building. Brilliance Automotive expects to use this model to seize the luxury high-end MPV market that still belongs to Blue Ocean.

Brilliance Automotive Chairman Yu Yumin once formed the Huachen Frame into a "big plane". The main body of the aircraft is the Chinese and Gold Cups. It is unshaken and does not need to grow. The wings of the fuselage are BBA BMW Brilliance and BSV special vehicles. For their own brand escort. However, what has been criticized by the industry is that, compared with the outstanding performance of the BMW Brilliance joint venture, Brilliance Automotive has been declining in sales and profits in recent years.

Given the bottleneck in the development of both China and Jinbei, can Hua Chung of “starting a new stove” bring a turning point for the development of Brilliance? I believe that Yu Yumin is more eager than anyone to know the answer to this question.

Another MPV trail

When the German BMW Group authorized the Mianyang Xinchen Power Production N20 engine project to officially start construction in June 2013, it has already been reported that BMW will help Brilliance build an internal MPV codenamed J11, which will be used by the MPV. The engine is the N20 engine that BMW authorized New Morning Power OEM.

More than a year later, Brilliance put the model on the booth of the Guangzhou Auto Show and named it Huasheng 7. Although after the listing, Brilliance Motor Co., through strategic cooperation with the world's top hotel group Starwood Hainan, and New Year's Eve in New York Times Square to New York's Times Square to the New Chinese New Year, etc., to make the industry and the Chinese people eyeball, but the shadow behind the BMW It is the reason for the final consumer to pay.

“Wason 7's vehicle design and development manufacturing process is strictly based on BMW's and Magna's standards for positive research and development.” The relevant person in charge of Huasong brand has been stressed to the Times Weekly reporter.

According to statistics, under the strong support of BMW and Magna, Huasong 7 has integrated the world's top supplier supporting systems, including the U.S. TRW Group EBC460 active safety system, transmission system manufacturer ZF, and the tire system. Suppliers such as German mainland, Michelin, France, and even audio equipment are from Alpha, a luxury car. In addition, more than one-quarter of the spare parts of Huasong 7 vehicles are directly shared with BMW.

Of course, Hua Chung 7 is equipped with the BMW N20 series engine and the design from the BMW Group Designworks design studio is the biggest highlight of the product. The inline four-cylinder 2.0-liter turbocharged fuel direct injection engine supported by BMW has been selected as the “Top 10 engine for Ward” for two consecutive years. It was officially manufactured at Brilliance’s Mianyang plant last year. It is also the first time in BMW’s history for 100 years. Authorizes the production of engines outside the system.

According to the above-mentioned person in charge, the Times Weekly reporter stated that in addition to technical support, the BMW team also provided effective and effective advice and advice on aspects such as supplier management, business process management, and dealer storefront upgrades. “We reorganized the supplier management team under the support of BMW, tested the suppliers 100%, greatly improved management capabilities and quality control capabilities; assembly lines, inspection process control more stringent, the specific performance in the standard increase, inspection procedures Many, and according to BMW standards developed a special assembly tool; refer to BMW standards for dealers to carry out a comprehensive upgrade and sales service training, greatly enhance the brand's high-end display and terminal services."

With reference to BMW's standard process, Brilliance selected the first batch of 31 distributors as its Huasong brand distributors in its existing sales channels, and made reference to BMW standards to upgrade the storefront. “This year, we plan to fully lay Huasong 7 distribution channels in major cities across the country. At present, the nation’s sales network has been initially formed, and 27 cities can buy Huasong 7.” The responsible person told the Times Weekly reporter. Say.

In Yan Yumin’s plan, Hua Song 7 will expect to reach sales of 20,000 units this year after listing, and it will also refer to joint venture competitors such as Shanghai General Motors GL8 and Guangqi Honda Odyssey. “The current mainstream commercial vehicles mostly regard ride comfort as the core demand. At present, the mainstream crowd in the Chinese commercial vehicle market is a growing emerging entrepreneur in China, which is a representative of the new economy. High efficiency and fast pace have become Their business life is 'new normal.' The market demand for German commercial vehicles that are known for their simplicity, efficiency, and large space is also highlighted.” said the responsible person.

Relevant data show that last year GL8 sales in the Chinese market was 80,476, while the Odyssey was 34,839, plus a G10 recently launched by SAIC Chase was also hailed as a strong competitor to Hua Song 7, and this can be foreseen. It will be a fight.

“Building Hua Song 7 as an internationalized product is more helpful to the brand of Brilliance Automotive. Now it seems that it is impossible for independent brands to make breakthroughs in high-end cars, so Brilliance chose Breakthroughs in the high-end business MPV market may feel a higher chance of success.” Cui Dongshu, deputy secretary-general of the National Passenger Vehicle Market Information Association, told the Times Weekly that the current independent brands are still blank in the high-end MPV market, although Wuling Hongguang , Po Chun 730, Changan Ono, Ling Zhi, etc. in the MPV market accounted for most of the share, but it is still in the 100,000 yuan price range.

However, there are also a considerable number of industry insiders who are on the sidelines. Judging from the pricing of this model and the weak reality of Huachen itself, it is still a question mark whether Brilliance has enough brand power to support such a high-end brand.

Profit test

The shadow of BMW appearing everywhere in Hua Chung 7 reflects the development difficulties of the two other brands of Brilliance, Gold Cup and China.

Jinbei Motor’s 2014 performance report shows that last year, Jinbei Automobile sold 80036 vehicles, completed 72.76% of the plan at the beginning of the year, realized operating income of RMB 5.147 billion, a year-on-year decrease of 9.55%, and realized a net profit attributable to shareholders of listed companies of 150 million. The loss around the yuan was down 948.90% year-on-year.

The sales volume of Brilliance’s own-brand China Motors also showed a significant decline last year, at 141,200 units, a decrease of 33.87% from 2013. Although the Chinese brand's products now have 15 models, but in addition to the Chinese H330 and China V5 sales can reach 4,000 monthly sales, the remaining few sales have reached the industry average level models. It can be seen that Brilliance is facing tremendous pressure on the cost of bicycles, resulting in low profit margins.

It is reported that from Huasong 7, which was put into R&D in September 2011, the Brilliance Group has invested more than 2 billion yuan. Together with the launch of the small SUV China V3 this year, Yan Yumin believes that Brilliance’s own brand losses will narrow this year.

In fact, relying on the joint venture company BMW Brilliance's "transfusion" has long been a reality that Brilliance cannot avoid. When the Times Weekly reporter sorted out the relevant annual reports, it was found that the BMW Brilliance Group's contribution to the Huachen Group's net profit rose from 3,435 million yuan in 2013 to a significant increase of 61.2% to 5.536 billion yuan. In 2012, this figure was 35.2%, which means that Brilliance’s reliance on joint ventures has grown.

There have been industry insiders that profitability is an important indicator of self-owned brand assessment. However, looking at the current independent brands, except that Great Wall Motor can achieve substantial profitability through its focused SUV strategy, the rest rely on joint ventures or continue to lose money.

According to the 2014 financial report released by SAIC, last year, the parent company's operating income was 15.304 billion yuan, down 17.7% from 18.856 billion yuan in the previous year, but sales costs did not fall, and the growth value was 2.914 billion yuan, an increase of about 19%. Excluding investment income of up to 30.806 billion yuan, its operating income still suffered losses of approximately 7.014 billion yuan. Changan Automobile (Weibo), which is located in the southwest, has achieved a significant leap in its own-brand business. Its CS75 and Yidong sales have increased significantly year-on-year, but it is expected that the self-owned brand will continue to suffer losses in 2014, but will only decrease. In December last year, Geely Auto (00175.HK) also issued an announcement stating that due to the loss of foreign exchange exchanges in the Russian business and the reduction in car sales, it is expected that net profit for 2014 will drop by about 50% year-on-year.

This shows that it is not an easy task for the self-owned brands to achieve profitability at present. In addition to relying on the improvement of product quality, prices are also seeking ways to break through. Zhang Zhiyong, a veteran automotive analyst, once told the Times Weekly reporter that Brilliance China has always had a good reputation in its own brand, and with the technology of relying on BMW, the Chinese brand has a unique advantage, but there is always no one. Can be considered as high-end independent products, the brand did not rise up.

For example, the H530, which has been listed on the market for almost four years, has not yet disclosed the news of its replacement. At the Beijing Auto Show last year, the new H530 exhibited was only a modification of its appearance, power and interior. No major changes or upgrades have been made. In this case, the sales of the H530 have continued to decline in the past two years. The data show that last year Brilliance sold a total of 8,939 H530s, which was nearly 49% lower than in 2013.

At present, Brilliance is putting the hope of breaking into the Hua Chung brand. "Follow-up models and marketing plans have been put on the agenda, and details are not readily available for disclosure," said the relevant person in charge of the Huasong brand. An analyst who declined to be named told the Times Weekly reporter that in the increasingly fierce Chinese auto market, it is very difficult for a new brand to survive and achieve development. Whether Brilliance is ready or not is yet to be observed.