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“saic volkswagenthe pressure is still very high, requiring our entire team to walk on thin ice and race against time to win the market. "this is what tao hailong, secretary of the party committee and general manager of saic volkswagen co., ltd., revealed in a public interview not long ago.

in view of the current market performance, tao hailong's words are true. saic-volkswagen's life is indeed not easy.first, production and sales dropped in the first eight months of this year, with output falling 4.6% year-on-year to 684,000 vehicles and sales falling 4.8% year-on-year to 678,000 vehicles; second, there were reports that while volkswagen was considering shutting down some european production capacity, saic volkswagen is also planning to close its factory in nanjing, jiangsu next year.

although saic volkswagen later responded that all production work at the nanjing factory is currently operating normally, many people are still worried about whether its future sales can support production capacity.it is difficult to say whether saic-volkswagen will follow the old path of closing factories, laying off employees and cutting wages in order to reduce costs and increase efficiency.

under the great changes in the automobile industry, even saic volkswagen, which has been rooted in the chinese market for 40 years, is somewhat unable to do what it wants. in july this year, tao hailong, the former general manager of huayu automotive systems co., ltd., took over as general manager of saic volkswagen. the new official has three things to do when he takes office. under his leadership, can saic-volkswagen become popular again?

1

monthly sales fall for fourth consecutive year●

saic-volkswagen co., ltd., which signed the contract and laid the foundation stone in october 1984, is one of the oldest automobile joint ventures in china and is jointly operated by saic group and volkswagen group. benefiting from its long-term roots in the chinese market, saic-volkswagen has always been the "benchmark" for domestic joint venture car companies and has written many legends.

for example, in november 1995, saic volkswagen passed iso9001 quality system certification, becoming the first unit in the domestic automobile industry to pass this certification. and in 2016, it became china's first passenger car company with annual sales exceeding 2 million units.

during the most glorious period from 2015 to 2018, saic volkswagen won the sales championship in china's passenger car market for four consecutive years with sales of 1.812 million, 2.002 million, 2.063 million and 2.065 million vehicles respectively.

at that time,lavida、passat, tiguan and other models are phenomenal products in the chinese automobile market. in 2018, the lavida family sold a total of 504,000 vehicles throughout the year, becoming the only sedan brand with sales exceeding 500,000 vehicles that year. the suv tiguan is the joint venture suv sales champion, with cumulative sales exceeding 300,000 units throughout the year.

unfortunately, the market is not static. starting in 2019, saic volkswagen, which has been in power for more than 30 years, has begun to encounter threats. saic volkswagen's sales volume that year was 2.002 million vehicles. although it maintained the annual sales mark of 2 million vehicles, it still fell by 3% year-on-year.

in the next two years, saic-volkswagen’s sales were 1.506 million and 1.242 million vehicles respectively, continuing to decline by 24.8% and 17.5% year-on-year.and it is worth mentioning that during the period of declining sales from 2019 to 2021, saic-volkswagen also lost its top sales position in the passenger car market, falling to faw-volkswagen next door.

finally, in 2022, saic volkswagen has made some progress, with cumulative sales reaching 1.321 million vehicles, a year-on-year increase of 6.4%. however, this growth trend did not last. last year, saic-volkswagen's sales returned to the decline channel again, only achieving 1.215 million units, a year-on-year decrease of about 8%.

come this year, according to saic group’s production and sales report, saic volkswagen’s cumulative sales in the first eight months were 678,000 vehicles, a year-on-year decrease of 4.8%. among them, sales in august reached 85,000 vehicles, a year-on-year decrease of 22.75%.and we noticed that from may to august, saic volkswagen’s single-month sales have declined year-on-year for four consecutive months.

it’s no wonder that tao hailong used “very high pressure” to describe the current situation in an interview, and asked the entire team to “walk on thin ice” and “race against every second.” for saic volkswagen, it has now entered the most critical period. it must increase sales as soon as possible to support its sales network and brand positioning. otherwise, it may become a dish on the dinner table instead of the one who sits on the dinner table and eats.

2

rumors of factory closures●

under normal circumstances, when encountering a decline in sales and profits, companies will carry out some measures to increase revenue and reduce expenditure. previous reports have shown that volkswagen may lay off 30,000 people in germany as it seeks to become more competitive in europe's shrinking car market. the department with the largest layoffs will be the r&d department, which will have 4,000 to 6,000 people. unemployment.

later, there were media reports that volkswagen had also started to reduce personnel in the chinese market, with the goal of helping it reduce management expenses by 20% globally within three years.even now, the "fire" has spread to the saic-volkswagen factory. there is news that saic-volkswagen is planning to close its factory in nanjing, jiangsu province next year.

it is reported that the factory is mainly responsible for producing passat andskodathe brand has a variety of models with an annual production capacity of 360,000 vehicles. saic volkswagen plans to relocate some workers at its nanjing plant to another of its plants in yizheng, jiangsu, which currently focuses on producing the lavida sedan.

however, saic volkswagen quickly came out with an explanation, saying that all production work at the nanjing factory is in normal operation. currently, the production capacity of all passat models is sufficient, and production and sales are all normal. based on market demand and product planning, saic volkswagen will launch many new products in the future, including new fuel products and new energy products. based on the new product spectrum, the production base must also be planned accordingly.

this seems to be refuting the rumors, but it is not entirely true. it can only be said that the nanjing factory has not been closed yet, but there is no guarantee that it will be adjusted based on the actual situation in the future."rim visibility" noticed that this is not the first time that news about saic volkswagen closing its factory has spread. in the middle of last year, the factory in yizheng, jiangsu was mentioned.

according to the information from that meeting, saic volkswagen’s three vehicle plants in anting, shanghai are undergoing production line adjustments. among them, the first plant will end production in july 2022 and has been permanently shut down. some production lines have been relocated to yizheng, jiangsu; the second factory has started to combine shifts, merging two production shifts into one; the third factory is likely to start working together in the second half of 2023.

even according to what the official said, there is an overall upgrade and transformation reason behind this, which is part of the rational planning of the production layout of its electric vehicles and fuel vehicles.however, after seeing too many rumors about plant closures, it is still difficult not to worry about saic volkswagen's capacity utilization and efficiency issues.

last year, saic volkswagen's designed production capacity reached 2.088 million vehicles, but the actual production capacity was only 1.202 million vehicles, with a capacity utilization rate of only 58%, which means that nearly 900,000 vehicles of production capacity were idle. in the first eight months of this year, capacity utilization was also very low. it may be a helpless but inevitable choice to reduce expenditures by shutting down redundant production lines.

3

how to regain its glory?●

in fact, saic volkswagen is currently facing severe challenges. on the one hand, there are factors in the domestic market environment. in august this year, chinese brands’ passenger car market share reached 63.4%, while german brands’ retail share was 16.6%. in this case, saic-volkswagen cannot survive alone.

on the other hand, saic volkswagen also has its own shortcomings that need to be made up for. previously, zhongbaoyan passat,tiguan lthe poor performance in the crash test has reduced consumers' trust in it and increased their wait-and-see mood. in the past two years, with the advent of the electrification era, saic volkswagen's previous layout in the new energy field has also affected sales to a certain extent.

therefore, no matter what adjustments the nanjing factory will make in the future, the most important thing for saic volkswagen at the moment is to return to products and sales.

in this regard, tao hailong, who has just taken office, has his own thoughts. he said: "saic-volkswagen will never do anything eager for quick success and cannot mess up its position by playing cards." "saic-volkswagen's transformation is necessary, but this process must adhere to the regular army's style of play and systematic play."

how to fight specifically?in terms of product strategy, it is "adding". on the one hand, it is adding to the product matrix, and on the other hand, it is adding to product competitiveness.

in terms of product matrix, saic volkswagen plans to form a dense product layout in the price range of 80,000-320,000 yuan with different energy forms. basically, there will be one product for every 10,000 yuan range; in terms of product competitiveness, the plan is to build a family of heavyweight models that have already performed well, thereby pushing the brand upward.

fu qiang, executive deputy general manager of sales and marketing of saic volkswagen, also revealed that this year is a quasi-big year for saic volkswagen products, and two parts of the pro trilogy have been released this year. while adding to the product matrix, saic volkswagen has also optimized some products to meet the needs of users in more market segments. the company's strategy is to advance both oil and electricity, and product upgrades have also been carried out on the id. series.

it seems that saic-volkswagen has not yet "lain flat", but the effectiveness of these strategies remains to be verified by time.the good news is that in august this year, saic volkswagen delivered 14,000 new energy vehicles, a year-on-year increase of 23.3%, setting a new monthly delivery record for the year. continued efforts in the field of new energy are expected to become a sales growth point。

"the volume of the chinese market is far from over. it is difficult to say who is better. it is far from the time when the game is over. the key to victory still lies in the competitiveness of the company itself." in tao hailong's view, the joint venture still has chance. next, we will see whether saic-volkswagen can stand up again under the leadership of his new leader.

author | li li

source | carvisibility