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Regarding the issue of overcapacity in the heavy truck industry, many people are not worried about it. Some people even think that overcapacity in the heavy truck industry will destroy the industry.
However, I feel that this matter is not so serious. The theory of "demand for supply creation" put forward by the school of supply in the school of economics shows that a huge supply may generate huge demand. And this supply school theory may become one of the policy basis for the country's future regulation. Future policies may highlight tax cuts and reduce administrative approvals. These will not only promote the overall improvement of the economy, but also contribute to the growth of the heavy truck industry itself.
On the other hand, due to the oversupply and intensified competition, the heavy-duty truck industry will also make heavy-duty trucks more cost-effective and able to adapt to more users, thereby generating more demand.
Therefore, the author believes that due to the power of “supply demandâ€, the overcapacity generated by the heavy truck industry is not as serious as it seems.
From the management needs to the management and supply of national policies to boost demand for heavy trucks
For the commercial vehicle industry, especially the heavy-duty truck industry, the rapid development in the first 10 years has mainly benefited from the country's large-scale infrastructure construction. In the future, China's fixed asset investment is no longer likely to maintain its high speed. At this time, where did the development momentum of the heavy truck industry come from?
The country’s transition from management demand to management supply, growth in fixed asset investment, etc. may be reduced, but a series of measures to stimulate supply will also promote the development of the commercial vehicle industry.
Among these policies, tax reduction and reduction of administrative approval are the most important for the heavy truck industry.
Tax reductions and administrative approvals are first to promote overall economic growth; secondly, for many industries, especially the "carpenter mothers" excessive automobile industry, reducing administrative approvals is conducive to full market competition and can promote enterprises to increase competition. force.
Saying that tax cuts are good news for the company itself. In particular, the increase in the number of reforms implemented since last year will promote mergers and acquisitions in the logistics industry, promote the specialization of labor, and promote the reduction of logistics costs.
In addition, in the face of overcapacity in the heavy truck industry, it is believed that the country will not sit idly by. For new heavy truck projects, the country may be more careful and strict approval. For the huge production capacity that has already been formed, the country has begun to take some measures to digest the huge surplus.
Therefore, it can be said that the policy is conducive to the digestion of production capacity of the entire heavy truck industry.
Heavy truck price increase will increase demand
Taking a step back, even without considering the factors of national policy, huge excess capacity will increase market competition in the heavy truck industry. Market competition will increase the product's price/performance ratio and broaden the user base. Therefore, overcapacity will promote the continuous increase in sales in this industry.
The author here gives you a reasoning, from the meso level of the industry to analyze why excess production capacity can produce some demand.
At present, the heavy-duty truck industry has a capacity of over 2 million vehicles, and last year, the total sales volume at home and abroad was only 630,000. With such a large capacity, the sales volume is only one-third, which means that a large number of heavy truck companies have the problem of excess capacity.
As we all know, the automobile is an industry with obvious economies of scale. If a large number of production capacity is shorted, it will inevitably lead to a serious decline in efficiency or loss.
Bear the burden of huge production capacity, companies will certainly improve product performance and reduce prices. The sales of the heavy truck is the intersection of the heavy truck supply curve and the demand curve. The increase in the price/performance ratio of the heavy truck will change the supply curve of the heavy truck and thus intersect the demand curve at higher sales points. This means that the domestic market competition makes the supply of heavy trucks. The curve shifts, which results in higher sales when the market is balanced. The simpler point is that competition increases the performance of heavy-duty trucks and the price declines, which on the one hand will reduce user costs, increase revenue, and thus increase demand; on the other hand, heavy trucks will form alternatives to other similar products. .
There is also a problem here. Some readers may want to ask, the production capacity in 2012 has been a serious surplus, why sales will fall sharply? What I want to say is that any adjustment policy will take time. In 2012, the central government and local governments also adopted some regulatory measures, but the effectiveness of these measures cannot be reflected immediately in 2012. In addition, the situation of overcapacity in 2012 is not so severe, because some companies have only just started production of new factories in 2012. In 2013, on the one hand, the industry’s overcapacity is under greater pressure; on the other hand, some regulatory policies in 2012 will show results in 2013. Therefore, the author judges that domestic heavy truck sales in 2013 will increase.
Foreign market expansion will also increase demand
Marx said that the overcapacity in capitalist countries is the most fundamental impetus for overseas expansion of imperialism.
This theory has been put into the current society. China, which has been put into the socialist market economy, still applies. Under the pressure of huge production capacity, major auto groups will increase their overseas market expansion efforts, and heavy truck exports will continue to increase.
The increase in the sales volume of China's heavy-duty trucks will obviously not depend on the means of colonial expansion during the initial capitalist era, but on the advantage of competition. In fact, China’s heavy trucks, especially dump trucks, are highly competitive in emerging market countries, BRICS countries, and developing countries that are building on a large scale.
In order to reduce the enormous pressure of overcapacity, major enterprise groups or auto companies will allocate more resources to the export of heavy trucks. The increase in overseas sales channels, the strengthening of after-sales service capabilities, and the development of products suitable for various regions, including even price reductions, will increase exports. Obviously, the increase in exports will, on the one hand, help solve some of the excess capacity in the heavy truck industry.
Enterprise's own adjustment
In fact, many people saw the newly-built factories and newly-added production capacity of heavy truck companies. However, they did not see that many companies closed and adjusted old factories while building new ones.
For example, Dongfeng Commercial Vehicle built a new plant with a production capacity of 100,000 in Shiyan. However, due to problems such as unreasonable design and aging equipment, the original 100,000-capacity old factory will not continue after the new plant is put into operation. Production of heavy trucks, and transformation of production parts. For another example, after the completion of the new plant of 50,000 capacity of Valin, the original 50,000-capacity old factory was also transformed into an engine factory, and no longer produced a complete vehicle. The same is true for Beiqi Foton. At the same time as many new factories are completed, the old factory will no longer be produced but will be used for other purposes (such as preparing for passenger cars). Therefore, many heavy-duty truck companies build new factories, but they only build more advanced factories, which means upgrading their production levels rather than increasing their production capacity.
Other factories, although they claim to have a lot of production capacity, are not step by step, but are implemented step-by-step. Some companies use large production capacity to staking their positions. In fact, most of the plants are vacant. This is to prepare for future capacity expansion, while the current equipment capacity is far lower than the design capacity. These factories can purchase equipment and expand production capacity as needed. After all, land is not readily available, and equipment can be bought with money. Therefore, many companies build new plants with capacity that is used to obtain land reserve capacity, not actual capacity.
The speciality of heavy truck industry in China
In fact, the problem of overcapacity exists not only in China's heavy truck industry, but also in developed countries. In the face of overcapacity, commercial vehicle giants in developed countries have stepped up overseas expansion. On the other hand, they have continuously shut down their local or European factories to reduce production capacity. Well, some people have to ask: Will this situation of shutting down factories appear in China? In addition, will China's heavy-duty truck industry use mergers and reorganizations to switch to other industries to reduce production capacity?
The author believes that this kind of closure of factories and changes in common practice in other industries is not likely to occur in China's heavy truck companies. According to the author's understanding of the heavy truck companies, China's heavy truck companies have powerful supporters behind them. Many of China’s mainstream heavy truck companies are not only backed by large auto groups, but also have a significant presence in major groups. All major auto groups are willing to make up the money they earn from cars and pay for them on the heavy trucks. They have spared no effort in giving support to people and money, and strive to achieve great development. FAW, Dongfeng, Futian, SAIC, Jianghuai and so on are all the same.
As for companies that do not have the backing of large auto groups, they often rely on the government. For example, China National Heavy Duty Truck Group, Shaanxi Heavy-duty Truck Group, Hualing Heavy Duty Truck Group, Beiben Heavy Duty Trucks, and Three-ring Special Gas are among the most important industrial enterprises in the local government. The local government is in great need of these enterprises to create GDP, profits, and employment. Therefore, the local government’s support for these enterprises is far from comparable to those of foreign multinational companies. Just as the mayor of Shiyan City once said, “The needs of the Third Ring Road are our mission.†In other words, how difficult it will be for this company in the future will surely only develop. Will not go backwards. For another example, Beiben and Yuchai talked about cooperation, and the leaders of the Baotou municipal party led the team to Yulin.
Most of the heavy truck companies in China are state-owned enterprises. Two (FAW and Dongfeng) companies are directly under the SASAC. Others are also the “state-owned assets†of the local government. Therefore, the government will give strong support.
Although these private enterprises like the Universiade do not have the backing of large groups behind them, they are also eager to make heavy trucks. Their spirit and courage have also determined that it will never change course.
The year 2012 is not a year of prosperity, but the annual meetings of the major heavy truck companies make the author feel that this industry is an unusual industry: the group has done a good job, and has done a very good job. Badly committed. In short, all companies are not discouraged, determined to fight a big shot in 2013.
In 2013, these heavy truck companies are backed by large groups and governments. Many companies have added support from multinational corporations.
Therefore, in my opinion, the heavy truck industry in China is indeed a very strong industry. If its production capacity can not be released more at home, it will certainly gain more in overseas, and Chinese products will be more competitive in the world in the future.
There is also a saying in economics that short-term needs look and long-term supply. If this sentence is applied to the current heavy truck industry, it means that in the long run, China's heavy truck production will continue to increase.