BYD low-cost models come to an end?

Three major adjustments took place in less than a year, and the most recent layoffs were more like “broken arm self-help” and coupled with declining performance, BYD Auto Co., Ltd. (“BYD Auto”) made the automotive industry Can not help but worry about: Wang Chuanfu BYD model really reached a turning point yet?

BYD Auto, which started in the automotive field in 2003, has reached the peak of the industry in the “black horse” posture in seven years, but the success of the “short-lived” crisis appears to be also fast. Insiders believe that behind this, BYD (01211. HK, 002594. SZ) uphold the low-cost business model, perhaps its most fundamental crisis.

The low-cost business logic that drives high-speed development with low costs is one of BYD's successful models. This model was also copied by BYD to BYD Auto. However, BYD’s advantage of using the demographic dividend to develop is gradually losing.

According to media reports, BYD's semi-annual report revealed that in the first half of this year, BYD required a total of RMB 4.7 billion in compensation. As a labor-intensive enterprise, BYD’s labor costs have also become one of the highest among private enterprises. However, BYD achieved revenue of 22.544 billion yuan in the first half of the year, down 10.77% year-on-year; net profit of 275 million yuan, down 88.63% year-on-year.

The layoffs may have become an effective means for BYD to overcome difficulties in the short term. However, Wang Chuanfu previously stated in public that BYD currently has more than 10,000 engineers and more than 100,000 workers. The number of engineers in the future will reach 30,000 or more, and the number of workers will reach 300,000 to 400,000. "I said that in 2025 we must be the world's largest passenger vehicle sales company. Many people do not believe it. But I have a bottom in my heart. What is it that I rely on? People. The 300,000 labor force and the huge Engineer team, this is my capital."

Benefiting from the rapid growth of the Chinese auto market in the past few years, BYD Auto's human-sea tactics helped it to complete its sales in the short term. Behind the sales breakthrough is the innovation of its production model.

Wang Hua, an associate professor at Shanghai Jiaotong University's Antai School of Management, told the "First Financial Daily" that the production model is essentially the relationship between people and machines. No matter if it is Toyota or Ford, it mainly uses machine automation, followed by manpower, but BYD carries out manufacturing process innovation. Use labor-intensive means of "artificial fixtures" for manufacturing. This approach also led BYD to produce almost all auto parts except not producing tires and Other auto parts.

In respect of the sustainability of production and sales, some domestic experts believe that the development bottleneck of self-owned brands is 600,000 units. BYD's sales volume in 2010 is about 520,000, and when it reaches 600,000 units, it will be difficult for independent brands to continue to develop. . With the continuous increase in labor costs, the production methods of BYD may need to be changed.

Professor Wang Hua believes that from the large-scale layoffs of BYD, the “BYD model” has encountered a bottleneck. “The development of a company needs to comply with the law of economies of scale, and the minimum effective economies of scale for different auto parts are not the same. Not all things can be made by themselves to reduce costs. Early Delphi and Ford Visteon, which have been divested by parts companies, are enough to explain this. a little."

A dilemma On the surface, BYD Auto’s layoffs are sales channels and products that cannot drive sales, but fundamentally reflect its dilemma choices, whether it be a traditional car or a focus on new energy vehicles.

However, in recent years, BYD Auto has been promoting new energy vehicles and creating a new vision for BYD's mass production of new energy vehicles. "There is no car company that takes BYD as a bet for new energy vehicles," said one industry insider.

However, in reality, the profits of BYD Auto mainly come from traditional vehicles, and the competitiveness is not a new technology lead, but a labor-intensive production method, but now this advantage is also eroded.

Sun Jian, vice president of Conair (China), said in an interview with the media that while most Chinese auto companies have established large-scale product R&D institutions today and have launched many new car products in the past few years, Advanced enterprises, China's car companies are obviously immature in terms of system development and integration capabilities of their vehicles and innovative capabilities of advanced technologies.

In the field of new energy vehicles with big bets, BYD Auto has lost its revenue.

Constrained by the high prices of new energy vehicle infrastructure and new energy vehicles, and core power battery technology, it has not achieved a fundamental breakthrough. BYD's high investment in new energy vehicles has not brought the company a return. Now, with the weakness of the traditional auto market and the overdraft of the concept of new energy vehicles, the halo effect of BYD Auto slowly fades.

The automotive industry believes that for a company, resources are limited to a certain extent, so the company's development path is very important. As a high-growth company, BYD does not focus on one industry, but it is too diversified.

From the perspective of BYD, when BYD's strategy is in need of adjustment, BYD needs to consider how to balance the development of traditional and new energy vehicles within limited resources. After all, the mass production of new energy vehicles is also There is a distance.

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