Joint venture brands are facing a "middle-aged crisis", with more than 4,000 dealers closing or transferring operations throughout the year.

Before the pain of new energy and intelligent transformation, there is the strong impact of new forces and new cars. The joint venture brands in 2024 are facing an unprecedented "midlife crisis". On December 23rd, Honda and Nissan announced that they have signed a memorandum of understanding on the merger and will officially begin merger negotiations. The two parties will jointly invest to establish a holding company, with both parties being subsidiaries of the holding company. This heavyweight cooperation, which has the meaning of "huddling together for warmth", reflects the reality of many foreign brands facing a "cold winter" in the global market, especially in the Chinese market. Traditional distributors closely related to joint venture brands are also facing widespread "closure and transformation" in this "cold winter" - either exiting or switching to the vibrant new energy track. Localization and export as the "self-rescue remedy" of joint venture brands China Passenger Car Association data shows that mainstream joint venture brands sold 600,000 vehicles in November, a year-on-year decrease of 9% but an increase of 6% compared to the previous month. Among them, German brands accounted for 15.6% of retail sales in November, a decrease of 3 percentage points year-on-year; while Japanese and American brands accounted for 12.4% and 6.4%, respectively, with a year-on-year decrease of 3.1 and 1.5 percentage points. After reviewing the sales performance of mainstream joint venture brands in the first 11 months of this year, it was found that FAW-Volkswagen, SAIC Volkswagen, FAW Toyota, Huachen BMW, Beijing Benz, and Dongfeng Nissan controlled their year-on-year decline within single digits, while Guangqi Honda, Dongfeng Honda, SAIC GM Buick and Beijing Hyundai saw a decline in sales of more than 20% compared to the same period last year. "I personally do not look favorably on the merger of Nissan and Honda. Both Nissan and Honda need to increase their investment in localized research and development in China and achieve product innovation leveraging China's industrial chain advantage to empower Nissan and Honda's global development." Cui Dongshu, secretary-general of the China Passenger Car Association, said frankly when evaluating the "Nissan, Honda merger," the strength and global orientation of China's domestic auto companies are unstoppable. He said, "If joint venture car companies lose their competitiveness in the Chinese market, they will inevitably lose global market share as well. If Nissan and Honda put their core energy and technical research and development into the most competitive and innovative Chinese market, they will definitely receive more lucrative returns." It is widely believed in the industry that in addition to organizational structure and personnel changes, strengthening localization and increasing overseas exports will be the most direct and effective adjustment direction for joint venture brands to "self-rescue". After closing its fourth production line, on December 23rd, Guangqi Honda's new energy factory in the development zone officially started production. The factory is designed to have an annual production capacity of 120,000 vehicles. According to Honda's accelerated promotion of electrification business in China, by 2027, the lineup of pure electric products will reach 10 models, including the e:N series released in 2022 and the new electric brand "Ye" series to be released in 2024. By 2035, the sales ratio of pure electric vehicles will reach 100%. Before this, Dongfeng Honda's new energy factory was put into operation in the Wuhan Economic Development Zone in October. While accelerating the transformation to new energy, the cooperation between joint venture brands and Chinese local industry chain companies is becoming more frequent, with multiple cooperation announcements in November alone. Guangzhou Automobile Group stated on an interactive platform that the company and Huawei are comprehensive strategic partners, maintaining close and extensive cooperation in multiple areas. Among them, Guangqi Toyota will collaborate with Huawei's ecosystem to enhance intelligent experience; Dongfeng Honda and JD Auto signed a strategic cooperation agreement, and will deepen cooperation in retail channels, accessory authorization, vehicle sales, and JD Car maintenance service system; at the Guangzhou Auto Show, Dongfeng Nissan announced a collaboration with autonomous driving company Momenta to jointly create an industry-leading high-level autonomous driving solution based on end-to-end smart driving models; the new A5L model developed specifically for the Chinese market by FAW-Audi has been confirmed to be equipped with Huawei's smart driving solution... As early as 2015, "SAIC-GM's Buick Enclave exported to North America" marked the beginning of Chinese car exports. Nine years later, "building a Chinese export base" has become increasingly mainstream in joint venture brands. Beijing Hyundai, Kia, Dongfeng Peugeot, Guangqi Honda, and Changan Ford have successively seen "exporting to overseas markets" as another important means of staying in the Chinese market besides localization. "The weak performance of joint venture brands has made traditional distributors feel the sharp pain of 'if the lips are gone, the teeth will be cold.'" On the evening of August 21st, China Grand Automotive Services Group, which was suspended due to the triggering of the face value delisting, announced that the exchange decided on August 21st to delist the company's stock and convertible bonds, with the delisting date set for August 28th. With this, China Grand Automotive Services Group, once the "number one in domestic sales", officially bid farewell to the A-share market. Prior to this, China Grand Automotive Services Group's stock price had been below 1 yuan for 20 consecutive trading days from June 20, 2024 to July 17, 2024. According to the relevant regulations of the Shanghai Stock Exchange, the company's stock and convertible bonds had met the conditions for termination of listing. According to the performance forecast released by China Grand Automotive Services Group before delisting, the company is expected to incur a net loss of 583 million to 699 million yuan in the first half of 2024, compared to a profit of 601 million yuan in the same period of the previous year. Unlike the "helpless" exit of China Grand Automotive Services Group, Beijing Huayang Autong, once the "largest Audi dealer in Beijing", chose to actively seek change. On December 4th, Huayang Auto announced that it would no longer carry out the distribution business of FAW-Audi brand and transition to Huawei Wenjie Network. Subsequently, Huayang Autong's authorization from FAW-Audi was cancelled. Along with Huayang Auto, Zhengzhou's largest FAW-Audi dealer, Zhongsheng Huidi, was also revoked authorization for the same reason of transferring to Wenjie Network.Hua Yang Aotong's transformation is just a microcosm of the current survival status of automobile dealers in 2024. According to data from the China Automobile Dealers Association, from 2020 to 2023, more than 8000 4S stores across the country closed down, with an average of over 2600 stores closing each year. "In 2024, the authorized model of 4S stores will face a wave of closures, with an estimated 4000 4S stores expected to close throughout the year, surpassing the first half of the year (around 1500 stores)." predicted Lang Xuehong, deputy secretary general of the China Automobile Distribution Association.Behind the intensifying trend of traditional dealerships closing down is the fundamental reason of not making money or even losing money. "The market prices are severely internalized, and dealerships are suffering comprehensive losses, bleeding continuously." Wang Du, vice president of the China Automobile Dealers Association, raised a "soul-searching" question - who will bear the approximately 150 billion yuan in sales losses after price reductions in the first three quarters of this year? The answer he gave was, "The manufacturers bear a part of it, but the majority is borne by the dealerships." Facing the survival crisis of dealerships, the China Automobile Dealers Association submitted an urgent report to relevant government departments in September titled "An Urgent Report on the Financial Difficulties and Risk of Closure Facing Automobile Dealerships." The National Federation of Industry and Commerce Automobile Dealers Chamber also held a special seminar on "Financial Institutions Supporting the Healthy and Sustainable Development of the Automobile Dealership Industry" on October 29, with representatives from the Ministry of Commerce, the People's Bank of China, the National Federation of Industry and Commerce, and other industry regulatory authorities in attendance for research and guidance. At the meeting, the representatives of the National Federation of Industry and Commerce Automobile Dealers Chamber raised suggestions to the regulatory authorities and banks on solving financing issues. "In the face of the market downturn, it is commendable for joint venture brands to actively seek change, but at the same time, it is important to realize that time is running out for these brands, especially in the layout of advanced technologies such as autonomous driving, where 'open cooperation' has become a must-answer question. In addition, traditional dealerships also need to actively seek change, for example, accelerating reform and continuous innovation in areas such as automotive finance, value-added services, and market development." Analysis from industry insiders who have long been concerned about automobile dealerships. This article is from "Cailian Society", GMTEight editor: Liu Xuan.