Big profits in the auto industry

According to the Volkswagen Group’s financial data released in the first half of this year, the company’s automobile operating revenue and profits increased in the second quarter, but its net profit after tax fell by nearly half year-on-year, and it fell by more than 40%.

The decline in public profits is not a single case. At the beginning of the year, the major financial companies released the 2012 annual financial statements, showing that due to changes in the market environment, the performance differentiation is very obvious. Nearly 70% of car companies have experienced different degrees of decline in net profit.

To some extent, the overall decline in the profitability of the automotive industry is a logical result. In recent years, due to financial turmoil, the global manufacturing industry has shown a slight decline. As a pillar industry in manufacturing, the automotive industry cannot be negatively affected.

The overall profitability of the auto industry is not as good as before, reflecting two aspects:

On the one hand is the increase in costs. As the level of per capita consumption increases, the manpower cost of the manufacturing industry increases accordingly, and the quality cost also increases with the pursuit of high-quality products. Under the combined effect of both, the cost of automobiles is bound to rise.

On the other hand, the price is reduced. In the past ten years, house prices have risen several times. Even the price of milk powder has risen sharply. The overall price of social consumer goods has been “up and down”. However, the price of cars has dropped one after another in the industry competition, reducing prices and increasing preferential prices. Has become an effective promotional tool.

Having suffered a double "blow" and "a decline in profits" is indeed a fact. However, under this appearance, the profits of the auto industry remain the same.

China's auto market is in a state of sudden profit. It has long been the consensus reached by people both inside and outside the industry. Even in the situation where market prices have fallen in recent years, profits are still the key words for the domestic automobile industry. According to industry insiders, the profitability of the domestic auto market is hardly expected by developed countries in Europe and America. For joint ventures, their profits in China are split between the Chinese and foreign parties. Even so, the annual profits of either Chinese or foreign parties are much higher than those of foreign capital in other countries.

In this context, the "decline of profits" offered by the Volkswagen Group seems to be a bit funny. In the domestic automobile market, Volkswagen has been performing well, not only selling prices are not low, but also has a considerable performance in terms of volume.

Listed companies' strong "sucking power" in the stock market can also be used as evidence. Luxury cars such as Land Rover and traditional cars such as BYD have seen their shares perform at an alarming rate in the near future and they are listed in other industries.

Comparing the 0.13% profit rate of the steel industry announced by the China Iron and Steel Industry Association on July 31st, the profit rate of nearly 10% for auto companies is surprising. It can be seen that the profits of the auto industry are the facts that no one dares to deny. Although profits have indeed declined in the near future, overall, the profit margin of the entire industry is still huge.

Of course, although the “profit decline” is merely a representation, it means a warning to domestic auto companies: They must be calm and cautious about each step of decision-making. They cannot be reckless, and they cannot blindly expand. Large-scale does not mean big profits.

In order to improve profits, controlling costs is a natural means. The significance of innovation is even more significant in controlling cost expenditures. In the age of information explosion, the market is changing all the time, and the traditional marketing model cannot adapt to the characteristics of the times. Therefore, it is really necessary to calm down and analyze the market demand in order to make corresponding countermeasures.

It now appears that most of the “car public interest” that has become widespread is ineffective. At the bottom of its roots, major car companies value only the increase in sales behind the good corporate image created by charitable activities, but no one can really calm down and do it. Public welfare. Throw away all the good appearances, leaving only the word "float".