Shanghai Volkswagen shares the risk and loss with the parts and components

Shanghai Volkswagen recently announced the launch of the "Hurricane Action" combination of marketing measures, a number of models of its own active price cuts 6% -13.73%, although not currently profitable loss, but the industry analysis, this part of the loss will be calculated up to several hundred million yuan. Yesterday, relevant people of Shanghai Volkswagen stated that most of the profit loss for price reduction will be borne by Shanghai Volkswagen, while dealers and analysts believe that the upstream parts and components suppliers will probably also bear some losses.

Last year, Shanghai Volkswagen sold 352,000 vehicles, of which 17.52276 were sold in the second half of the year, which was less than the first half of the year. In the first half of this year, Shanghai Volkswagen sold a total of 135,800 vehicles, of which POLO and Touran, which had not cut prices, sold about 15,000 vehicles. The price-reduction model accounts for nearly 90% of its sales in the first half of the year. What will be the sales volume in the second half of the year cannot be predicted at this time, and profit loss is also difficult to predict.

Analysts and Shanghai Volkswagen sellers generally believe that it is not possible to fully achieve the sales target of last year, but it is possible to recover part of the market share and calculate an average reduction of 10,000 yuan. The profit loss of this price reduction may reach several hundred million yuan. When talking about the loss of profits, Shanghai Volkswagen related personnel said that the company will certainly count the bills, but it is still impossible to know the specific data, but "the largest part of this loss will be borne by Shanghai Volkswagen."

"This time the price reduction, Shanghai Volkswagen must have a large financial strength for the guarantee." Shanghai Volkswagen related personnel said, "After the first half of the marketing adjustment, Shanghai Volkswagen's comprehensive competitiveness has improved, with a certain degree of financial strength can be guaranteed. According to reports, as of the end of April this year, Shanghai Volkswagen has achieved a goal of “cost reduction and efficiency increase” by 60%, CKD cost has dropped by 84%, localization target has also been completed by 42%, and general cost savings have been completed by 75%. This accumulates the financial strength of price cuts.

Regarding whether it will share the losses with the distributors, Shanghai Volkswagen has stated that this year Shanghai Volkswagen emphasizes the implementation of the policy of “direct sales force” to encourage distributors, which makes it impossible to calculate the value of this account to the dealer’s on.

A general manager of Shanghai Volkswagen 4S also denied the possibility that the price reduction will be pressured to dealers. He believes that Shanghai Volkswagen has clearly stated its goal of sacrificing profits to grab the market. It is still in the process of seeing the effect and it is impossible to use the press library. In the form of cracking down on the enthusiasm of dealers, if the price reduction is not effective, it is possible to increase the sales figures with the press warehouse. Then, the most likely part of the loss share with Shanghai Volkswagen is the upstream parts and components company. Shanghai Volkswagen may press down on the profitability of its parts and share the price reduction losses with it.

Shanghai Volkswagen related parties did not deny the possibility of profit to the parts and components business. He said that they had previously established a “Santana Community”, in addition to technical support for parts and components, spare parts business and Shanghai Volkswagen profit sharing, risk sharing. Moreover, at present, they are still continuing their efforts to improve localization, and they also provide support for price cuts.

The relevant person of Shanghai Volkswagen also said that he had not heard that SAIC and Volkswagen China had financial support for their price cuts. "This price cut is an independent operation of Shanghai Volkswagen. Parents of higher levels are given policy support at the most. If the parent company needs to 'transfuse' to protect profits because it wants to lower prices, it will not set a target of profit before this."

Shenyin Wanguo Auto Analyst Wang Zhihui believes that the erosion of profits caused by falling prices is much greater than the increase in sales profits. To maintain profits, the increase in sales volume must be greater than the rate of price decline. Now whether the price reduction can lead to greater sales It's still not obvious how to improve. "At present, Shanghai Volkswagen's biggest possibility is to lower the prices of upstream component suppliers. Instead of sharing the losses, the possibility of adjusting prices at the end of the year or early next year is still possible. At the same time, the superior parent company may not be able to share the profit loss of the subsidiary company. Lowering the profit target will make Shanghai Volkswagen less stressful," he said.