The dragon launched a survival defense war: one year to turn the deficit, six years to revive?

 The dragon launched a survival defense war: one year to turn the deficit, six years to revive?

For many car companies, how to survive has become the goal of the remaining four months of 2019.

Data show that in the first half of this year, the sales of Shenlong Automobile and Shenlong Automobile Sales Co., Ltd. were only 7.053 billion yuan, a decline of more than 60% compared with 17.653 billion yuan in the same period last year. At the same time, the two companies lost 2.532 billion yuan in the first half of 2019, which was close to 70% of the total loss in 2018, while the two companies earned 200 million yuan in the same period last year. In the past 18 months, Shenlong has lost 6.2 billion yuan.

The continued decline in sales is the main reason for the loss of Shenlong Automobile. According to the official sales data released by Peugeot Citroen Group, the cumulative sales of Shenlong automobiles in January-July this year were only 74,000, down 56% year on year, which is the 13th consecutive month since July last year.

Now the Dragon is like a person who has a serious illness. He cant help it, but he cant use powerful drugs. So we cant wait, and we cant wait. On September 4, the new management team headed by General Manager Rothberg and Executive Deputy General Manager Li Jun had a clear judgment and understanding of the situation of Shenlong in an interview with the media.

Time will not wait for me. For the current dragon, it has reached the life and death moment that must be changed.

The persistent loss of Shenlong Company also made the shareholders of both sides of the joint venture realize that they would have to withdraw from the Chinese market unless radical changes were made. Obviously, this is a situation that neither China nor France would like to see.

Faced with the downturn, Peugeot Citroen Group headquarters in France attaches unprecedented importance to the worlds largest automobile consumer market, the Chinese market.

Of course, as one of the oldest joint ventures in China, the change of Shenlong needs the courage to break the kettle and sink the boat. Shareholders of both sides are also full of expectations and confidence for the revival of Shenlong.

Most importantly, the determination of the dragon to change from top to bottom is also extremely resolute.

Now the dragon is in a very difficult time, maybe this difficult time will be longer. The consensus of the Chinese and French management of Shenlong is that the way of Shenlongs rebirth is bound to be a new Long March and a protracted war.

This is a three-stage, six-year road of continuous reform, involving product planning, R&D, production, marketing, operational efficiency and other aspects, mainly summarized as more Chinese products, more accurate marketing, more efficient operation.

Of course, this is also considered the beginning of the Dragon Renaissance:

The first stage, Peiyuan (2019), focuses on surviving, with the break-even point falling below 180,000 vehicles to achieve positive cash flow.

The second stage, Guyuan stage (2020-2021), through the implementation of a series of reforms, light loading, adjusting posture, laying a good foundation, restoring system capacity, sales gradually increased to 250,000 vehicles;

The third stage - Tuoyuan stage (2022-2025), through product restructuring and more Chinese product delivery, to achieve sales breakthroughs, return to the scale of 400,000 vehicles and stabilize, and promote the sustainable development of the whole value chain.

According to Li Jun and other Shenlong executives, Shenlongs recovery plan is treating diseases and wounds. The first stage is to find the cause of disease and remove the focus through the treatment of broken wrists and scraping bones; the second stage is to cultivate ones self-cultivation, strengthen ones body and build up ones strength; the third stage is to strengthen ones body and build up ones thick and thin hair so as to make ones body vigorous and vigorous gradually. The body is stronger and the wings are fuller.

Compared with the peak of 700,000 vehicles, this revival goal may be slightly conservative. In the current objective environment, this goal is pragmatic and challenging. This is the cruel reality that the dragon, which has lost most of its sales in the past few years, needs to face. Users need to find it back bit by bit, and their confidence needs to be found back bit by bit.

Its hard to get the Dragon back on track. But this is not a joint venture company, not a Chinese or French problem, but a business problem. All we have to do now is get back on track.

On the afternoon of September 4, Rothberg, general manager of Luxin Shenlong Automobile Co., Ltd., said in an interview with 21st Century Economics Reporter for six months, We are not pursuing sales, but to make profits on the scale of sales, which is what we are trying to do. It is hoped that through a starting point and by adjusting the structure, profits will be made at this level of sales.

From the perspective of Shenlongs senior officials, the reform plan started in 2018 has worked.

We are a joint venture with the first consideration of structural adjustment in this market. In fact, like Shenlong, many joint ventures have been built 27 years ago, but the market environment is totally different now. It is impossible to support the business with the institutions established 27 years ago. After structural adjustment, our break-even point has been reduced from 240,000 to 180,000, which means that our structural adjustment is very effective. Rothberg emphasized.

Comprehensive reform

In mid-July of this year, Zhu Yanfeng, chairman of Dongfeng Automobile Group Co., Ltd., made it clear at the Committee of Dongfeng and PSA Strategic Alliance that both sides could discuss all issues conducive to the development of Shenlong Company, insisting on the better development of Shenlong Company in China with PSA Group.

Tang Weishi, chairman of Peugeot Citroen Group Management Committee, said that PSA Group would not abandon China and gave full authorization to the management team of Shenlong Company to provide positive help.

It is undeniable that in the past few years, Peugeot and Citroen have been criticized for their products in the Chinese market, regardless of their configuration appearance, positioning, pricing or residual value. And the high-level Shenlong also has a profound reflection on this issue.

The demand of Chinese consumers is constantly changing, and their thinking is also changing. We did not react fast enough in the past. On July 3, Gao Kailin, member of the Executive Committee of PSA Group, president of China and Southeast Asia and vice chairman of Shenlong Company, said in an interview with the media.

The next comprehensive change in Chinas market will also determine the future direction of Shenlong.

Localization will be the top priority. One of the core elements of the yuan program is to launch products that appeal to Chinese consumers. Shenlong automobile said.

In May this year, Shenlong was approved by the State Ministry of Industry and Information Technology to obtain the national new energy automobile manufacturing enterprises and product access qualification. In the next three years, Shenlong will launch 14 brand-new models, each brand has new models every year. According to the 1 + N strategy, a variety of personalized customized and exclusive models will be launched in the future. All models will be fully realized by 2020, three years ahead of the policy requirements. The new energy camp has three models: pure electric, PHEV and micro-mix. After 2020, new models will be launched. Fuel and new energy versions will be launched simultaneously for consumers to choose.

Dongfeng Peugeot New Generation 2008 (including pure electric version) chose to launch globally at this years Guangzhou Auto Show. It is also the PSAs action to prove that it will not leave the Chinese market.

In terms of brand building, Peugeot and Citroen will comprehensively cover Chinas passenger car market segments in a complementary way. At the same time, in terms of channels, we are promoting the dual-brand synergy strategy. Now we have started this project. This year we will have 60 to 80 double-brand cooperative stores. We will further improve the coverage of double-brand. Li Jun, executive vice president of Shenlong Automobile Co., Ltd., told reporters.

In Rothbergs view, when a company transforms, all aspects will be involved, not to solve a problem, but to consider sales, marketing, organizational efficiency, procurement, production methods and so on.

We are now changing our old marketing thinking, focusing our limited human, material and financial resources on core models, high potential areas, important marketing events and target user groups. Li Jun said, Including the adjustment of pricing strategy and the establishment of VOC mechanism, all our marketing actions are customer-oriented, focusing on customers, focusing on customer experience, and improving brand reputation.

At the group operation level, Shenlong will change the current organizational structure of 700,000 vehicles, actively slim down, and build an efficient organization supporting 300,000 vehicles, including intensive optimization of production capacity.

In the field of forward-looking technology, Shenlong has obtained the L3 level autopilot test license in Chongqing, and is currently testing along the open road in Chongqing with PSA. In addition, PSA Group and Shenlong Company have formally joined Baidus Apollo autopilot ecosphere, which is scheduled to start testing in Shanghai in early October for the next L3 level. Prepare for the application of autopilot technology in China.

We want to control the future of Dragon Company in our own hands. The plan has been reported to the board of directors and has come into effect. We are fully authorized by both shareholders. We are able to make full use of these two brands and contribute to the revival of Shenlong. Rothberg concluded.

The autumn rain in Chengdu is bleak, which adds some tragedy to the declaration of Shenlongs reform.

But freezing three feet is not a days cold, as Li Jun said, Now the god dragon is like a person suffering from a serious illness, can not be cured, but can not be strong medicine. So we cant wait, and we cant wait.

It takes one year to turn around the deficit and six years to revive. Regardless of the outcome, for the Dragon, change may mean rebirth.

Source: 21st Century Economic Reporter: Du Qiaomeis Responsible Editor: Zhong Qiming_NF5619