Chapter 8 Oakes' car "dream factory"

The time was March 24, 2005. Oaks, which had entered the auto industry with a high profile, announced on this day that it would completely withdraw from the auto industry.Correspondingly, on February 24, 2004, Oaks officially announced in Beijing that it plans to invest 8 billion yuan to eventually achieve an annual production capacity of 450,000 vehicles and enter the automotive industry.A dream of building a car that lasted for only one year and one month ended hastily, and the banner of "killing the profiteering of the auto industry" that was held high by Oaks also fell down. Time is not long, that may be the beginning of a dream. In the Chinese market in 2003, the auto industry continued to heat up, and the high fever continued. The growth rate of cars was as high as 80%.At that time, it seemed that consumer demand was far greater than supply, and it seemed that as long as it was a car, it could be sold at a good price.This market not only makes all the companies that entered the automobile manufacturing industry a lot of money, but also makes some manufacturers who have funds but do not know how deep the automobile industry is to enter the automobile industry one after another, especially the home appliance manufacturers. Is to become a "fashion".Enterprises such as Greencool, Chunlan, Xinfei, Duckling, Midea, Amoi, Delong, Bird, and Lifan all set foot in the automobile industry during this period.Finally, on February 24, 2004, Oaks, who also set foot in the automobile industry, impatiently launched two automobile products in Beijing—the multifunctional SUV "Prime Power" and the double-cab sedan "Ruitu".From then on, Oaks began to enter his own car "Dream Factory".

Oaks, like many private enterprises, should be regarded as a "reckless" origin: in 1986, Oaks was a township watch parts factory with a debt of 200,000 yuan in Siming Mountain, but in the following 19 years, Oaks’ assets reached 5.5 billion yuan. And it has become one of China's top 500 companies, the leader of the international electric energy meter industry, the top three in China's air-conditioning industry, and the top 20 private enterprises in the country.Oakes, the "star of private enterprises", exudes dazzling light all over his body. However, the assets of 5.5 billion yuan owned by Oaks are scattered in several major manufacturing industries (including electric power, home appliances, communications, energy, etc.) and three major investment fields (real estate, logistics, and medical care). The risk of getting too long.Li Xiaolong, who used to be the National Marketing Director of AUX Air-Conditioning and is now the National Marketing Director of AUX Mobile, once said that "AUX is looking forward to new diversified industries, which can create new economic growth points for enterprises."Moreover, as the share and brand of domestic home appliance companies tend to be stable, the profits of the home appliance industry are getting thinner. After years of trial and error, home appliance companies with certain brand and channel advantages are looking for new economic growth points.Oaks is no exception. Oaks, which is already quite mature in home appliances, needs new growth points. During this period, when a wave of car manufacturing continues to heat up, facing the seemingly huge market space and high It is impossible for Oakes to miss this luxurious feast.

Wang Zongying, the vice president of Oaks Group, said when he announced with great pride that he would build a car. The diversification of Oaks has always been mature, and then he made another one. Only when the electric meter became the leader in the industry did he make an air conditioner. To make mobile phones, mobile phones have already reached a relatively large scale.The implication is that Oakes can now be a car.It seems that everything is logical, everything is inevitable, and everything seems impatient. In June 2003, Oaks was about to enter the busy auto industry.At that time, Zheng Jianjiang, the president of Oaks Group, personally set up an 8-member car project preparation team, and set the goal of Oaks' first car manufacturing as "finding cooperation with companies that can take the initiative."

In July, Oaks signed an agreement with Shenyang Agricultural Machinery Group in a high-profile manner. Oaks invested 40 million yuan to acquire 95% of Shenyang Shuangma Automobile Co., Ltd., thereby obtaining the production license for SUVs and pickups. In October, Shenyang AUX Automobile Co., Ltd. was established. AUX Group incorporated Shenyang Shuangma Automobile Company under its umbrella. The two parties established Shenyang AUX Automobile Company with a registered capital of 50 million yuan at a ratio of 4:1. In November, Shenyang Oaks launched a prototype. On February 24, 2004, Oaks announced its formal entry into the automobile industry, and two models of its original power and Ruitu rushed to the market.It also announced a high-profile "5-year plan" to enter the automobile industry with 8 billion yuan and finally achieve an annual production capacity of 450,000 vehicles:

February 2004-June 2005: 2 billion yuan was invested in the first phase, with a target of 100,000 designed production capacity; June 2005-December 2006: 2.5 billion yuan was invested in the second phase, and the design capacity was increased by 150,000 vehicles; December 2006-December 2008: 3.5 billion yuan was invested in the third phase, and the design capacity of 200,000 vehicles was expanded again. This high-profile approach is different from Amoi, Bird, Delong, etc. who announced their entry into the automotive industry at the time but did not see any obvious moves. The high-spirited Oaks rushed all the way: Ningbo and Beijing built 4S stores, recruited talents, and built automotive research institutes... … Oaks has repeatedly emphasized on different occasions: to raise 8 billion yuan within 5 years to build an auto industry with an annual output of 450,000 vehicles, and the focus is on cars.Oakes' dream is to enter the auto industry by producing SUVs and finally get a "production license" for sedans.

From 1998 to 2001, the growth rate of SUV was very fast, with an average annual growth rate of 65%.Oakes predicts that sales of SUVs will reach 150,000 and 200,000 within two years.From the analysis of market content, SUV still has huge growth space and potential.After entering the automobile market, Oaks launched two vehicles, the SUV "Prime Power" and the double-cab sedan "Ruitu", with a sales target of 20,000 units for the year.However, things backfired.After the mid-to-low-end SUV market expanded rapidly in 2003, there were numerous entrants, and the price war was far more intense than expected. Oaks had to cut prices twice, with a drop of nearly 20,000 yuan.Oaks' performance in the auto market was also disappointing. Its SUV sales in 2004 were only more than 3,000 units, far from the original plan.In this regard, a car dealer commented that Oaks' cars are all regular models, that is, high-end products, and the price of 70,000 to 80,000 yuan is not an advantage.What's more, there are too many brands in the low-end SUV market and the competition is fierce. It is obviously difficult for Oakes, which has neither brand effect nor price advantage, to survive.

On January 18, 2005, at the board meeting, Oakes made a decision to withdraw investment from the automotive industry. On March 23, 2005, AUX approved Shenyang AUX Automobile Co., Ltd. (Shenyang Shuangma)'s application for terminating the production of SUVs and pickups. On the 24th, Oaks announced its complete withdrawal from the auto industry. As for the reason for Oaks’ withdrawal from the auto industry, Huang Jiangwei, the spokesperson of Oaks, explained: “Once it entered the auto industry, it focused on the production of cars, and the production of SUVs was only a means in the early stage. However, due to the macro environment and the state’s regulatory policies, we Feeling that it was impossible for Oakes to apply for a license plate for cars, we could not wait indefinitely and chose to withdraw."

Huang Jiangwei refers to the "Automobile Industry Development Policy" promulgated by the state, which stipulates: "For investment projects of new automobile manufacturers, the total investment of the project shall not be less than 2 billion yuan, of which the self-owned funds shall not be less than 800 million yuan. Product research and development institutions, and the investment shall not be less than 500 million yuan." According to Huang Jiangwei, there are four main ways for Oaks to obtain the qualification for car production originally envisioned.One is to acquire the "shell resources" of the automobile industry, and the acquisition of Shenyang Shuangma is based on this intention; the other is to directly strive for it like Geely; It is a joint venture with a foreign auto giant.However, according to the automobile industry policy implemented on July 1, 2004, it is not allowed to transfer automobile and motorcycle production qualifications to non-automobile and motorcycle manufacturers and individuals.This cuts off the intention of buying a shell to enter in the first place.It is also impossible to find domestic auto companies to cooperate with, because most domestic auto companies are not short of money, and no one wants to cultivate a potential competitor.As for joint ventures with foreign auto giants, almost all auto giants have come in now, and this possibility is also very small.And at this time, according to the regulations, if you want to produce cars across product categories, you must have "the performance of mass production of automobile products, the accumulated after-tax profits of more than 100,000 yuan in the past three years, the enterprise's asset-liability ratio within 50%, and bank credit." Level AAA" qualification, and then approved by the national department before proceeding.With Oakes' qualifications, it is obvious that he cannot get the approval notice, and Oakes' wishful thinking is not easy to do.

But for the exit of Oaks, people in the auto industry believe that the deterioration of competition in the auto industry is the fundamental reason for its exit. If policy barriers block the way out for these new entrants, then the decline in the profits of the domestic auto industry since 2004 will eventually make them fall. Determined to quit the auto industry.According to data from the Association of Automobile Manufacturers, in 2004, my country's auto industry produced and sold 5,070,500 and 5,071,100 vehicles, a year-on-year increase of 14.11% and 15.50% respectively.Compared with the growth rates of 35.20% and 34.21% in 2003, the production and sales volume dropped by nearly 20 percentage points.At the same time, under the double squeeze of falling automobile prices and rising raw materials, my country's automobile industry realized a total profit of 71.985 billion yuan in 2004, a year-on-year decrease of 5.95%, with a drop of 4.552 billion yuan.Calculated by dividing total profit by sales revenue, the profit rate of the auto industry in 2004 was only 6.6%, which was 2 percentage points lower than the 8.6% profit rate in 2003.The loss of the auto industry has further increased.At present, there are 5,857 enterprises in the automobile industry, of which 1,020 are loss-making enterprises, with a loss rate of 17.42%, an increase of 0.46 percentage points over the same period in 2003, and a loss of 6.472 billion yuan, a year-on-year increase of 25%.

However, Oaks does not think that the original decision was wrong. He only said that the withdrawal is a "rational adjustment" to the direction of the company after the change in the macro investment environment. Jia Xinguang, chief analyst of China Automotive Industry Consulting and Development Corporation, pointed out that if Oaks chooses to continue building cars, there will be no major problems in terms of capital, hardware and external environment. The main reason for its resolute withdrawal It's because I have persisted for so long and invested so much, but I can't see obvious benefits.In fact, this is also the epitome of the situation of most private car manufacturers.It is an obvious characteristic of industry opportunists that they choose to quit or turn to other industries and enter new industries without seeing obvious benefits in the short term. Oaks also saw the reality of this industry when the fiery automobile wave came. Huge profits have thus entered the auto industry, with obvious opportunistic features, and its final outcome was already doomed on the first day of entry.What can be used as proof is Huang Jiangwei's words, "The reason why we chose to quit is because we can't see hope."

Oaks entered the automobile industry, hoping to occupy the automobile market at a low price like selling air conditioners, and even claimed to be the "terminator of profiteering in the automobile industry". Prices shifted to focus on brands, and blindly emphasizing "low prices" is basically unworkable in the auto industry, which is one of the factors that caused Oaks to suffer "Waterloo". According to the overall introduction provided by AUX Automobile to dealers at the beginning, in order to cooperate with the completion of the annual production capacity of 100,000 vehicles before June 2005, and finally rolling investment of 8 billion yuan into the car field before May 2008, forming 450,000 vehicles The first phase of the annual design capacity of cars, Oaks built the Oaks International Industrial Park in Ningbo, covering an area of ​​2.08 square kilometers and about 3,000 acres of land. Panorama of the Technology Park.Today, the 2,000-acre plant originally used for Oaks cars has begun to be converted to the production of mobile phones. The feast is finally over, and the construction of "Dream Factory" is not as easy and simple as imagined. In the third quarter of 2004, Bird Co., Ltd., which has cooperated with Nanjing Automobile Co., Ltd. to produce the "Xiatu" sedan, withdrew its capital from Nanjing Automobile Co., Ltd., becoming the first non-industrial enterprise in China to formally withdraw from automobile production. On January 18, 2005, Amoi Electronics held a board meeting and decided to withdraw its investment in the automobile industry. It was less than a year since the high-profile announcement that it would spend a huge sum of 175 million yuan to establish a joint venture with Nanjing Junda Auto Body Co., Ltd. with Nanjing Automobile.Just like the upsurge of entering the automobile industry in 2003, since 2004, almost all private enterprises that announced their entry into the automobile industry were submerged in the wave of numerous joint venture new car launches and price reduction promotions. In 2005, private enterprises experienced a turbulent automobile ebb tide .In this retreat, Oakes used the 40 million "real ocean" invested in Shenyang Oakes Automobile Co., Ltd. to make a good splash.When discussing cooperation at the beginning, Oaks spent 40 million yuan to obtain license plates for SUVs and pickup trucks. However, due to changes in national policies, the license plates cannot be transferred to companies outside the automotive industry, and companies that have already produced cars believe that they already have license plates. Therefore, Oaks The license plate is basically worthless, and the time and investment Oakes spent on building the car is irretrievable. As an industry with high investment and long payback period, the automobile industry is bound to face a long industry cultivation period.It is impossible for a company like Oaks not to understand this common sense.Oaks used the phrase "overestimated the hope, underestimated the difficulty" to explain Oaks' aggressive entry into the auto industry last year and his "defeat in Maicheng" just one year later.With many years of operating in China, multinational auto companies have all entered the Chinese market. If private companies want to build cars in such an environment, the risks can be imagined.The cooling rate of the auto market has also been far faster than the growth rate of the market. For the capital and technology-intensive industry of the auto industry, it is becoming more and more difficult for private enterprises to get a piece of the action. The risks behind the "car-making craze" of Chinese private enterprises have also sounded the alarm for those private enterprises that have entered or are about to enter the ranks of car-making. Industrial opportunism that only sees opportunities but does not see threats is doomed to fail. .Although it is still unknown whether many private car manufacturers will repeat the mistakes of Oaks, what is certain is that under the continuous downturn of the entire auto market, the big wave has just begun, and private companies that entered the auto industry by taking advantage of the 2003 auto boom Enterprises, the once grandiose ambitions are being replaced by today's bruises.An excellent company should not just be a follower following market trends, but a pioneer who creates trends with its own core competitive advantages. A vigorous car-making movement has gradually become calm today from the enthusiasm at the beginning. The enterprises that joined this movement with opportunism at the beginning are no longer seen in this team, and they are walking on the edge of opportunity. Finally can not enter the ranks of the team.Huang Jiangwei said that "Aux is a car dream", but behind this seemingly easy and even beautiful sentence is the price of 40 million yuan paid for this dream. Oaks builds a car and sleeps on it.