20150916-三星证券-Utilization_in_China_to_rebound_gradually_34页_2mb

报告摘要

Sector Update Summary: Automotive Industry in China

Core Content

This report provides an update on the Chinese automotive sector, focusing on the recovery of utilization rates, the performance of major automakers, and the strategic implications for Korean automakers and parts suppliers. The analysis is based on a visit to Shanghai Automotive Industry Corporation (SAIC) and its parts-making affiliate Huayu Automotive Systems, as well as data on sales, inventory levels, and market trends.

Main Points

Utilization Recovery in China

Inventory adjustments have led to a decline in wholesale auto sales, with a 2.6% y-y drop in June and 6.4% in July.
Retail sales rebounded slightly in August, growing 0.6% y-y, indicating a potential recovery in utilization from September.
The Chinese auto market is expected to grow at 3-5% pa over the coming years, with seasonal effects from holidays playing a role in demand recovery.

SAIC Group Insights

SAIC predicts 3-5% annual growth in auto demand and aims to maintain its market leadership through localized models.
Huayu Automotive Systems, a key parts supplier, has expanded its global reach via M&A and plans to reduce its reliance on SAIC.
The top-10 Chinese automakers control 86.2% of the market, with local brands gaining ground in inland cities and the SUV segment.

Korean Automakers: HMC and Kia

HMC and Kia have seen declining utilization due to model aging and delayed price cuts.
Both companies have initiated price cuts and introduced incentives to restore sales, with HMC reducing prices on Santa Fe and Tucson by about 10% and Kia by CNY50,000 and CNY20,000 respectively.
HMC plans to launch the new Tucson (TL) in September and the Avante (AD) early 2016.
Kia is expected to introduce a new K5 in December and a new Sportage (QL) in 2016.
Both automakers are advised to revise their long-term strategies, especially before their fourth and fifth China plants open in 2017, by focusing on exclusive models and new technology.

Strategic Recommendations for Korean Automakers

Expand China-only model lineup to better compete with local brands.
Introduce new technology to align with the market's rapid adoption of advanced features.
Reassess the strategy of selling both new and old models, as local brands now offer newer models at 50-60% lower prices than JVs.

Outlook for Korean Parts Makers

Mando and Hyundai Wia are highlighted as potential beneficiaries due to the overselling of parts makers caused by China-related concerns.
Mando has a strong relationship with local automakers, especially Geely, and is involved in the supply of key components like brakes and steering parts.
Mando's Ningbo JV with Geely is set to supply over KRW560 billion worth of parts to Volvo over 2016-2025, and has capacity expansion plans for several products.

Key Information

Inventory Adjustments

Wholesale sales fell by 2.6% y-y in June and 6.4% in July, but retail sales increased slightly in August.
Dealership inventory was at 1.6 months in August, slightly above normal levels, suggesting further cuts are unlikely.

Market Trends

China's auto demand is expected to grow at a moderate pace of 3-5% pa, with a focus on SUVs and inland cities.
Local brands are gaining market share due to value-for-money strategies and improved quality through partnerships with global automakers.

Strategic Moves

SAIC and its affiliate Huayu Automotive Systems are focusing on localization and technology acquisition.
Global automakers are developing China-only models to better compete with local brands.
Korean automakers are advised to delay plant expansions and adjust strategies to maintain competitiveness.

Performance Metrics

HMC and Kia have seen declines in utilization and sales volume in 2015, with HMC experiencing a 16.2% drop and Kia a 22.6% drop.
Net profit margins have declined significantly for both HMC and Kia, with HMC's net margin dropping to 5.4% and Kia's to 4.0%.

Growth Forecasts

China's auto sales are projected to grow, with 2015E total sales at 19,475,000 units.
Korean OEMs are expected to grow at a 12.1% CAGR from 2014 to 2017, with HMC and Kia showing mixed results.

Conclusion

The Chinese auto market is transitioning from a high-growth phase to a more competitive environment.
Korean automakers must adapt their strategies to local market demands and competitive pressures.
Korean parts makers like Mando and Hyundai Wia are well-positioned for growth opportunities due to their quality and cost advantages.