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People's observation: The automotive industry has gone through a turning point. Whether it is a wish or not, Chery seems to have always been regarded as something "alternative." For this car company living in Penghu, this year may be the "best year" - Chery continues to write its miracle, is expected to reach annual sales of 100,000 vehicles. At the same time, people can not ignore its rumors with the SAIC Group, and intellectual property disputes with foreign car manufacturers. Based on this, it can even be said that this is the "worst year." In a sense, Chery's experience and feelings are only a microcosm of the domestic auto industry. In the impending past 2003, the auto industry seems to have experienced a turning point, with annual production and sales exceeding 4 million units. However, under the circumstance, the lack of the right to speak technically and the faltering investment have caused people to feel uneasy. More people are asking: What kind of era is this? Rushing prices: Gradually bid farewell to the era of profit before Chery, few auto makers have rendered such price reductions vigorously. In March this year, Chery’s long-planned “Spring Thunder Action†was formally launched: “Fengyun†series cars have all lowered their prices, and the average price reduction is about 15%. Among them, the best-selling luxury fell more than 17,000 yuan. Since then, price cuts have become the main theme of the domestic auto market this year. If divided by time, this year's auto market has experienced a total of 4 waves of price cuts. The first wave is around the Spring Festival, represented by the Red Flag Mingshi and Chery; the second wave is promoted by Sail and Xiali during May and June; the third wave is before and after the National Day, with Southeast lioncel and Nanjing Fiat series. Representatives, affecting Santana, Vios; the fourth wave around the end of the year, on behalf of models POLO, Galle, Maxima and other models cheering. Interestingly, in the first half of the year, the price-reduction models were dominated by older models. In the second half of the year, with the upgrading of competition, many new models that have just been listed this year have also begun to self-devaluate, and are forced to join the price-cutting phalanx under market pressure. Statistics show that at present, the national car inventory has exceeded 60,000. However, be sure to avoid the "overcapacity" conclusion. Because today's auto market is uneven, it can not be generalized, it is a structural surplus. At present, the domestic automobile industry is in a period of adjustment and is in a transitional period of structural changes, ownership changes, and regional adjustments. From this perspective, even if there is an excess of product structure, it will be beneficial to the survival of the fittest and enter the era of full competition. To be sure, the price war has brought benefits to consumers, and consumers’ sense of identity with domestic car prices is also increasing. In a public opinion survey this year, the proportion of consumers who believe that domestic car prices have been relatively modest has reached 35.5%, compared with only 12% last year. In this sense, it is an indisputable fact that the automotive industry gradually bids farewell to the era of huge profits. Why Didn't Sky Fall: Consumption Heat Accomplished the Year of the Car? On November 25, on the opening day of the Shanghai International Automobile Finance Forum, the insider said implicitly that SAIC had already “separated†with Chery. Although both parties have remained silent afterwards, the industry believes that the formal announcement of splitting news is only a matter of time. This is obviously news with multiple interpretations. But one thing is certain: Chery believes that even without SAIC's backing, it will still be able to take a good step in the Chinese auto market in the WTO era. Many people compare the accession to the WTO as "the wolf came", which makes people think that China's auto industry will face a severe situation after entering the WTO, and even have the same fear of "the sky will fall." However, two years after China’s accession to the WTO, the automotive industry, once considered to be the most vulnerable, has not “changed its courseâ€. On the contrary, the rapid growth of automobile production and sales has caused many people to lose sight. On the one hand, there is a strong growth in production capacity and on the other is a sustained consumption boom. In the whole year of this year, more than 50 new vehicles went offline, auto companies expanded and reformed, companies outside the auto industry rushed to build cars, multinational companies significantly increased their investment, and luxury cars such as BMW, Mercedes-Benz and Cadillac also settled in China. Compared with the slump in the world auto market, the Chinese auto market is really good for the landscape. In fact, it is over the years that consumers have accumulated huge purchasing power under the hold-to-buy and have achieved a 2003 car boom. It can be said that the current automobile industry has entered the "growth period" from the "introduction period." This is because not only has the scale base and growth rate reached a level at the same time, but the industry has maintained a higher profitability. If there is no special situation, it is generally believed that this stage will continue for many years. This may be true. However, if we think that we have easily defeated foreign "group wolf" and passed the threshold of the WTO's test, it would be wrong. At present, the lack of technical expertise in home-made vehicles is still serious, and in the short term it still does not have the ability to compete equally with foreign cars. How to introduce new products, strengthen cost control, improve service levels, and enhance brand image are still important issues facing auto companies. Now, the reason why the scene of "sheep" and "wolf" coexisting peacefully is that the key to our scene is that our "penfold" has not yet fully opened. China’s accession to the WTO agreement has secured a buffer period of 4 to 5 years for the automotive industry. This is the key reason why domestic cars still feel good about themselves in the second year of entry into the WTO. The troubles behind the glory: What kind of self-owned brand needed at the end of the year, Chery QQ won the "Best Domestic Microcar Award". Chery said hotly that it will choose the right time to launch a luxury QQ with power steering, ABS. But behind the joy, Chery also has his own annoyance. Recently, the U.S. general suspects that Chery QQ is suspected of copying a GM Daewoo model and has already launched an investigation. And such troubles also involve other Chery models. Similar intellectual property disputes have become a hot spot in the auto market this year. Not long ago, Japan’s Toyota sued Zhejiang Geely Automobile Co. for infringement of trademark rights and unfair competition. Although the first instance was rejected, it has attracted widespread attention from inside and outside the industry. The focus of people's discussion is, what kind of national auto industry do we need? In the final analysis, mastering the steering wheel for the development of China's auto industry is, in the final analysis, to see if it can grasp equity and intellectual property rights. Having control over capital will directly determine the issues of industrial organization, management, and use of capital to achieve value addition and profitability and profit distribution. The importance of intellectual property for the automotive industry is even more self-evident. Relevant information shows that in the past, the major cost of the auto industry, which was mainly composed of land, plant and equipment, was reversed today. Intangible investment in knowledge and skills has accounted for about 70% of the average value of the automobile. In this year's auto market, we are seeing more and more new models and new technologies that are in sync with the world. However, we have to admit that in the cooperation with multinational corporations, we have not enough say, and the core brands and technologies of our products are foreign. After this year, no one dared to underestimate Chery, just as no one in the world would ignore the Chinese auto industry. However, similar to Chery, who has troubles behind its glory, the domestic auto industry is also facing a severe test of how to accelerate the development of independent brands within the framework of intellectual property regulations. "East China News" December 29, 2003 First edition