Head image source: Stills from "Flying Life"
The "core shortage" that lasted for more than a year does not seem to stop the upward pace of China's auto market, according to the data released by the Federation of Passenger Vehicles, in 2021, China's passenger car new car sales of 20.5 million units, becoming the first positive growth of China's auto market since 2018. In 2022, many car companies raised their sales forecasts. The China Association of Automobile Manufacturers also predicts that domestic passenger cars can achieve 8% year-on-year growth in 2022.
However, the fog of "core famine" hanging over the automotive industry has not dissipated. Under the impact of the repeated epidemics and the "black swan" events such as the Russian-Ukrainian conflict, the supply of automotive chips has not yet reached a time when it can be optimistic.
Source: Multiplying Association
In the latest february production and sales data, a number of car companies mentioned the impact of chip shortage on production and sales. In particular, Chang'an, Great Wall and Geely clearly pointed out that due to the insufficient supply of Bosch's "core-related" parts, sales in February showed different degrees of decline. The continued chip shortage has also made Toyota Motor recently announce that it has to expand the scope of production cuts, and it is expected that production in the second quarter will be 20% less than originally planned.
A senior executive from a well-known tier1 company mentioned in the exchange with the car market Story that the chip shortage has not fundamentally improved, and the current lack of cores is comparable to the worst time last year, and the price of chips will rise further. "Chip companies are subject to long-term supply agreements and can't increase prices too much." If you go to the market to scan the spot, it is dozens of times more expensive than normal, and some even cost thousands of yuan. ”
1, there is a first price of goods second
Recently, there have been media reports that Renesas, Toshiba and NXP have decided to raise the price of automotive chips by 10-20% in the second quarter of this year, and there are reports that Infineon has notified downstream distributors of the upcoming price increase. Infineon said that the imbalance between supply and demand of semiconductor production capacity will run through the whole year, and under the influence of rising cost structure, the company can no longer digest the increased costs on its own, and intends to "distribute the burden on a broad basis".
Online transmission of Infineon price increase letter
"Most of our ESC (Body Electronic Stability Control System) chips are purchased from NXP, and the price we procured last year has increased by 20%, and this year we are expected to increase another 15% on this basis." Shi Zhengtang, deputy general manager of Asia Pacific Shares, told The Story of the Car Market that in this situation, it is the first thing to get the goods. He laughed and said that he had "looked down" on such things as chip price increases. "Last year, when the lack of cores was the most serious, a chip with a normal price of about 20 yuan was speculated to eight or nine thousand yuan on the market."
Wang Chaojiu, general manager of Hive Intelligent Steering, added that as long as there is a long-term supply agreement, the price increase of most chip manufacturers is not large. "The premise is that upstream chip manufacturers have chips. Just like Infineon has fab factories in the United States, Malaysia, Taiwan and other places, but a series of uncontrollable factors such as power outages, epidemics and extreme weather have caused the factory to stop production many times, resulting in Infineon's chip supply being very unstable. Wang Chaojiu said that the DP-EPS steering system they produced this year was all purchased from NXP chips. He explained that NXP's Taiwan fab capacity is relatively stable.
The ZF DP-EPS steering system equipped with Infineon chips has been affected, and GAC Trumpchi officially responded to the decline in sales of its "net red" model Shadow Leopard recently, mainly due to the shortage of ZF DP-EPS steering system chips. It is reported that some models of Great Wall Motors also use ZF's steering system and have begun to look for alternative suppliers.
2, the second confession can not solve a thousand sorrows
"Due to the lack of ESP (Bosch patented body electronic stability system) assembly, many installed cars cannot be rolled off the production line." A person familiar with the matter revealed to the car market Story. Changan Automobile, which is also affected by Bosch's lack of cores, has also fallen into the dilemma of no rice under the pot. Sources close to Changan Automobile revealed that "because of the lack of parts, a factory in Chongqing has taken many days off."
It is understood that Bosch ESP currently occupies more than 70% of the market share. That said, it's hard to have a good alternative in the short term. Great Wall Motors has also publicly stated that Bosch is the exclusive supplier of ESP configurations for Great Wall's main model. In addition to Changan and the Great Wall, it is reported that Geely Automobile will implement a supply chain replacement plan in the second quarter of this year to alleviate the currently restricted production capacity pressure, but Bosch is still its most important supplier in this plan.
Industry insiders say that "all car companies are working for Bosch", but on the issue of chips, even a tier1 big guy like Bosch has a time to stretch. It is understood that Bosch currently has four-fifths of the components and chips that need to be purchased externally. On the last day of 2021, Chen Yudong, president of Bosch China, announced his status in the circle of friends, and he and the leaders of the Great Wall and Geely sat at the office door, waiting for the core.
First from the left: Chen Yudong, President of Bosch China
Second from left: Zhao Guoqing, executive director of Great Wall Motor
Third from the left: Geely Purchasing Director Fang Chenglong
"Because bosch's ESP system is not supplied enough, a German car company is also talking to us about the second supply." Shi Zhengtang said that as the head local enterprise in the field of ESC (the universal name of the body electronic stability system), because of Bosch's supply warning, a number of car companies, including the head Chinese brand and the joint venture car companies, have expressed their intention to deepen cooperation.
However, it is also subject to chips, and the supply may not meet expectations. According to Shi Zhengtang, last year's Asia-Pacific ESC distribution volume was about 100,000 sets, and this year is expected to exceed 300,000 or even 500,000 sets, mainly to see how many chips can be obtained. He sighed, "If Bosch can't get the chip, we will only have more difficulties." At present, we use NXP chips for ESC systems, and the supply is also very tight. Therefore, I dare not take too many projects, and I can only do how many chips and how many products come out. ”
As a local parts supplier, Wang Chaojiu of Hive Yichuang also revealed that the delivery of DP-EPS steering system of Hive Yichuang this year will have a big breakthrough compared with last year, in addition to some high-end models of Great Wall Motors, there are other Chinese brands that are discussing cooperation in steering system parts. "The volume of local suppliers is still incomparable with companies like Bosch ZF, which can only alleviate the shortage of parts for car companies to a certain extent."
He added that solving the shortage of parts caused by the "lack of cores" is not so easy to change suppliers. "The replacement of parts for any model not only involves the structural design of the product itself, but also involves a series of problems such as verification and testing." Not to mention, a chip that goes upstream to pass the vehicle standard certification needs to undergo rigorous and rigorous inspection and testing to get the corresponding qualifications.
3. Car companies should deal with the lack of cores, reduce allocation or raise prices?
Public reports show that under the impact of various factors, the shipment cycle of chips has been extended from 6 months to the current 12 months, and even some varieties will reach 18 months. In order not to affect the normal production and sales rhythm, many car companies by adjusting production priorities, changing or adjusting the model configuration and other ways to emergency.
Online transmission of Chang'an internal documents
Volkswagen mentioned in the recent financial report that the reason why it can achieve revenue growth in 2021 due to the decline in coreless sales is that a proven way is to distribute scarce chips to high-profit models. An insider of Changan Ford revealed to the car market story, "We also lack chips, especially the power chips in the car. Although it is not as difficult to find a replacement as the ESP chip, it also needs to do a series of tests and verification before a new chip can be put on the car. He said that at the moment of chip shortage, companies can only protect key models first.
There's a saying in the auto industry: You can't build a car out of 99 percent of the parts. At the moment of "core famine", this common sense is being challenged. Recently, Ford Motor said at the Association of Automobile Dealers (NADA) exhibition that in order to alleviate the shortage of inventory, Ford plans to ship some "semi-finished products" vehicles that lack non-safety-critical function chips or related parts to dealers for sale. According to people familiar with the matter, Ford will replenish the chips to dealers within a year and install them on these products that are already sold.
"First to pay and then make up" is not the Ford family, due to the lack of core, Audi announced that some new cars will only provide a remote control key when delivery, and the remaining keys will be reissued in the future. Auto Market Story recently visited the 4S stores of several automobile brands in Beijing and found that the "shadow" of missing cores is still visible. Mercedes-Benz, BMW, Audi sales have said that due to chip shortages, the latest new car to the store is no longer equipped with mobile phone wireless charging function; Volvo's sales staff directly informed that due to the lack of cores, the imported model XC90 has not been scheduled in the near future.
An announcement from Audi to dealers in the middle of last year was circulated online
On the other hand, many car owners who have paid a deposit to pick up the car often wait for the news of delayed delivery or reduced allocation before the car. Henan car owner Liu Yu (pseudonym) told Cheshi Monogatari that she paid a deposit at the local Euler 4S store last November to book an Euler black cat, and until now three months later, she still did not mention the car. The sales staff had negotiated with her that due to the shortage of ESP parts, the car could not be delivered on time, and if she accepted the non-ESP version, she could quickly pick up the car, but Liu Yu rejected the plan.
Shi Zhengtang also mentioned in the exchange with the car market Story that in order to solve the chip problem, some car manufacturers may ensure supply by reducing the allocation, such as reducing the ESC to ABS, after all, ESC is not the standard in the passenger car, which can also solve part of the demand.
The shortage of parts caused by the lack of cores is difficult to be properly solved in the short term. Although long-term investment is necessary for the entire industry, at present, it can only be solved through semi-finished products, allocation reduction, delayed delivery, etc., or at bosch China's headquarters, door-to-door "core".
"A fact that people are reluctant to admit is that there is very little subjective initiative that car companies can play on the issue of lack of cores. There may be a good alternative, but in the end there is still a need for chips. A circulation person in the automotive industry told the car market that in the current market environment of lack of cores and rising prices of raw materials, the "waiting party" may not be able to wait for victory.
Although many authoritative institutions expect that the chip shortage will improve in the second half of this year, but from the automobile production end to the sales terminal will take a certain amount of time, if you refer to the impact of last year's "lack of core" on the car market, in the second half of this year, the impact of chip shortage on the car market may not dissipate.