The Ministry of Finance, the National Development and Reform Commission, and the Ministry of Industry and Information Technology jointly promulgated the "Circular on Strengthening the Implementation of Automobiles in Rural Areas" and the "Circular on Printing and Distributing the Operating Regulations for Automobiles and Motorcycles in the Countryside" (hereinafter referred to as the "Notice").
The "Notice" relaxed the conditions for farmers to purchase trucks and enjoy subsidies. While implementing the original three-wheeled vehicle or low-speed truck scrapping and redemption of the subsidy policy for light-duty trucks, it also subsidizes the direct purchase of light-duty trucks by the farmers and the mini-vehicles with a total mass of 1.8 tons or less. The subsidy standard is the vehicle sales price. 10% of the unit price is more than 50,000 yuan, and the fixed amount is 5,000 yuan.
Many truck companies have indicated that this is another good policy to boost the auto market. However, the actual impact on the automobile market depends on market feedback.
Relief of light trucks
In the "Enforcement of Cars and Motorcycles to the Countryside" initially formulated by the state, it was stipulated that only owners who originally used three-wheeled vehicles or low-speed trucks could enjoy policy subsidy when scrapping their original vehicles for light trucks. The original intention was to speed up rural areas. The end of production tools to upgrade, to enhance the auto market sales. However, in actual operation, it has encountered the problem of scrapping and redemption, because a large part of the owners of three-wheeled or low-speed trucks does not have a license. A number of truck manufacturers stated that the scope of the original redemption policy was too small, which had a very limited effect on the light truck industry. Some manufacturers’ brand managers even stated that since the implementation of the policy, the brand has not had a successful redemption case.
From January to April, micro-customer sales increased by 42.87%, while light-duty trucks only grew by 3.45%. The two industries of light trucks and micro-credits can be said to be one in the sky and one in the ground. Informed sources told reporters that since the introduction of the policy, truck manufacturers have not stopped efforts to recommend policy makers to expand the range of trucks to benefit from.
From another perspective, June is the traditional off-season of the auto market. In the first half of the year, the purchase tax will be reduced by half and the positive effect of the auto-to-home policy on the micro-customer market will be weakened. At this moment, the country again made heavy fists and improved the original automobile-to-country policy. It can be seen that the decision-makers have been paying close attention to the changes in the auto market and are ready to move ahead to speed up the auto market. The introduction of the automobile-to-country policy will surely make both passenger and commercial vehicle sales go hand in hand, laying a good foundation for China's auto sales to exceed 10 million.
Auto analyst Zhong Shi said that the purpose of the car to the countryside is not to go to the countryside, but to increase. Because the original car-to-country policy had too many restrictions on the truck industry, the effect was not satisfactory and could not stimulate potential consumers to buy cars. This adjustment shows that the public service efficiency at the decision-making level has been improved and the policy can be flexibly adjusted according to the actual situation.
He believes that although it is now in June, only six months before the end of the policy, it does not rule out the possibility of extending the policy period.
Question: Has the spending potential been overdrawn?
However, from the perspective of regional distribution, after the “Notice†was issued, there were more truck trading opportunities in rural areas such as Jiangxi and Shandong, or in the suburbs of economically developed cities. However, trucks are mainly used in the logistics industry. The specific consumption potential of rural trucks remains to be examined.
Although according to current regulations, a farmer family can purchase a light truck or micro-card after purchasing a micro-commuter, according to the current economic capacity of rural areas, there are not many consumers with such strength. The first implementation of the micro-subsidy purchase program will overspend the spending power?
The benefits are hard to quantify and alert to local protection
China Merchants Securities analyst Wang Liusheng believes that this policy will enable the light truck market to maintain a growth rate of around 5%-10% in the second half of the year. However, truck manufacturers did not dare to make such a decisive prediction. Many truck manufacturers and regional managers such as Jianghuai, Jiangling and Dongfeng generally expressed that the new “Notice†has certain advantages compared to the original policy, but it is currently impossible to measure its specific role.
The relevant person in charge of the Dongfeng Manufacturers Market Department stated that manufacturers will formulate propaganda programs in accordance with the new policies and hope to implement them in the consumer sector as soon as possible so as to truly bring about actual sales.
The relevant personages in the JAC Light Truck Marketing Department stated that the notice was not published long enough to accurately assess its role. However, JAC manufacturers attach great importance to the rural market this year. In the first half of the year, the network has already sunk to second- and third-tier cities. At present, there are already 50 county-level joint exhibition halls. From January to May this year, the cumulative sales amounted to 62,129 units, an increase of 19.98% over the same period of last year. The increase is very obvious, and the contribution of county-level city outlets is very large. In view of the good performance of the first five months, manufacturers should adjust the original sales tasks in the middle of the year.
The Jiangling light truck brand manager pointed out that because truck manufacturers have no way to determine the proportion of rural consumers in sales, they cannot quantify the positive effects of policies. The impact of the original redemption policy is very weak, and the detailed “Notice†role is definitely better. If the government can further improve the rules, solve the problems of complicated procedures and delays in receiving subsidies, the detailed policies will have better results.
However, industry analysts have to ensure that the policy can truly benefit consumers. It is also necessary to remove barriers to local protectionism. Since some of the subsidies are funded by local governments, local governments do not rule out some conditions for consumers to choose. Tilt to the local truck company when driving.
Since the beginning of this year, every favorable policy has been able to boost the sharp increase in automobile stocks in the two cities, but this time the “Notice†was issued and the capital market reacted coldly. This week, automobile stocks only slightly increased, and JAC Motors and Futian bathed in the spring breeze of policy. Automobiles, Changan Automobile and other stocks did not rise on the Thursday and Friday. However, thanks to the price cuts of raw materials such as steel, the gross profit margin of truck manufacturers has rapidly increased. The gross profit margin in previous years was about 8%, and it has exceeded 10% in the first quarter of this year. Therefore, securities companies are more optimistic about the profits of the truck industry this year.
The implementation details of the new notice will introduce certain trading opportunities for light and micro trucks. The listed companies involved include: Jiangling Motors, Jianghuai Automobile, Dongfeng Motor, and Foton Motor. Dongfeng Securities also recommended such companies in its investment rating. Guosen Securities also raised its 2009 earnings forecast for Foton Motor.
For the specific role of the policy, securities companies have different views. Wang Liusheng believes that the "Notice" can increase truck sales, but it is difficult to increase the profits of the truck industry. On the contrary, with the rise of commodity prices and international crude oil prices, the gross profit of the truck industry may be weakened. On the other hand, if the competition in this industry intensifies in the second half of the year, once the manufacturers exchange prices for the market, profits will drop again.
However, another securities company, Guosen Securities, is more optimistic. The company believes that due to driving ahead of consumption, the automobile segment's profit in the second half of the year will reach its peak. It is expected that the growth rate of sales of full-year young cards and micro cards will reach 20% and 40%, respectively.
June 30, 2018