According to Caixin News on December 25 (Reporter Zhang Yipeng), following the pain of transformation towards New energy and Intelligence, and facing the strong impact from new forces and new cars, joint venture brands in 2024 are encountering an unprecedented "mid-life crisis."

On December 23, Honda and Nissan announced that they have signed a memorandum of understanding regarding the merger and will officially begin merger negotiations. The two will merge by jointly investing to establish a holding company, with both parties acting as subsidiaries of this holding company. This significant cooperation, which carries the meaning of "coming together for warmth," reflects the reality of many foreign brands facing a "winter" in the Global market, and this is even more pronounced in the Chinese market.

Traditional Dealers, who are closely connected to joint venture brands, are also encountering widespread "shutdown and transition" during this round of "cold winter"—either withdrawing or shifting to the vibrant New energy track.

Localization and export become the "lifesaver" for joint venture brands.

According to data from the Passenger Car Association, mainstream joint venture brands retailed 0.6 million vehicles in November, down 9% year-on-year, but up 6% month-on-month. Among them, the retail share of German brands in November was 15.6%, down 3 percentage points year-on-year; while Japanese and American brands had retail shares of 12.4% and 6.4%, showing year-on-year declines of 3.1 and 1.5 percentage points respectively.

After reviewing the sales performance of mainstream joint venture brands in the first 11 months of this year, Caixin News reporters found that the annual decline for FAW-Volkswagen, SAIC Volkswagen, FAW-Toyota, Brilliance BMW, Beijing Benz, and Dongfeng Nissan was controlled within single digits, while GAC Honda, Dongfeng Honda, SAIC General Motors Buick, and Beijing Hyundai saw sales decline more than 20% compared to the same period last year.

I personally am not optimistic about the merger between Nissan and Honda. Both Honda and Nissan need to increase their investment in local R&D in China and achieve product innovation based on the advantages of the Chinese Industry Chain to empower the Global development of Nissan and Honda.” Cui Dongshu, secretary-general of the Passenger Car Association, bluntly stated when commenting on the "Nissan and Honda merger," that the strength of Chinese independent car companies and their journey to the world is unstoppable.

He said, "Joint venture car companies have lost competitiveness in the China market, which will inevitably lead to a loss of global market share. If Nissan and Honda focus their core energy and technological research on the most competitive and innovative China market, they will surely gain more substantial returns."

The industry generally believes that important measures for joint venture brands to "self-rescue" currently include, apart from organizational structure and personnel reform, strengthening localization and increasing overseas exports, which will become the most direct and effective adjustment direction.

After shutting down the fourth production line, on December 23, Guangzhou Honda's new energy factory in the development zone officially commenced production, with a designed annual production capacity of 0.12 million vehicles. According to Honda's plan to accelerate the promotion of electrification in China, by 2027, the pure electric product lineup will reach 10 models, including the e:N series released in 2022 and the new electric brand "Yeh" series models to be released in 2024. By 2035, 100% of sales will be pure electric vehicles. Prior to this, the Dongfeng Honda new energy factory had already started production in October in Wuhan Economic Development Zone.

While rapidly accelerating the transformation to new energy, the collaboration between joint venture brands and local industry chain enterprises in China is becoming increasingly frequent. In November alone, several collaborations were announced. Guangzhou Automobile Group stated on its interactive platform that the company is a comprehensive strategic partner with Huawei, maintaining close and extensive cooperation in multiple fields. Among them, GAC Toyota will link with Huawei's ecosystem to enhance intelligent experience; Dongfeng Honda signed a strategic cooperation agreement with JD.com Automotive, and both parties will engage in in-depth cooperation in retail channels, parts authorization, complete vehicle sales, and the JD.com car maintenance service system; At the Guangzhou Auto Show, Dongfeng Nissan announced its partnership with autonomous driving company Momenta to jointly create an industry-leading advanced intelligent driving solution based on end-to-end intelligent driving models; the new Audi A5L model specially developed for the China market is confirmed to be equipped with Huawei's intelligent driving solutions...

As early as 2015, "SAIC General's Envision was exported to North America" marked the beginning of complete vehicle exports from China's auto industry. Nine years later, "creating a Chinese export base" has begun to become increasingly mainstream among joint venture brands. Beijing Hyundai, Yueda Kia, Shenlong Automobile, Guangzhou Honda, and Changan Ford, among others, have successively regarded "exporting to overseas markets" as another important means of "staying in the China market" besides localization.

"When the lips are gone, the teeth feel cold"; Dealers are significantly shifting to new energy.

The weak performance of joint venture brands has made traditional dealers feel the painful reality of "when the lips are gone, the teeth feel cold."

On the evening of August 21, Guohui Automotive, whose shares were suspended due to triggering the delisting threshold, announced that the exchange decided on August 21 to delist the company's stocks and convertible bonds, with the delisting date set for August 28. As a result, Guohui Automotive, which once held the title of "domestic sales champion," officially bid farewell to the A-share market.

Previously, from June 20, 2024, to July 17, 2024, the closing price of China Grand Automotive Services Group stocks remained below 1 yuan for 20 consecutive trading days. According to the relevant regulations of the Exchange, the company’s stocks and convertible bonds have reached the conditions for being (Delisted). According to the performance forecast released by China Grand Automotive Services Group before being (Delisted), it is expected that the company will report a net loss attributed to the parent of 0.583 billion yuan to 0.699 billion yuan in the first half of 2024, compared to a profit of 0.601 billion yuan in the same period last year.

In stark contrast to the 'reluctant' exit of China Grand Automotive Services Group, Beijing Huayang Auto chose to actively seek change, previously the largest Audi dealer in Peking. On December 4, Huayang Auto announced that it would cease to conduct dealership business for the FAW Audi brand and instead shift to Huawei’s Aito network. Subsequently, FAW Audi canceled Huayang Auto’s authorization. Also losing authorization was Zhengzhou's largest FAW Audi dealership, Zhengzhou Zhongsheng Huidi, for the same reason of switching to Aito.

The (Delisted) status of China Grand Automotive Services Group and the transformation of Huayang Auto are just reflections of the survival status of auto dealers in 2024. According to data from the China Automobile Dealers Association, from 2020 to 2023, over 8,000 automobile 4S shops nationwide have shut down, with an average annual closure exceeding 2,600. 'In 2024, the authorized model of 4S shops is facing a wave of closures, with the number expected to reach 4,000 for the year, and the second half of the year will surpass the first half (around 1,500),' predicted Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association.

Behind the increasingly severe wave of traditional dealers’ 'shutdowns,' the fundamental reason is not making money or even incurring losses. 'Market prices are severely competitive, leading to comprehensive losses among dealers, continuously draining their resources,' stated Wang Du, vice president of the China Automobile Dealers Association, who raised a 'soul-searching question'—about 150 billion yuan in sales losses occurred due to price reductions in the first three quarters of this year; who ultimately bears these losses? His response was: 'The manufacturers bear part, but most of it is shouldered by the dealers.'

In light of dealers' survival difficulties, the China Automobile Dealers Association published a statement in September indicating that it has formally submitted an 'urgent report on the current financial difficulties and shutdown risks faced by auto dealers' to relevant government departments. The All-China Federation of Industry and Commerce Auto Dealers Branch also held a specialized symposium on October 29 to support the healthy and sustainable development of the auto dealer industry, gathering industry主管部门 and Banks for research and guidance. At the meeting, the All-China Federation of Industry and Commerce Auto Dealers Branch represented the industry to propose solutions regarding financing issues to the主管部门 and banks.

'In the face of market predicaments, the proactive changes made by joint venture brands are commendable, but at the same time, it must be noted that there is little time left for these brands, especially concerning technological layouts such as advanced intelligent driving, where 'open cooperation' has become a must-answer question. Additionally, traditional dealers must also actively seek transformation, accelerating reforms and continuous innovation in areas like auto finance, value-added services, and market depth,' analysts familiar with auto dealers commented.