Recently, Weichai Power intends to realize the listing of “H+A†through the split share reform of Hunan Torch. Weichai Power’s high-powered engines and the Torch’s Fast Transmission and Hande Axle have already formed assets. At present, China's highest-quality heavy-duty resource gold industrial chain, and its absorption of the Weichai power after the merger of the Hunan Torch will become China's most competitive auto parts industry group, and it will further take advantage of the industrial chain.
At present, China has become the world's largest heavy-duty vehicle production and sales market. The Chinese heavy-duty truck industry has initially assumed the conditions for undertaking the gradient transfer of the world's heavy-duty truck industry and then dominating the developing country market through an internationalization strategy. After the merger and absorption is completed, the engine, transmission, and axle constitute the powertrain of the heavy-duty vehicle, which can enhance the technical support capabilities in the entire market, making the company the most powerful auto parts group in China.
Fusion effect
The goal of Weichai Power's integration of the Hunan Torch is to expand the scale and enhance the status of the industry. With the help of synergies to enhance the competitiveness and profitability of the company, it will eventually become the most powerful modular supplier of heavy-duty truck powertrains in China and have stronger capabilities. Heavy truck manufacturers to fully share the heavy truck industry growth and resist the risk of changes in the industry competition.
Some experts analyzed that the “fusion effect†that can bring about reinventing changes to the simple sum of assets of the Hunan Torch and Weichai Power is reflected in the following aspects: Really master scarcity of powertrain resources, increase the right to speak in the industry, and the business runs through the heavy truck industry. The high proportion of the chain and parts business will effectively counter the non-systematic risks in the heavy truck industry, such as changes in the pattern; the synergy effect will bring down the cost and expense ratio and increase the profitability.
Master scarcity of powertrain resources
At this stage, the technical level of China's heavy truck industry is not high, and the general lack of locomotive integration capabilities, the key components of the vehicle powertrain is in the hands of a few supporting manufacturers, powertrain resources are scarce.
At present, the main components and parts manufacturers of the original Steyr platform are still supporting the heavy tonnage powertrain assembly. Even new-heavy truck manufacturers on other platforms have to rely on the Steyr Platform Parts Factory. Supporting support. The engine and gearbox business owned by New Weichai Power has an 80% and 90% market share in the heavy tonnage heavy truck market, respectively, and its bargaining power is outstanding; and after controlling the core powertrain resources, it can help its automaker Shaanxi. Heavy trucks occupy a more favorable position in the fierce market competition.
The Torch basically grasps the complete set of technologies and products of the Steyr platform from complete vehicles to key components, and has the ability to supply heavy trucks to key components. The stability, dynamics, and economy of its products are at the forefront of the industry. Therefore, in recent years, sales growth of its subsidiaries such as Shaanxi Heavy Duty Truck, Fast Gear and Hande Axle has far exceeded the industry average. If there is turmoil in the future heavy truck market, the advantages of the company's industrial chain integration will be further reflected.
Weichai Power, as the largest high-power engine supplier in China, has extensive marketing networks and customer relationships. However, if only as an independent engine supplier, in the future, when the integration of locomotives and the right to speak are increased, the bargaining power and market share will be difficult to maintain. The Hunan Torch Body is a dual role for buyers and suppliers. It owns Shaanxi Heavy Duty Trucks, which manufactures vehicles, and Fast Wheels, Hande Axle, and Zhuzhou Gear, which manufacture heavy-duty truck parts. However, there are deficiencies in the integration of resources and the construction of marketing networks.
After the merger of the Hunan Torch and Weichai Power, through the integration of procurement and marketing networks and the integration of regulatory agencies, the synergies will be brought into play to reduce the cost and expense ratio.
If eventually Weichai Power merges with the Hunan Torch and realizes the verticalization and flattening of management, this level of the original Hunan Torch Management Headquarters will be abolished, and the previous management cost of about 100 million yuan will be expected to disappear.
Forging industry chain
On August 12, 2005, Weichai Power officially entered the torch. Weichai Power was successfully launched in Hong Kong in March 2004. Weichai had exceeded 10 billion yuan in sales revenue in 2005 and became the first billion-dollar enterprise in China's internal combustion engine industry.
Hunan Torch is an automotive and automotive parts industry. Its leading products are heavy trucks, key parts of heavy trucks, other auto parts and hardware products. At present, heavy trucks are already the best business in the automotive industry. Among them, the four core business assets represented by Shaanxi Heavy Duty Truck, Fast, Zhuzhou Spark Plug and Dongfeng SUV are the most. Among them, Shaanxi Zhongqi, Fast Transmission and spark plugs have become star companies with industry influence. It can be said that who controls the Torch in Hunan means that it controls the heavy trucks and parts assets with the highest profitability in China. According to the idea of ​​Weichai Power Chairman Tan Xuguang, the future goal of Weichai Power should be to become a general-purpose engine supplier, provide high-power power support for heavy-duty vehicles, luxury passenger cars, construction machinery, marine, power generation and other industries to break the independence of foreign countries. It is difficult for engine manufacturers to become big players. However, from the current situation, the living environment has become increasingly unfavorable for independent diesel engine companies.
Wang Hui, a researcher of the automotive industry at Shenyin Wanguo Securities Co., Ltd., believes that the heavy-duty field gearbox and engine are the two most lucrative businesses. As the output of the Fast Transmission single plant has already reached the top in the world, Weichai Power's restructuring of the Hunan Torch will not only greatly control the domestic transmission and engine market, but will also form a powertrain with the gearbox of the engine and the Hunan Torch. Further increase market competitiveness. At the same time, due to the fact that Weichai's domestic market share of heavy-duty trucks with a capacity of 15 tons or more is as high as 73%, it matches the industry advantage of Shaanxi Heavy Duty Truck. Wang Zhihui pointed out that it will not only provide a new product sales channel for Weichai, but more importantly, Weichai Power can use this to enter the automobile manufacturing terminal field and build a complete heavy-duty card industry chain, forming a unit outside China National Heavy Duty Truck Group. Independent industrial clusters.
Risk and opportunity coexist
The biggest challenge for the new Weichai is to manage an expanded and diversified company. The main manufacturing facilities of the Hunan Torch will be located in more than three other cities in China. In addition, the remaining non-core assets of the Hunan Torch are of low value, but the company still needs to complete the final round of asset restructuring. The assets include property, logistics and investment. Holding and other non-manufacturing business.
Needless to say, the Torch is a complex group (in terms of structure). It is an investment holding company and has more than 30 subsidiaries and affiliates. New Weichai has important work to do. It needs to clean up non-core businesses and focus on core businesses. The potential implementation risk of Xinwei Chai is whether it can cooperate with the existing management team of the Hunan Torch and whether it can effectively integrate its core business with the assets of the Hunan Torch.
New Weichai is more attractive to overseas potential partners (in terms of establishing a joint venture) because New Weichai will control China's heavy-duty auto industry more effectively. If New Weichai has speeded up negotiations with a number of foreign companies and reached an agreement, it will be a driving factor for the company. Cooperating with foreign capital will not only improve the brand image of Weichai Power, but also help improve its technology, product series and management quality, all of which contribute to the improvement of profits.
View related topics: Weichai Power: Expanding Auto Parts Gold Industry Chain
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