Zhiwei Motor strictly implements the national four standards

1. OEMs have a huge influence, and the market pattern may change

Although the National Fourth was implemented on July 1, 2019, it has already had a relatively obvious impact in 2018.  

In the fourth quarter of 2018, motorcycle sales experienced a serious decline. Some joint ventures saw a decline in production of more than 60%. At that time, when the author visited Taizhou companies, sales even fell by more than 90%. The reason is that, on the one hand, affected by the Sino-US trade war and the macroeconomic downturn, the market consumption power is generally insufficient;

Except for a slight recovery after the Spring Festival, this trend has continued until July this year. In addition, Haojue and Honda have continued to reduce prices, causing a serious decline in the production capacity of enterprises above a certain scale that mainly produce road vehicles, especially scooter or underbone vehicles with low brand added value, which are seeking to go overseas or transform.

Due to the significant increase in the cost of the National IV announcement compared with the National III, enterprises are reducing their product lines. Many enterprises originally had hundreds of National III models, but now have to shrink to dozens or even dozens of models, which has a great impact on enterprises that originally adopted the strategy of the sea of vehicles. At the same time, due to the concentrated application of National IV by enterprises, enterprises need to queue for a long time to obtain announcements, which has also had a certain impact on the sales of some differentiated medium and large displacement enterprises.

The China Association of Automobile Manufacturers once conducted monthly economic indicator express statistics on 91 motorcycle manufacturers across the country, and the data obtained are as follows: In the first half of 2019, the overall economic operation of motorcycle manufacturers continued the downward trend of the previous year, and the main economic indicators continued to decline to varying degrees.

1. The total industrial output value and industrial sales output value decreased year-on-year, and the production and sales rate was slightly lower than the same period last year.

2. Operating income and total profit decreased year-on-year, and the comprehensive economic benefit index was lower than the same period last year.

3. The overall operating income and total profit of the top 10 companies decreased.

4. Notes receivable and accounts receivable increased year-on-year, and notes payable and accounts payable decreased slightly.

5. The loss of enterprises was slightly higher than the same period last year.

Overall, almost all motorcycle companies have been impacted to varying degrees, and many companies have reached the survival balance line. Maintaining sales, adjusting structure, and finding a way out have become the consensus of all motorcycle companies.

After entering July 1, due to the previous inventory clearance and purchase tax exemption for vehicles below 150 displacement, the National IV vehicles once ushered in a small rebound. A large curved beam vehicle manufacturing company in Chongqing once saw a surge in orders, but at this time the company was unable to fully produce them due to the previous reduction in scale.

The impact of the National IV on the overall industry sales volume is difficult to predict in the short term. But the market brand pattern will change, which is certain.

2. Most merchants suffered losses in the first half of the year

Affected by National IV, most merchants suffered losses to varying degrees, among which the operating pressure brought by National III inventory was significant.

Before July 1, including agents and dealers, there was a huge social inventory. A domestic sales manager of a first-tier brand once revealed that after June 20, the total inventory of National III in the society was more than 600,000 units. After June 20, some large agents had an inventory of National III vehicles of more than 50,000 units. Even the first-tier brand city-level agents in a certain area in the southwest have more than 3,000 National III vehicles in their hands. A large-displacement merchant in a certain city also has more than dozens of National III vehicles.

After July 1, National III vehicles faced the problem of being unable to be licensed. In order to clear the inventory, most merchants chose to sell at a lower price. The terminal price reduction was once very large, and even or listed for sale, which were converted into new inventory for the company, and additional purchase tax, license plate and insurance fees were required. But either way, it means that merchants are facing huge operating pressure. A media outlet once interviewed 20 motorcycle dealers, and more than 50% of them suffered losses in the first half of 2019. And from the data I have surveyed, this proportion may be even greater.

3. Some companies are cheating on the National IV due to the mentality of luck

Under heavy pressure, cheating has become a strategy for some second- and third-tier small brands.

Have National III cars in stock? No problem, change a certificate. Can't make an EFI car? No problem, then hang a carburetor or use a low-cost fake open-loop EFI.

An industry staff member recently conducted an investigation on the problem of fake EFI in National IV. After sampling 10 brands, it was found that more than half of them had fake National IV to varying degrees, of which two were concentrated in the Jiangsu and Zhejiang sectors, and three were concentrated in the Henan and Hebei sectors. Most of these counterfeiting companies use the following means to circumvent National IV:

1. Use low-cost oxygen sensors (with shells) and use open-loop control to shield the oxygen sensor signal. Adopting this method means that regardless of emissions, it can be calibrated according to the carburetor status, and the actual performance is that the acceleration performance is better than closed-loop control;

2. The muffler is equipped with a catalyst with a greatly reduced precious metal content or a white carrier catalyst to reduce costs, but it does not meet the requirements of the National IV emission standard at all;

3. Use electronic fuel injection models to declare the National IV announcement, obtain the certificate of conformity, and actually produce National III vehicles, and use the National IV certificate to register;

4. Some companies declare a large number of National IV models, and after obtaining the certificate of conformity, they sell the certificate of conformity, but regardless of whether the sold National IV certificate is used to produce electronic fuel injection models.

Bad money drives out good money. This chaos that occurred when the National II switched to the National III has now repeated itself after the National III switched to the National IV. And these non-compliant behaviors will have a great impact on medium and large enterprises that strictly implement the National IV.

In response to this phenomenon, we also interviewed Zhang Hongbo, Secretary-General of the China Motorcycle Chamber of Commerce. For many years, he has represented the industry in negotiating or implementing motorcycle-related policies with various state ministries and commissions, and has done a lot of work in canceling purchase tax and consumption tax, as well as local anti-motorcycle bans.

According to Zhang Hongbo, there will be a very obvious difference between switching from National II to National III and switching from National III to National IV. For example, there are many technical requirements and environmental parameters such as OBD, oxygen sensor control and injector control, as well as electronic injection, which will be indicated on the certificate. These, like production consistency, must be strictly enforced, and are also for more effective inspections in the future.

As the overall national environmental protection policy has become increasingly stringent in recent years, the Ministry of Environmental Protection is now forming a joint mechanism for environmental protection evidence collection, and jointly enforcing the law with market supervision and public security departments. Last year, some automobile companies were found to have cheated on emissions and received huge fines. The same is true for motorcycle companies. Once the problem of emission cheating is discovered, it will be strictly punished. In addition to ordering a recall, it may even face economic or criminal penalties.

Therefore, the current stage of cheating in National IV is a self-righteous move and cannot cope with inspections at all. Relevant companies should not lose the big picture for the sake of small gains and take risks to confront regulations.