Shen Hui talks about resumption of work and production: 90% is similar to 0%

On June 13, WM Motor founder, chairman and CEO Shen Hui said on Weibo that after visiting dozens of suppliers, he had some new ideas for the recovery of the auto industry under the epidemic.He pointed out thatthe premise of the recovery of the auto industry is that the supply chain will not be disrupted, interrupted or stopped."If the supply chain is only 90% ready, it's actually close to 0%. Without a chip, a car can't be built with a single screw."

Image source: Shen Hui Weibo

Shen Hui reflected on the current status of the current automotive supply chain from five aspects: inventory, supply, system, capital and flow of people.

Zero stock must brake

He believes that zero inventory must be braked. The lower the inventory, the easier it is to stop work. It is time to change JIT (Just in Time) to JIC (Pre-production).In order to pursue the best cost and sales volume, current auto suppliers should learn and refer to Toyota's "Just in time" just-in-time production mechanism (ie, the JIT model).Through precise control of production plans and inventory, although OEMs and parts companies will reserve certain production materials, the overall cycle will not be too long.

However, in recent years, under the influence of external environmental factors such as repeated epidemics and chip shortages, the automobile supply chain has been tense, logistics interruptions, and car companies have stopped production and production from time to time.Some netizens told Gasgoo that the company had been promoting "zero inventory" before the epidemic in 2020. After the epidemic, because suppliers did not resume work and production at the same time, the company could only continue to suspend operations.

Under such circumstances, auto suppliers began to rethink the JIT model and proposed JIC (pre-production) to prepare more inventory, spare parts resources, etc.

Cluster supply is converted to amulti-site scatter layout

In terms of supply chain, Shen Hui does not agree with putting "eggs in one basket".He believes that "the cluster supply should be properly transformed into a multi-site scattered layout, and it is very important for car manufacturers to have more headquarters."

This time, the Yangtze River Delta region centered on Shanghai has been affected by the epidemic, which has led to the suspension of the supply chain, which in turn affects the vehicle production of most car companies in the entire automobile industry.A very important point is that the Yangtze River Delta region is an important cluster of automobile industry chains in my country. There are more than 1,000 parts companies, and it is also the Chinese headquarters of foreign parts giants such as Bosch and Continental Group.

Analysts from Gasgoo Automotive Research Institutealso believe that due to the impact of the epidemic and geo-economic impacts, the future auto cluster cities will realize the integration of industrial layout and avoid supply chain security risks.

In terms of building the supply chain system, Shen Hui believes that we should pay attention to the lean manufacturing of the production and research system.

Provide financial support to small suppliers

Facing the phenomenon of many small suppliers closing down due to the epidemic, Shen Hui believes that support should be given to small enterprises that have not closed down."The industrial chain is not running water, you can turn it on when you want, and turn it off when you want," he said.

In fact, Li Xiang, CEO of Ideal Motors, also issued a document in April, calling on auto brands to not only solve the problem of their immediate parts supply, but also analyze and investigate the survival problems of small and medium-sized parts suppliers below the third level in advance. Cooperate with first- and second-tier suppliers, "act decisively if the aid supports".

The "crowd flow" problem is being solved

The fifth aspect is the problem of "people flow".However, Shen Hui believes that because the country has introduced many policies to revitalize the economy and stimulate consumption, there is no need to worry too much about this issue in general.

In order to alleviate the impact of the epidemic, the state and local governments have successively introduced policies to promote large-scale consumption such as automobiles.

For example, in mid-April, Shanghai issued the "Guidelines for the Resumption of Epidemic Prevention and Control of Industrial Enterprises in Shanghai (First Edition)", which promoted the orderly resumption of work and production of the first batch of 666 enterprises, of which nearly 4 were automobile-related enterprises.In order to ensure the smooth flow of supporting logistics, a batch of transit stations for emergency supply of important materials have been built in the Yangtze River Delta region.By June 1, the whole city of Shanghai will enter the stage of comprehensive and orderly resumption of work, production and market, and normal production and life order.

To stimulate car consumption.On May 31, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on Reducing and Levying the Purchase Tax for Some Passenger Vehicles", referring to passenger cars with a displacement of 2.0 liters and below that do not exceed 300,000 yuan; the office of the Ministry of Industry and Information Technology Four ministries and commissions, the General Office of the Ministry of Agriculture and Rural Affairs, the General Office of the Ministry of Commerce, and the General Department of the National Energy Administration, issued a notice to carry out 2022new energy vehiclesto the countryside.

At the same time, local governments, car companies and dealers have also made efforts to jointly promote automobile consumption.Guangdong, Shenzhen, Shanghai and other restricted cities have added tens of thousands of new car purchase indicators, and Shandong, Henan, Liaoning and other places have issued tens of millions or hundreds of millions of car consumption subsidies.SAIC Volkswagen, Dongfeng Nissan, Roewe and many other car companies provide "full purchase tax exemption" benefits.

Cui Dongshu, secretary-general of the Passenger Federation, said that it is expected that the implementation of new policies such as purchase tax concessions, as well as the efforts to promote consumption in the next seven months, will promote the annual retail sales to reach 21 million units, an increase of 4% year-on-year.The Passenger Car Association previously estimated that the retail sales of passenger vehicles in 2022 will be 19 million units, a year-on-year decrease of 5%.