On the first day of the resumption of work in February 10, the news that Geely will merge with Volvo to form a global automobile group with an annual sales volume of 2 million vehicles (Geely10.3 million, Volvo 700,000) set off the automobile circle and became the first news of automobile media analysis after the outbreak.
Of course, the future plans of Geely and Volvo in the capital market are most widely interpreted, that is, Geely Automobile (00 175, HK) will complete the overall listing of Geely's automobile business, even become the automobile group with the highest market value in China, and indirectly help Volvo to complete the listing plan and realize the docking with the global capital market.
Of course, the planning of the capital market is an important purpose of the merger, but I think the fundamental task of the merger is more important, that is, "reducing costs and increasing efficiency."
It is believed that the word "reducing costs and increasing efficiency" is not unfamiliar to the automobile industry in recent two years, because when the global mainstream automobile market is in a negative growth environment, one of the main ways for automobile enterprises to save themselves is "reducing costs and increasing efficiency".
There are many ways to "reduce costs and increase efficiency", such as controlling upstream and downstream costs, improving management level, reducing capital investment in non-profit businesses, merging similar businesses, divesting non-performing assets, and layoffs.
According to the financial performance report of 20 19 released by Volvo Cars on February 6th, its operating profit in 20 19 increased to 143 billion Swedish kronor, a slight increase of 0.8% compared with 20 18. However, its operating profit rate and net profit in 20 19 years are still lower than that in 20 18 years (of which net profit decreased by 2% year-on-year).
Volvo achieved this result thanks to the cost reduction and sales growth in the fourth quarter, which offset the impact of the global auto market downturn. Among them, the most important means for companies to cut costs is to cut fixed costs, including further layoffs.
Compared with Volvo's relatively stable financial situation, Geely's situation is not so good. According to the company's financial report for the first half of 20 19, regardless of the decline in sales, its net profit of 4.009 billion yuan decreased by 40% compared with the same period of 20 18.
In 2020, although Geely Automobile may still be the "No.1" brand in China and Volvo has a good development prospect, uncertainty still exists in the global market, and it is most important to practice one's internal strength.
In the official news released by the two parties, it is said that the merger aims to promote the deepening cooperation between the two sides and more effective coordination in technology research and development, cost control and finance.
In addition, both sides have grand plans and investments in the field of "new four modernizations". If the merger is realized, the two sides will realize more efficient and lower-cost innovative R&D cooperation with foreign capital, which is not only beneficial to Geely and Volvo, but also a good reference case for the global automobile industry.
At the same time, the outside world does not have to worry about the negative impact of the merger. First of all, it has been ten years since Geely acquired Volvo, and the two sides have a good sense of identity in technology, operation and even culture, and the brand will continue to develop independently in the future.
Secondly, the cooperation and joint venture between the two sides in the fields of R&D, production and procurement also have a history. For example, in March 20 12, Geely and Volvo Car signed a technology transfer agreement to jointly develop a series of engines with small displacement, high performance and environmental protection; Another example is 20 13, and the two sides began to jointly develop the basic module architecture of mid-level cars for their new generation products-CMA architecture, which has been applied to Volvo, Lectra and Geely.
In 20 17, Geely and Volvo established the joint venture company of lectra motors and Geely-Volvo technology, which realized the cutting-edge technologies in the fields of vehicle architecture technology, efficient and clean powertrain, and joint procurement of parts and components. 20 19, 10 in June, both parties announced that they would jointly set up a new company, integrate the internal combustion engine department, and form an independent and world-leading powertrain division.
This step is to practice the thinking of Li Shufu, the chairman of the group, on the development of the global automobile industry. The ultimate goal is not only to establish a multinational automobile giant like Audi AG, but also to bring synergy and efficiency to the whole group and establish a foundation for sound development.
This article comes from car home, the author of the car manufacturer, and does not represent car home's position.