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| FAW Group believes that the main reason for the loss is insufficient sales. In the first quarter, FAW Group produced 230,000 vehicles and sold 192,000 vehicles. Among them, the sales volume of FAW-Volkswagen was far below the expected target, with a production of 53,800 vehicles and a sales volume of 30,000 vehicles, with a loss of 300 million yuan. In the sales structure, the increment is mainly low-end products such as Xiali, and the increment does not increase profits. In order to protect the market, the price reduction (or preferential treatment) of some products has exceeded the budget level. In addition, the rising cost of raw materials and the decrease of credit consumption and sales caused by the credit crunch are also the main factors of losses. |
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| In addition to the objective factors considered by the enterprise, the key to the loss of FAW Group is whether the sales volume of joint venture products can not go up. The main reason is that the foreign shareholders of the joint venture do not lower the CKD price. China’s automobile market has broad prospects and has become a "battleground" for major automobile companies in the world. Domestic automobile companies must accelerate their independent development in an open competitive environment, and the core of which is to adhere to the open road of independent innovation and realize the localization of key technologies and key components. Only in this way can the healthy development of the domestic automobile market and domestic automobile industry be guaranteed.
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| FAW Group has a special weight in Chinese’s mind, bearing people’s expectations for China’s automobile industry and even the rejuvenation of China. However, the serious shortage of successors has become a bottleneck restricting the development of FAW Group. FAW’s losses are due to management and sales strategy, but the most important thing is that FAW’s brand appeal in the eyes of Chinese people has been seriously weakened. In China, where the competition in the automobile industry is increasingly fierce, the good days of treating several old cars as cash cows are gone forever. In the eyes of Chinese people, FAW has become an elderly person without any vitality. |