中国汽车行业报告（英文版）

FORIMPORTANTINFORMATIONABOUTGOLDMANSACHS’RATINGSYSTEMANDOTHERDISCLOSURES,REFERTOTHEENDOFTHISMATERIAL,GOTO:Europe:AttractiveUS:CautiousJapan:AttractiveGlobalAutomobilesTheChineseAutoIndustryToomanybullsinaChinashop?Automakersarerushingtoexpandcapacity,luredbyboldgrowthprojections.Butwefearthemarketcouldprovevolatile,pricingcouldfallfasterthancosts,andcashflowsfromJVscoulddisappoint.ThehighreturnscurrentlyenjoyedinChina,particularlybyVW,[e-mail]:[e-mail]:[e-mail]:[e-mail]:[e-mail]:[e-mail]:44-20-7552-2919GoldmanSachsGlobalEquityResearchChineseautosalesgrowingrapidly;unitprofitabilityhighChinaistheworld’sfastestgrowingautomarket,withcarsalesup62%in2002.The1.2mnunitssoldin’02compareto0.5mnin1996.Unusuallyforadevelopingmarket,profitabilityishightoo:VWandHondamaketheirhighestunitmarginsinChina,butthisisduetohightariffsandprotectedpricing.ProductioncostsarehigherthaninJapan,EuropeortheUS.1.3bnpotentialcustomers–theautoindustryjustcan’tresistthepullFacingstagnantdemandinothermarkets,theautoindustrycanbarelycontainitsexcitementaboutChina.Carownershiplevelsarelow,incomelevelsappeartoberisingandChinarepresentsthelargestpotentialmarketofall.Automakersarerushingtoaddnewcapacity.Continuedmarketgrowthisnotassured,investmentrisksarehighManyindustrieshaverushedtoinvestinChina,onlytofindthatreturnsdisappoint.Autoindustryinvestmentscouldproveover-optimisticgiventherisksofmarketvolatility.RealGDPandincomegrowthratesremainunclear,thebankingsystemfaceschallengesandgovernmentborrowingisstillrising.Thismeansthatthepathofgrowthislikelytoberocky.Overcapacityarealthreat,pricingsettofallfast,cashdifficulttoextractWebelievethereisahighprobabilitythatcapacitycouldexceeddemand.WTOentry,fallingtariffsandcompetitionwilllikelyerodepricing.Highcosts(duetohighoverheads,investmentcostsandpoorsteelandpartsquality)maynotfallfastenough.Designsmaybecopiedbylocalproducers,particularlyforspareparts.Continuedgovernmentinfluenceinindustrialpolicyandcapitalcontrolsmaymakeitdifficultforshareholderstoaccesscashflows.InvestorsshouldnotcountonChinatosupportsectorreturnsforlongThesheerscaleofplannedautoindustryinvestmentinChinaisstriking(overEUR6bnofinvestmentandover2mnunitsofnewcapacityannounced).Managements’optimismisclear.AnticipatedChineseprofitsarenowkeytomanycompanies’profitgoals(andChinaalreadygeneratesalmost20%ofVW’spre-taxprofit).Butwerecommendthatinvestorsadoptaverycautiousviewofthesetargets.WebelievethereisahighriskthatreturnsfromtheChinesemarketwillquitequicklyfallbacktowardsnormalautoindustrylevels.AutoindustryinvestmentinLatinAmericaduringthe1990smayprovideaprecedent,inourview.AutomobilesGlobalGoldmanSachsGlobalEquityResearch-February21,2003Tableofcontents1Overview:ToomanybullsinaChinashop?3AutoproducersarerushingintoChina7TheChinesecarmarketmaynotbeasattractiveasclaimed9Macroeconomicdevelopmentmaynotbeasrapidashoped19OvercapacityarealthreatinChina23Competitionandlowertariffsshouldresultinrapidpricefalls26Continuedgovernmentinfluenceonautoindustrylikely29Chineseprofitabilityisduetohighpricing,notlowcosts33CouldChinabearepeatoftheBrazilianautostory?36AquickguidetoChina’scarproducersGlobalAutomobilesGoldmanSachsGlobalEquityResearch-February21,20031Overview:ToomanybullsinaChinashop?ExcitementabouttheChinesecarmarketisreachingfeverpitch.TheChineseautomarketisgrowingrapidly,incumbentproducersaremakingveryhighprofitsandthegrowthprojectionsappearunprecedented.Therestoftheindustrywantsapieceoftheaction,withmassiveincreasesincapacityplanned.Butwefearthattheindustry’sloftyassumptionscouldeasilyprovewrong.ThepurposeofthisreportistoprovideadetailedcontrarianviewinresponsetothealmosteuphoricstatementsbeingmadeelsewhereaboutChina.Billionsofnewcapitaltobecommitted;1.3bncustomersareapowerfulattractionNoautoindustrypresentationtoinvestorsin2003iscompletewithoutboldstatementsaboutChinesegrowthambitions.Billionsofdollarsofshareholders’capitalisabouttobepumpedintoChinatoaddnewcapacity,inexpectationoffuturerewards.ForgetthefactthattheChinesepassengercarmarketisstillsmallerthanthatofSpain,thereare1.3bnpeopleandthatmakesChinathelargestpotentialmarketofall.CouldhistoryrepeatitselfinChina?Chinahasheldastrongallureforinternationalbusinessformanycenturies.Itisfascinatingtoobservehowsimilarstatements,madebytheautomakersinthelastfewmonths,aretothosemadecenturiesago.HenryCabotLodge,anAmericansenatorwhorepresentedthetextileindustry,statedin1890that:“AllEuropeisseizingonChina,andifwedonotestablishourselvesintheeast,thenthatvasttrade,fromwhichwemustdrawourfutureprosperity,andinthegreatregioninwhichwealonecanhopetofindthenewmarketssoessentialtous,willbepracticallyclosedtousforever.”In20