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BYD large layoffs come to an end behind the low-cost model

Less than a year for three major adjustment, but a recent major layoffs is more like "Brokeback self-help", with declining performance, BYD Automobile Co., Ltd. (hereinafter referred to as "BYD") so that the auto industry can not help but worry: Wang's BYD model really come to the inflection point yet?

    2003 BYD entered the automotive vehicle, the "dark horse" posture in the industry seven years to reach peak, but the success of "blip" of the crisis appears to have quick hit. The industry believes that, behind this, BYD (01211.HK, 002594.SZ) adhering to the low-cost business model, perhaps the most fundamental crisis.

    Low-cost business logic

    Promote the rapid development of low cost, is one of the successful model of BYD, Wang this model is also copied to the BYD Auto. But BYD way to use the demographic dividend is slowly losing the advantages of development.

    According to media reports, semi-annual report said BYD, BYD require a total expenditure of the first half of this year, pay $ 4.7 billion. As a labor-intensive enterprises, BYD's labor costs in private enterprises has also become one of the highest. But BYD revenues 22.544 billion yuan in the first half, down 10.77% year on year; net profit of 275 million yuan, down 88.63 percent year on year.

    Layoffs, may become a short-term weather the storm BYD effective means. But Wang had previously said in public, BYD existing 10,000 engineers, more than 100,000 workers, the number of future engineers to reach 3 million or more, the number of workers to reach 30 million to 40 million. "I said we want to achieve by 2025 the world's largest passenger car sales business, many people do not believe, but the bottom of my heart is I what? With is the people. 30 million and a huge workforce of engineers team, this is my capital. "

    Over the past few years to benefit from the rapid growth of China's automobile market, BYD Auto's human wave tactics to help them complete the sales in the short term. There behind the sales breakthrough of its mode of production innovation.

    Shanghai Jiaotong University Antai School of Management Associate Professor Wang told the "Financial Times", the production model is the real relationship between people and machines, whether it is Toyota or Ford, the main use of machine automation, followed by the manual, but the manufacturing process for BYD innovation, the use of "artificial + fixture" in labor-intensive approach to manufacturing. This approach also led BYD in addition to not producing tires and other auto parts, almost all auto parts production.

    In the scale of the sustainability of production and marketing, domestic experts believe that the bottleneck of the development of independent brands in 60 million of the scale, sales of BYD in 2010 to 52 million units, up 600 000 scale, it is difficult to own brand continue to develop. With labor costs rising, BYD Auto's production may need to make changes.

    Professor Wang Hua believes that BYD large-scale layoffs from the point of view, "BYD model" has encountered a bottleneck. "Business development needs to comply with the law of economies of scale, different auto parts is actually the least significant economies of scale is not the same, not all things to make themselves able to reduce costs. General Delphi early parts enterprises have been stripped, Ford Visteon are sufficient to show that. "


    On the surface, BYD Auto layoffs are not driven distribution channels and product sales, but simply reflects the dilemma is to do conventional cars, or focus on the development of new energy vehicles.

    However, in recent years, BYD Auto has been doing publicity to get new energy vehicles, and create a new energy vehicles BYD mass production is also in sight of the scene. "No car prices as a way to get new energy vehicles BYD made a bet." Says one industry.

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