Why does Huazhong Automotive’s “Plastic Substitution Steel” model achieve a gross profit margin of 30%?

June 25 of this year is the last day of the transition period between the 2018 new energy vehicle subsidy policy and the 2019 new energy vehicle subsidy policy.
Starting on June 26, local government subsidies for new energy vehicles have been cancelled, and the national subsidy standard has also been reduced by more than 50%, and the overall subsidy decline rate has exceeded 50%.
It is expected that manufacturers will increase car prices, which may greatly reduce consumer sentiment.
Taking multiple measures to promote automobile consumption.
Even if the cancellation of local government subsidies for new energy vehicles will have an adverse impact on the automobile market, in January this year, the National Development and Reform Commission and other 10 ministries jointly issued the "Further Optimization of Supply, Promoting the Stable Growth of Consumption and Promoting the Formation of a Strong Domestic Market.
Eucalyptus (2019).
Six measures to promote automobile consumption are listed in the plan: i) Orderly promote the obsolescence and renewal of old cars, ii) continue to optimize the subsidy structure for new energy vehicles, iii) promote the replacement of rural cars, iv) steadily promote the relaxation of pickup trucks into cities Limit the scope, v) accelerate the prosperity of the second-hand car market, and vi) further optimize the local government's motor vehicle management measures.
These measures are beneficial to the automotive consumer sector.
Supporting the operationof
new energy buses by means of "reward for subsidies".
With the introduction of a series of national incentive policies, it is expected that the growth of vehicle sales and new energy vehicles will be significantly benefited.
On May 7, the General Office of the State Council forwarded the notice of the Ministry of Transport and other departments on accelerating the transformation and upgrading of the road freight industry and promoting high-quality development.
The opinion pointed out that in order to facilitate the passage of freight vehicles, new energy urban delivery vehicles that meet the standards will be provided with convenience.
Except for special areas, pure electric light trucks shall not be restricted in principle.
Accelerate the use of new energy or clean energy vehicles for light-duty logistics distribution vehicles in urban built-up areas, and encourage logistics parks, industrial parks, distribution centers and other places to concentrate on planning and building dedicated charging facilities.
On May 8, the Ministry of Finance and other four ministries and commissions issued the "Notice on Supporting the Promotion and Application of New Energy Buses.
" In the case of general cancellation of local purchase subsidies, local governments can continue to provide subsidies for the purchase of new energy buses; relevant departments will study and improve the subsidy policy for new energy bus operation.
Starting in 2020, the “reward for subsidy” method will be adopted to focus on supporting new energy buses.
Energy bus operation.
The improvement of new energy bus operating subsidies will benefit the optimization of the new energy vehicle industry pattern in the long run.

  Keep up with the general trend of "plastics instead of steel"  Lightweight, this concept first originated in motorsports, the purpose is to reduce the weight of the car itself to bring better dynamics and maneuverability.
As the concept of "energy saving and environmental protection" has taken root in the hearts of the people in recent years, more and more automobile manufacturers have begun to research on lightweight.
In response to the general trend of lightweight and energy-saving in the automotive industry, Huazhong Automotive actively researches and develops production technology.
The group invests 30 million to develop a "plastic instead of steel" automatic production line, which mainly produces bottom guards and front-end frames, mainly for the group's existing mid- to high-end For automotive customers, the products have received orders from many local brands such as FAW-Volkswagen, Shanghai Volkswagen and SAIC GM.
Its production line of "plastics instead of steel" is expected to open up more brand customers in the future.
  Leading in technology advantages The   Group is the first supplier of the front-end frame of many well-known car companies to replace steel with plastic, leading its peers in the material application technology of "plastic replacing steel".
The Group’s wholly-owned acquisition of FBZ in Germany is the original supplier of molds for many well-known European brands, including Mercedes-Benz, BMW, and Audi.
The technical standards have been affirmed by European high-end car manufacturers.
Among them, FBZ Group has mature FRP mold manufacturing experience.
Successfully developed SMC glass fiber reinforced plastic coupe spoiler, replacing ordinary ABS/PC materials, realizing high-strength and lightweight production, and becoming the only domestic component supplier that has successfully developed and obtained orders.
The Group’s "plastics instead of steel" products can now reduce the weight of the product to one-eighth to one-quarter of the original weight, while reducing the cost by about 30%, realizing the lightweight of automobiles and ensuring that the hardness of the product can reach the level of steel, which is beneficial to enter the market.
The high-end automobile market replaces the original steel products.
  New bases have been put into production one after another to release production capacity.
  In recent years, the Group has actively expanded its production capacity.
Currently, it has 21 production bases, including one in Germany, which is beneficial to develop foreign customers.
In the first half of 2019, the second phase of the Tianjin plant was put into production, and the second painting line was put into trial operation.
The increased production capacity was mainly used for new orders from Audi (new Q3) and other customers in Tianjin, Beijing and Hebei.
This year the group will put in a new paint line with an annual production capacity of 850,000 sets of bumpers in Changchun.
  Automated patented technology improves gross profit margin  Located in Hangzhou Bay, the group set up a special production line for sunshade fabrics, a three-party joint venture with Germany's Rokona and ZoePPritex, realizing the first domestic production of European first-line automotive fabrics in the country.
The Hangzhou Bay production base currently mainly designs and develops warp knitting, dyeing, finishing and compounding of high-end fabrics.
At present, the main customers are first-line automobile brands such as Mercedes-Benz and Audi.
The profit rate of new products is expected to reach more than 30%.
The Group reserves space in its production base for future expansion of production capacity, and its highly automated production lines have certain technological advantages.
  Strong customer support The
  Group has strong
production strength and superb manufacturing technology, so it maintains long-term business relationships with domestic and multinational automobile manufacturers and is also capable of attracting new customers.
Currently among the top ten automakers in the Mainland, the group has established business relationships with 6 of them, such as: SAIC Group (26.
880, 0.
03, 0.
11%), FAW-Volkswagen, Changan Automobile (7.
250, 0.
03, 0.
42%), BAIC, GAC Group (11.
470, -0.
14, -1.
21%) and Chery; some of them have more than 10 years of cooperative relationship, so that the group's orders are sufficient and stable.
At the same time, the Group is actively exploring new energy vehicle customers, and has reached strategic cooperation with brands including Weimar Motors and Aichi Yiwei, successfully entering the new energy vehicle market.