Developing new products for the market to develop FAW Xichai’s confidence to survive the winter

winter is here. The cold is not just the weather. The global economic crisis triggered by the US financial crisis has spread to Chinese companies, and it also makes auto parts companies deeply feel the chill of winter.

Qian Hengrong, director of FAW Wuxi Diesel Engine Plant, has a clear understanding of this. He said: "Winter is coming and it is impossible to avoid it. The key lies in how to spend the winter. There are three ways to choose winter. One is to be frozen in the cold, the other is to choose hibernation, and the third is to survive.

Prepare for five

This year, Xichai’s sales were very good. From January to October, engine sales reached 230,000 units, an increase of about 40% year-on-year. The increase was the highest among vehicle diesel engine companies. The export growth rate is also very fast. In the first 10 months, the engine export volume increased by 110% year-on-year.

Since October, the growth rate of Xichai has apparently slowed down and the impact of the economic crisis has begun to show. Qian Hengrong said that the impact is first reflected in the decline in the total demand. On the one hand, the reduction in domestic engineering construction projects has led to a decline in the volume of cargo transport, which has led to a sharp drop in truck demand. On the other hand, large customers such as logistics companies “tighten the moneybags” and the cautious consumer attitudes that they dare not easily invest in will inevitably lead to a drop in domestic demand. In this situation, it is difficult for companies to survive.

How to deal with this effect and survive the winter? Qian Hengrong and his team led the Xichai five preparations. The first is to be psychologically prepared to understand ideologically that the cold winter has arrived, to respect economic laws, and to actively fight, not to be indifferent or to blame. The second is to make material preparations to ensure that the capital chain is not interrupted. The third is to carry out physical fitness, instead of unilaterally pursuing the expansion of quantity, but to practice hard, internalize the potential within the enterprise, and improve its own strength in terms of market development, product development, and quality management. The fourth is to reduce consumption and curtail investment. The fifth is to improve the ability to adapt to the cold winter. Leading employees must have ideological preparations for tight days, hardships, and hard days.

Confidence from the bus market

"The advent of winter has both advantages and disadvantages. After freezing some enterprises, enterprises that survived will win more opportunities and the entire market will become more standardized," said Qian Hengrong.

The rapid development of the company in the past two years, especially in the field of the bus country III engine, has given Xichai much confidence in the winter. Since 2005, Xichai has developed a strategy to expand the passenger car engine market, that is, "starting at the bus, deep in the road passenger car." Seize the bus to replace the opportunity of the State III engine, seize the bus market in Shenzhen, Beijing, Tianjin and other places. This year, sales of Xichai's passenger car engines have increased by 56%, far ahead of other competitors.

Xu Xuefen, deputy director of Xichai, told reporters that Xichai’s success in the bus market benefited from three points. First, the leading product 6DL series diesel engine has the leading domestic technology level, especially the outstanding fuel economy, which is 5%~10% lower than the similar products. The second is to strengthen cooperation with OEMs to make products more adaptable to the operational requirements of public transport vehicles, and even to carry out personalized calibration according to the road conditions of different cities. The third is pre-sale, sales, after-sales service in place. Xichai promised to serve 24 hours a day and arrived at the scene within 2 hours after receiving a help call. It was vividly called “nanny-style service”.

Shenzhen Bus has higher requirements on the performance and emission level of vehicles, and it is one of the earliest areas in China to implement the National III emission standards. It has a certain demonstration role in the national bus market. In the past two years, the market share of Xichai engine in Shenzhen bus started from “zero”, and now it has occupied 60% of the national III engine market. According to statistics, the attendance rate of buses equipped with Xichai engines is as high as 99.8%.

Confident to survive the winter

In addition to the steady development of the bus market, Xichai's new product development has also been fruitful. Xixi people proudly said that this is their "winter food." In January of next year, 11-liter heavy-duty diesel engines independently developed by Xichai will be launched. This engine adopts the mainstream technology of international heavy truck engines and can compete with Xi'an Cummins 11-liter engine and Dongfeng dci11 engine. In addition, Xichai engines that meet the national IV and National V emission standards have been successfully developed. Once the economic situation improves, these new products will become Xichai's new performance growth point.

There is a market, there are products. Therefore, despite facing the winter, Qian Hengrong is still very optimistic about the development of Xichai next year.

Qian Hengrong analyzed that under the background of vigorously developing urban public transport, especially where bus companies in various locations have updated vehicles, the growth rate of Xichai in the bus market is expected to reach 40% to 50% next year. Although the truck market is rather sad, but relying on FAW liberation of this large customer, sales will not have much ups and downs next year. He said: "The target for next year is set at 270,000 units, a slight increase from this year."