| In the 21st century, the China's automobile industry has developed rapidly. The annual output has increased from 2 million in 2000 to 13 million in 2009. The amount has added 10 million in the past 10 years, while it was always wandering between 1 and 2 million in the 1990s. In 2008, China has more than 130 automobile manufacturers, but the industry concentration CR4is only 57.90%, and CR10 is 83%.According to Bain classification, it belongs to the common oligopoly structure, from the foreign countries'experience, the automobile industry usually belongs to high oligopoly structure, CR4 is above 90%. Although the auto industry in China has been developing greatly, it has some problems, including lack of economies of scale, product homogeneity, low technical level, weak brands, and so on. Therefore, we must adjust the industrial structure.In order to handle the global financial crisis in 2008 and to seize the new opportunities, in May,2009, the central government clearly stated the policy we called "Automobile industry restructuring and revitalization plan", where the mergers and acquisitions (M&A) of the automobile industry has been put on an important position. It clearly directs that "From 2009 to 2011, we must achieve the formation of 2 to 3 enterprises producing more than 2 million sales one year,4 to 5 enterprises having more than 1 million sales one year, the number of automobile enterprises reduces from 14 to 10 which own more than 90%market share".But can the M&A of auto industry really increase the performance in both the industry and the enterprises? That is what I want to explain in this article.Under the administrative power and market force, the formation of several enterprises with production scale over one million is not very difficult, but we should concern not only the size of enterprises, but also the effect of such M&A. The article first introduces the theory of M&A and the research methods and results, then introduces the history and current situation of M&A in China's auto industry, after that, we analyze the performance of M&A in China's auto industry using the empirical method. Finally, we draw some conclusions and make some suggestions.We use the theory of M&A to analyze the performance of M&A in China's automobile industry by an empirical method. The innovations lie in researching the special industry, performance study and empirical analysis. During the analysis, the industry level and enterprise level are combined, the econometrics and financial method are both used, the data is handled. At last, we come to a conclusion.From the view of industry, M&A bring the improvement of industrial concentration, the shrink of industry scale, the increase of rate of revenue growth, they all improve the industry's economic performance. From the view of companies, the effect of M&A doesn't appear immediately, usually, there is no significant change in the first year, sometimes the financial condition has deteriorated because of the cost of M&A and the difficult integration. When the enterprise integration has effect, the companies can improve the financial position and exceed the prior conditions. But observing the case we discussed, there is some effect in the second year, we should also observe the next few years. Therefore, the performance of M&A is positive for the whole auto industry, but, it depends on the actual conditions for a single enterprise.In addition, considering the special circumstances of our country, auto enterprises need to follow the market-oriented principles. M&A is the companies' independent action, which should follow the market rules. Government can regulate and guide by laws, regulations and policies. The target of M&A is to enhance the companies'competition. It benefits the development, and never aims to complete the task. Therefore, M&A should be established on a voluntary basis. The role of government is to complete the necessary market mechanism, and clear the obstacles for the enterprises. |
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