2003: Starting with Foreign Trade

Chapter 1019 Clash at the Guangzhou Auto Show

"In the next two months, we will continue to increase our promotional efforts to ensure this year's sales volume."

The new energy vehicle subsidy policy in 2022 will be reduced by 30% compared to this year. With various regions introducing preferential policies for new energy vehicle license plates, there will definitely be a buying frenzy in the last two months of this year.

From initially offering substantial subsidies with few legitimate models, the market has now entered a price war. The subsidy policy for new energy vehicles definitely needs to be revised. If there are still large subsidies, it will no longer be supporting the industry.

In addition to continuing the preferential policies for intelligent driving solutions from September and October, Weilai will also launch a limited-time zero down payment and related low-interest loan policy in December, which will allow customers to enjoy one to three years of tax-free interest-bearing benefits for several popular models including the Exeed S01, Galaxy P1, Weilai L1 and ET5.

In addition, the trade-in program for existing Xinghe P1 users will be extended to the end of the year, and some 4S stores are also providing free charging piles and installation services. Yuechi Auto's 4S store renovation plan has been underway since the Xinghe P1 was delivered.

With a market share of several million gasoline-powered vehicles, Yuechi Auto cannot possibly adopt a direct sales model like the Weilai system. Instead, it will continue with its dealer network, but it will need to adapt its previous business philosophy to suit the new energy era.

The transformation of several core sales regions has been almost completed. For the past few months, dealers from each region have been coming to the headquarters for training. The channel model of Galaxy P1 is also somewhat different from the traditional channel model, and it is still operated in a similar way.

Currently, for Yuechi Auto's traditional dealers and 4S stores, their primary task is the same as that of traditional gasoline vehicle manufacturers: clearing inventory.

"The promotional efforts for the Yuechi A1 can be even greater, especially in December. We can hold a limited-time promotion to boost sales."

The Yuechi A1 has been the best-selling SUV for nine years, and this year marks its tenth year. With the continuous decline in sales in recent years and the market penetration rate of new energy vehicles exceeding 20%, Tan Jincheng knows that the glorious era of the Yuechi A1 has come to an end.

In October, the total sales of Yuechi A1 were only 27,200 units. Although it is still the number one SUV in sales, it is much less than the previous monthly sales of 40,000 to 50,000 units. From January to October, Yuechi A1 was still the number one SUV in sales, but its advantage was not particularly obvious.

New energy SUVs like the BYD Song are already selling over 20,000 units per month, while the Galaxy P1, even though it's still in the production ramp-up phase, is already among the top 20 in monthly deliveries of over 10,000 units.

Among the top 20 best-selling SUVs, the sales difference between each brand is not significant, which shows how fierce the competition is in the compact SUV market. More and more new energy vehicle brands are also appearing in the top 20.

This year has already been like this, and the competition next year will only be more intense. This year is the year that Yuechi A1 will strive for its tenth consecutive sales championship. Although the quality of this championship is not as high as in previous years, ten consecutive championships are still ten consecutive championships.

Zero down payment plus a direct cash discount of 1.5 yuan is the core promotional strategy for the Yuechi A1, bringing the base price down to between 9 and 11 yuan, which is quite attractive.

Further price reductions are unlikely, but more incentives could be offered in terms of peripheral services and small discounts such as gas coupons to increase users' interest in purchasing the car. This year, the total sales volume of the Yuechi A1 model was 29.52 units.

Sales of nearly 300,000 units are still quite impressive. However, there have only been three months with monthly sales exceeding 30,000 units, and those were all in the first quarter. In the last two months, Yuechi A1 will need to push for monthly sales of 30,000 units again to boost sales.

Wang Fengying considered it for a moment and nodded in agreement.

“In the future, the sales volume of Yuechi A1 will only decrease, and next year’s sales volume may not even reach 30 units. However, I still hope that Yuechi A1 can maintain a sales volume of more than 20 units per year based on the high penetration rate of new energy vehicles.”

"As for other models priced below 20 yuan, any model whose annual sales are less than 10 units should be cut."

Currently, the Yuechi series has been optimized to three major series, with the highest price being no more than 25 yuan. It can be said that the entire series belongs to the Volkswagen model series. When the annual sales of a Volkswagen model have dropped to less than 10 units per year, this model is no longer necessary for Weilai.

This applies not only to Yuechi Auto but also to Weilai Auto. There is a sales target for each model based on its price. If a model fails to meet the target for two consecutive years, Weilai will discontinue that model.

"That's good, this way we can concentrate our resources more effectively."

Regarding Tan Jincheng's strategy on car models, if we were to ask who within Geely supported him the most, it would undoubtedly be Hu Zhengnan. Hu Zhengnan has the technology and the ability; in his previous life, he also created many blockbuster models. But why didn't he create a model with extraordinary influence at Geely?

The reason is actually quite simple: Geely's multi-brand strategy. Each model and each brand is like a project team of varying sizes, and each project team needs resources, while Geely's resources are limited.

When resources are distributed among each project team, it becomes difficult to concentrate them and create models with extraordinary influence, such as the Yuechi A1 and Haval H6.

Although Weilai is powerful, even the strongest strength cannot withstand such a spread. Therefore, Weilai is very cautious in launching new models or new brands. Over the past ten years, the only brands that truly belong to Weilai are Yuechi (including Tank), Weilai and Exeed series.

Brands like Yangzi and Zhidou were acquired through mergers and acquisitions. Unlike traditional brands like Geely, Chery, and BYD, they don't have a large number of models under their various brand series.

Take Great Wall's Haval series as an example. This year alone, there are more than 70 models on sale. With such limited resources, having so many models under the same brand series is not only a waste of resources, but also fails to gain consumer recognition.

In contrast, Weilai's model is very simple. Each model currently only has three versions: high, medium, and low-end. In today's terms, these are the basic, mid-range, and high-end versions.

While the three models may seem limited, the focus on color options, offered through an app customization system, allows consumers to have more personalized choices in terms of appearance while maintaining the depth of the lineup.

The main brand, Weilai, may even discontinue products like the ES6 and ES8 someday in the future. In fact, any of the current best-selling models could be discontinued if sales cannot cover costs.

When a car company has matured, profitability becomes its primary goal.

Taking the Exeed S01 as an example, the gross profit margin for the corresponding selling price ranges from 10.8% to 23.6%, and the gross profit margin per vehicle ranges from 16.7%, which is much lower than the average gross profit margin of Weilai.

Excluding the allocation of some fixed costs, the Exeed S01 needs to achieve an average annual sales volume of 13.3 units to break even. However, after adjusting the model based on factors such as economies of scale and capacity utilization, the Exeed S01 can achieve break even with an average annual sales volume of 9.5 units after next year.

With its intelligent driving capabilities and cost-effectiveness, the Exeed S01 has delivered a game-changing blow to the pure electric vehicle market this year. In October, the Exeed S01 achieved a monthly delivery record of 16,600 vehicles, with a total delivery volume of over 95,000 vehicles in six months and 100,000 vehicles rolling off the production line.

This year, the delivery volume of Exeed S01 should be around 12 units, which is still a little short of breaking even. However, this is only the first year after Exeed S01 was launched. To be close to breaking even in the first year after launch is nothing short of a miracle for domestic new energy vehicles.

From 2022 to 2023, Weilai expects annual sales of Exeed S01 to exceed 15 units, with a long-term goal of maintaining annual sales in the range of 25 units. Through increased sales and improved capacity utilization, Weilai aims to increase the gross profit margin per vehicle of Exeed S01 to around 20%.

Based on the current selling price, the gross profit margin per vehicle is around 3.5 yuan. If the long-term goal of 25 annual sales can be achieved, then the Exeed S01 alone, under optimistic expectations, could bring nearly 90 billion yuan in gross profit to the company.

The success of the Exeed S01 strengthened Wei Lai's confidence in the mass consumer market. Compared to higher-priced models, this type of mass-market model, which utilizes technology to lower price points, is very popular.

"Everyone says that new energy vehicles don't make money, but everyone is rushing into it. This kind of talk is just to fool consumers and investors."

Welai's third-quarter report was officially released in late October. As one of the world's leading new energy vehicle companies, Welai's third-quarter financial report can be said to represent one of the most representative companies in the new energy vehicle industry.

With increased sales volume and reduced production capacity of gasoline vehicles in the third quarter, Weilai's average gross profit margin rose significantly. In the first half of the year, due to the development of multiple models and factors such as raw material costs, Weilai's average gross profit margin once dropped to around 18%.

In the third quarter, when things improved, the intelligent driving option rate driven by Exeed S01 and Galaxy P1 allowed Weilai to recover its gross profit margin to over 20% again, with an average gross profit margin of 20.6% and an overall gross profit margin as high as 21.1%.

Among its individual models, the Weilai L1 boasts the highest gross profit margin at 23.3%, making it the profit driver for Weilai. The high gross profit margin of its range-extended electric vehicles has attracted significant attention within the industry.

Car companies like Chrysanthemum and Leapmotor have already released range-extended electric vehicle models. In particular, Leapmotor, a relatively unknown new player in the market, currently plans to develop a smaller version of the Weilai L1 to capture the market with a lower price.

To put it in the parlance of consumers, these small car companies are practically groping their way across the river by L1 technology. When pure electric technology has no advantage and hybrid technology is not competitive, range-extended electric vehicles are indeed the best solution for small and medium-sized car companies.

Da Zui's capabilities are beyond doubt. His collaboration with Seres, from exterior design to final sales, can be said to have been entirely controlled by him. When he discovered that the pure electric intelligent choice model had no advantage in market competition, he was able to quickly change the strategy and launch a new range-extended model in the shortest possible time.

Although the SF5 range-extended version also didn't sell very well, it still achieved some success as a transitional model. At least it allowed Dazui to fully understand the car market and figure out the tricks of the trade.

November 20th, the second day of the Guangzhou Auto Show. "This car looks good! When are you expecting it to be launched and delivered?"

"This time it's for real, deliveries will begin on December 23."

At the Seres booth, Zhang Xinhai glanced at Yu Dazui with a teasing look. Dazui frequently missed deadlines, which led to consumers and peers often making fun of him; of course, every company missed deadlines, so it wasn't a big deal.

It's not a big deal that Zhang Xinhai made a joke about this, because Tan Jincheng had also made a joke about Da Zui before. He was trying to use this kind of joke to shorten the distance between the two of them.

Despite the competition, Tan Jincheng, who was present at the Guangzhou Auto Show, naturally couldn't miss the Seres booth, nor would he avoid Da Zui. In fact, these people were all in contact with each other in private, and their relationship was quite good, after all, they were all from Anhui Province.

The boatman is also in Shenzhen. The real competition between Weilai and BYD only started this year. In the previous years, there was not much direct competition between the two companies, so the relationship between the two companies was quite good.

Whenever he travels to Shenzhen for business, Brother Boatman would organize private gatherings for familiar colleagues and industry insiders. Tan Jincheng and Da Zui have also had meals together in private on more than one occasion.

"How about it? Our smart cockpit is pretty good, isn't it? Positioning it as a smart car is spot on, isn't it?"

Big Mouth is still Big Mouth. Even though Wei Lai's press conference two days later posed a great threat to their intelligent driving solution, or HI mode, he was not at all timid in his publicity, still claiming that their intelligent driving solution was at least two to three years ahead of the competition.

As for who these competitors are, he doesn't care at all. But he's not wrong; Great Wall, BYD, and Geely are all competitors.

"It's really good."

Tan Jincheng nodded. Rather than exhibiting, Seres held a launch event for the Hongtu X5, with Da Zui personally promoting it.

With a pure electric range of 150 kilometers and a combined range of over 1000 kilometers, the dual-motor four-wheel drive version can accelerate from 0 to 100 km/h in 4.4 seconds. These basic parameters don't offer much advantage over the Weilai L1, but it's quite impressive that a small to medium-sized automaker like Seres can offer these mainstream parameters. This is thanks in no small part to the help of Chrysanthemum.

Of course, these parameters alone cannot explain the Hongtu X5. The most crucial selling point of the Hongtu X5 is actually the full empowerment of chrysanthemum technology. It can be said that apart from the brand and production, it is not an exaggeration to call it the first chrysanthemum car.

This is also the first step for Seres to transform from a peripheral car company into a core enterprise of the Seres Group.

With brand endorsement and executive support, Chrysanthemum is deeply involved in everything from technology and ecosystem to electric drive. The Chrysanthemum experience store in MixC World in Shenzhen even has a prototype model, and the sales channels are all Chrysanthemum's.

"Is there any threat to L1?"

Both being range-extended electric vehicles, the 5-door, 5-seater range-extended SUV is naturally priced lower than the Weilai L1. Following the same intelligent and luxurious range-extended electric vehicle approach, it undoubtedly targets families as its customer base.

At today's launch event, Da Zui claimed that the chassis of the Hongtu X5 is comparable to that of million-dollar luxury cars, and directly compared it with the Porsche Macan and BMW X3, which sparked a lot of trending topics and jokes on social media.

The media's attitude is also quite interesting. Technology media focuses on the car's system and ecosystem, while automotive media pays more attention to the vehicle's actual parameters. These two camps have created two different voices.

In news dissemination, there are opposing views and debates that make it interesting, and these two camps have brought a very high dissemination effect to the Hongtu X5.

"It seems you still have some issues with me, Mr. Yu. Haha, although the X5 and our L1 both target family users, the user groups are different. There's no threat involved. Let's all sell well together."

The core user group of the Weilai L1 is the 30-45 age group, including many middle and senior managers of enterprises, private business owners, families with multiple children, and those with a high-end need for 35 yuan. They have certain requirements for space and comfort, and are also open to new things and range-extended electric vehicles.

L1's user base is more forgiving when it comes to brand power. To be honest, L1's core user group is more focused on practicality. Refrigerators, TVs, large sofas, and family cars are the main needs of this user group.

In addition, L1 users are not that price-sensitive. After all, L1 cars are really not cheap. For most families, cars in the 20+ RMB range are already the ceiling, and cars in the 30+ RMB range are not something that all families can afford.

Many of the users of the Weilai L1 are former owners of BBA (BMW, Mercedes-Benz, Audi) and Highlander models, which is one of the reasons for the decline in BBA sales this year. The Weilai L1 is targeting this market segment.

Besides these objective selling points, the Weilai L1 has another selling point: whether it's Tan Jincheng, Li Xiang, or even Zhao Xinyi, Zeng Jixiang, and Zhang Xuhui, the young executives of Weilai born in the 80s, they are all considered "other people's children" among most family users.

Which parent doesn't hope their child will succeed? Although no one explicitly stated that they came for this reason, there are indeed quite a few families who came to buy the L1 because of Tan Jincheng and Li Xiang's personal brand.

Since the Hongtu X5 has not yet been officially delivered, the user group is still unknown. However, given the endorsement of the Huawei brand, they are undoubtedly similar to the mobile phone buyers: one group is users who value technology and ecosystem, and the other group is older people.

The biggest characteristic of these two groups is that they are actually users of the Chrysanthemum brand ecosystem, who choose the X5 out of trust in the technology and the brand.

The mobile phone brands used by Weilai L1 users are very diverse, including Apple, Huawei, Xiaomi, and some niche brands such as Meizu. However, Tan Jincheng is certain that the vast majority of users who bought Hongtu X5 use Huawei mobile phones.

“There is definitely some overlap in users between the two, but I am not worried about the sales of the Weilai L1. I also hope that the Hongtu X5 will sell well. I really like this model, and the Hongtu X5 has also proven that range-extended electric vehicles are suitable for the current new energy vehicle market.”

After endorsing Da Zui and Seres, Tan Jincheng was surrounded by numerous media outlets as he prepared to head to the Xiaopeng Motors exhibition area. Da Zui's personal appearance and Tan Jincheng's presence brought a significant amount of media attention to the Hongtu X5.

The two have had several arguments in recent months, and have been at odds on technical issues. However, Tan Jincheng's appearance at the new car launch event led by Da Zui only makes people realize that everything is just business.

Although the brand's name was used to target Porsche and BMW at the launch event, it was clear to everyone that this model was designed to compete with the Weilai L1. In October, more than 7700 Weilai L1s were delivered, and from January to October, more than 6.3 units were delivered.

A car model with an average selling price of over 300,000 yuan can achieve a gross profit margin of over 20% while remaining in the 100,000 yuan range. It truly lives up to its reputation as a money-making machine. However, there is an objective reality: in 2021, there was not a single competitive range-extended electric vehicle.

With mainstream technical specifications and the direct endorsement of the Chrysanthemum brand, no one would expect the Hongtu X5 to be as unpopular as this year's Smart Choice models. Based on current popularity assessments and professional predictions, the Hongtu X5 is expected to sell at least 50,000 units annually.

This will undoubtedly have some impact on the sales of the Weilai L1, but the media present did not see any concern from Tan Jincheng. They even came to support Yu Dazui and increase the exposure of the X5.

"Does Mr. Tan believe that the Hongtu X5 is not enough to pose a threat to the Weilai L1? Is this one of the reasons you endorse it?"

"Don't misunderstand me. What I'm trying to say is that although both focus on family users, there are differences between family users. There is not much conflict between the user groups of the two. The Weilai L1 can coexist perfectly well with the Hongtu X5."

"If you don't believe me, just look at our sales figures for the last two months of this year."

The delivery figures for the third week of November have not yet been released, but the total delivery volume of the Weilai L1 in the first two weeks has already exceeded 6000 units. Everyone can see that the delivery volume of the Weilai L1 this month will break through, and it is almost a certainty that the monthly sales will exceed 10,000 units.

Today is the launch event for the Hongtu X5, but the promotion didn't start today. Like most car models, various media outlets began extensive publicity for the vehicle before the launch event.

Moreover, the filing on the Ministry of Industry and Information Technology's official website was done earlier. The Hongtu X5 during its promotional period had no impact on the continued rise in sales of the Weilai L1, which also proves that Tan Jincheng's words were true.

Yu Dazui listened with a smile, but inwardly he was speechless. It was right that the kid came to support him today, and he spoke well, but something just didn't feel right. Overall, though, Dazui was still very happy today. Although Tan Jincheng was young, he had a lot of influence and a position in the new energy field. It was enough that he came to support him and flattered him the whole time.

"Alright, alright, friends, don't ask too many questions. We're going to the next booth."

At this year's Guangzhou Auto Show, chrysanthemums were one of the highlights, but not the biggest. The biggest highlight was He Xiaopeng's Xiaopeng Motors. The Xiaopeng Motors booth was a gathering place for many people, and there were many bigwigs at the booth.

However, everyone was just chatting casually, and it was clear to everyone present that the big shots seemed to be waiting for something.

(End of this chapter)