2003: Starting with Foreign Trade

Chapter 770 "The Pride of Chinese Products"

Since the beginning of the year, dealers and 4S store owners in Weilai have been extremely busy.

Nie Ruoxi, who has gradually adapted to her role as the boss's wife, is the same. Being close to the source, she has a high level of authority at Weilai Beicang 4S store. In addition, she doesn't have to come here to place orders like other dealers.

Since the release of the second generation Yuechi A1 and the Yuechi A3, in addition to parts suppliers lining up to bid for contracts, dealers have also flocked to Beicang.

Market research conducted before and after the Guangzhou Auto Show revealed that the second generation of Yuechi A1 and Yuechi A3 are highly anticipated by consumers.

Unbeknownst to many, the Yuechi A1, positioned as an urban intelligent SUV, has already gone through two full calendar years, and as of March this year, it has been 29 months since it was officially sold out.

In 29 months, the Yuechi A1 has set numerous records, with total sales approaching 40 units.

With its outstanding appearance, stable performance, timely after-sales service, and reasonable price, the Yuechi A1 is highly favored by consumers and competed against the two Japanese giants in 2010 and 2011.

This year, it has been competing fiercely with the suddenly popular Tiguan.

Due to its questionable handling during the Toyota recall incident and its subsequent soaring sales, the Yuechi A1 has unknowingly earned the title of "Pride of Chinese Products".

"I'm almost done with this busy period. I wonder how sales will be next month."

Slightly tired, Nie Ruoxi returned home and lay down on the sofa without any regard for her image, while Zhang Xupeng played on his phone beside her.

Although the 4S store is called a store, it is actually a medium-sized company. In particular, the Beicang store, which is of a high level, has good sales. Last year, they sold more than 400 Yuechi A1 cars.

On average, they can sell 1.2 cars a day, and during peak periods, the store can sell more than 10 cars a day, with a turnover of tens of millions.

Previously, although we had Cygnus sports cars on display in the store, they weren't for sale. The only models we could actually sell were the Yuechi A1s. Now, with two generations of A1s and the Yuechi A3, we have many more models to sell, and this year will only get busier and busier.

"What's the panic? We've prepared everything we need to. Now we'll leave it to the market. But I think it'll be pretty much the same as before. There are only so many people in Beicang, and there are already quite a few Yuechi A1s on the market."

As Tan Jincheng's headquarters, the entire Beicang area is filled with elements of Flashcar, with black and white factory buildings everywhere, making it easy to identify as Boss Tan's business.

During rush hour in the industrial area, rows of electric cars from the Shanchi and Fengchi series are quite a sight. Yuechi A1s can be seen driving everywhere on the streets, and even the logo of the GXG offline flagship store is quite eye-catching.

Oh, and by the way, there's also the Orange Technology headquarters building, which features an orange color scheme.

Nowadays, whenever people in Beicang see black, white, and orange buildings, they will reflexively think of the three major companies: Flash, Weilai, and Orange Technology.

“You’re right. There are only so many people in Beicang, it’s impossible for everyone to have a car.”

Beicang District is not large in area, and its population of less than 70 is not many.

According to data released by Ningbo City on September 7 last year, the number of cars exceeded 1 million. Beicang District did not release data on the number of cars, but Ningbo City has a population of less than 8 million.

Based on this rough estimate, Beicang must have at least 10 cars.

It's true that no matter how much you increase it, it won't increase much in a year; the market is limited.

"Hehe, that's why I told you to order less stock before, so you wouldn't have to compete with other distributors. If there's really no stock left, we can just go and queue up again."

Another consideration was that he didn't want to take too much advantage of Xiao Tan. The Beicang store was established by Wei Lai himself, and in the early days when his wife didn't know anything, their staff helped with the operation.

Zhang Yong himself even came to the site to provide guidance several times. Given Zhang Xupeng's relationship with Tan Jincheng, it would be a piece of cake for him to go to Weilai to pick up the goods.

"On another note, Mr. Tan, why don't you make a gasoline-powered sedan? The Aion S looks very nice; making a gasoline-powered version would probably sell better, right?"

“I asked Xiao Tan about this before, and he said that the positioning is different and Wei Lai has no plans to make gasoline cars.”

The couple is quite interesting. Zhang Xupeng always calls Tan Jincheng "Xiao Tan," but Nie Ruoxi always calls him "President Tan." Zhang Xupeng originally wanted to correct her, but then he gave up.

Today, there are very few people who dare to call Tan Jin Cheng Xiao Tan anymore; even he only does so in private.

The core technology of Weilai Automobile is based on Mitsubishi and Changfeng Motors, and it has technological advantages in pickup trucks, SUVs and off-road vehicles.

When it comes to product development, it's always better to stick to what you know than what you don't. Choosing to stay in a familiar market is far better than trying to compete in the sedan market. Besides, in terms of the market right now, the SUV market is growing faster than other markets every year, so why be fixated on sedans?

"What a pity, I actually think Aion S is quite good-looking."

Of course it looks good! The exterior designs that Wei Lai comes up with are for the aesthetics of several years from now. Even the Aion S, a 'ride-hailing car', is still stunning enough by today's standards.

BYD's Qin caused quite a stir upon its release. Now, any domestic independent brand with an independently designed model that isn't copied is very popular.

"Hehe, I don't care whether I make gasoline-powered cars or not. I'm just waiting for his Tank 300 to go into mass production so I can drive it around openly."

Tan Jincheng once gave him a Serena sports car, but once the novelty wore off, it was just so-so. Besides, given their image, it wouldn't be appropriate for them to drive a sports car around and cause a ruckus.

He doesn't usually drive much. He and Nie Ruoxi both drive Weilai ES6s, but he still prefers gasoline cars, especially after he saw the Tank 300.

There was a batch of prototype Tank 300 vehicles. Zhang Xupeng fell in love with it after seeing it and shamelessly asked Tan Jincheng for one. Whenever he had free time, he would go to the test track and drive it around a couple of times.

Unfortunately, he cannot drive it out before it is officially released.

"Let me tell you, once the Tank 300 goes into mass production next year, you can display several of them in your shop. They're absolutely stunning."

Like Nie Ruoxi, many dealerships and 4S stores in Weilai are also looking forward to April, as are the parts suppliers who have won the bids.

A large number of people are pinning their hopes on the success of Weilai's new products.

Dealers and 4S stores can directly obtain huge profits after making big sales, and the same is true for supply chain companies. Tan Jincheng's strong cash flow and the support of the Ningbo Municipal Government have kept the payment terms of Weilai Auto at 60 to 90 days.

Moreover, it's in cash, which is far superior to the payment terms of some companies that are often six months or even a year, or even bank acceptance.

What a 60-day payment period means to a business is something every business owner knows. Even if the profit margin is low, they would still prefer to become a supplier for Weilai.

After April, Weilai's product portfolio was close to what Tan Jincheng had envisioned.

In terms of pickup trucks, there are two main types: the Feiyang series and the Qilin series, both diesel and gasoline models are available, as well as 2.0L and 2.4L models. Yangzi Automobile's current production capacity is more than enough to operate at full capacity.

In the SUV segment, there are two generations of Yuechi A1. The launch of the second-generation Yuechi does not mean that the first generation has ceased production. The first generation has been on the market for less than three years, and its market has not been fully developed.

For example, the first generation can be sold to some relatively remote areas.

In addition to the two generations of Yuechi A1, the Yuechi A3 has also entered mass production, and the upgraded versions A5, A7 and A9 are under development. The SUV product line has been planned.

In terms of off-road vehicles, the Tank 300 is a trial run and a pioneering work. After mass production, we'll see how the market reacts. If it's good, then the 500 and 700 models can be developed.

With the three gasoline-powered vehicle brand lines gradually becoming more complete and there are more products to sell, more energy can be focused on new energy vehicles.

Now I just hope these three models sell better.

Currently, the Yuechi A1 can maintain a stable monthly sales volume of over 1.5 units, but this is not the full potential of the Yuechi A1. It can be said that the Yuechi A1 is still in its early stages, and the SUV market has not yet reached a stage of full growth.

Monthly sales have exceeded 2 units before this year, and with quality and after-sales service guaranteed, monthly sales exceeding 3 units is only a matter of time.

As for the other models, the A3, pickup trucks, and off-road vehicles combined would ideally amount to around 10,000 units per month.

In this case, the maximum expected annual production capacity for the gasoline-powered vehicle business could reach around 40 to 50 units.

This is the ideal scenario for Weilai's gasoline vehicle business: the production line wouldn't expand too much, and there would be enough profit to support the research and development of new energy vehicles.

The new energy vehicle business will definitely continue to lose money for several years. At least before 2015, Tan Jincheng did not intend to make a profit, which is unavoidable.

Before 2015, the annual growth rate of new energy vehicles was certainly very high, but that was only based on the premise that the previous value was too low. For example, less than 1 vehicles were sold nationwide last year, and 2 vehicles were sold this year. It seems that the growth rate is relatively large, but in fact it is not very useful.

Before sales volume picks up, new energy vehicles are really just a gimmick, and their popularity is even less than that of electric vehicles for the elderly.

Li Bing's investigative report on Tan Jincheng was very rigorous in its data. Currently, there are still very few individual consumers in China who are willing to accept new energy vehicles. The report also made some predictions about new energy vehicles in 2012.

In 2012, the number of new energy vehicles in China was around 1; of course, this does not include those procured through targeted purchases.

However, there are limits to targeted procurement. For example, in Luzhou, the number of new energy vehicles is approaching 4000 this year. No matter how much the government goes all in, it can't keep producing them indefinitely.

Cities not included in the "Ten Cities, Thousand Vehicles" plan, such as Ningbo, are purchasing so many new energy vehicles simply because the local government is supporting its own companies.

In areas with money, the government can provide more support; in areas without money, it can only provide less.

Every car company has the support of the local government behind it. Without the support of the local government, it simply cannot operate. The larger the enterprise, the more factory opening plans it has, and the greater the level of support it receives.

With the absolute support of Ningbo, Luzhou, Chuzhou, and Xiangcheng, plus the added benefit of Tianjin, Changzhou, and Yicheng, and the ability to develop some other cities on its own, Weilai Auto barely managed to sell 5000 Aion S vehicles. Selling these things is really not as profitable as selling buses produced by Huanghai. A single bus can easily cost hundreds of thousands of yuan, and the requirements for buses in first- and second-tier cities are even higher, often reaching several million yuan per vehicle.

Bus companies are very sensitive to the costs of purchasing and using vehicles, but they don't have high requirements for technology, as long as the vehicles are stable and safe.

Therefore, most people still choose hybrid vehicles.

Compared to pure electric buses, in the era when oil prices were low, bus companies were really reluctant to use electric buses if it weren't for policy promotion pressures, as electricity costs and battery maintenance costs were a considerable burden.

For individual consumers, the same applies. Range anxiety is one aspect, but a large part of the reason why it is difficult to promote is not only because gasoline cars are more deeply ingrained, but also because gasoline is cheaper.

The situation is different for "old man's cars". Most of the current "old man's cars" use lead-acid batteries, which are low in both purchase and use costs. Among the 770 samples, more than 50% of the respondents said they intended to purchase an "old man's car" within two years.

The largest market for electric vehicles for senior citizens is Shandong Province, followed by Zhejiang Province and Jiangsu Province. By comparing the production and sales data of these three provinces over the past three years, the First Electric Vehicle Research Institute even concluded that there is a huge market potential for micro electric vehicles in the future.

The estimated production of electric vehicles for senior citizens in 2012 may reach around 11 units!

This thing is so convenient, whether you're traveling between the city and the countryside, commuting to get off work, picking up or dropping off your kids, etc. Most importantly, you don't need a driver's license to use it!
After receiving the report, Tan Jincheng promptly gave Zhao Xinyi a copy, instructing her to make arrangements for this year's production capacity.

Many people have seen this huge market. Last year, Leichi sold more than 20,000 old man's cars, with a market share of 20%. This year, Bidevin established Leiding Auto to produce old man's cars.

As a local electric vehicle brand in Shandong Province, Bidevin's response can be described as very quick.

Leichi has a first-mover advantage, a sufficient market share advantage, and remaining production capacity. It certainly cannot allow these newcomers to seize its original market share.

We must at least maintain our current 20% market share.

It's funny to think about it, but Leichi's old man's car started making money right after it went public. It didn't require much investment in production. Last year, it generated 1.4 million yuan in output value and made 2000 million yuan in profit.

As for R&D costs, they are minimal. With the R&D investment from the two major groups, Flash and Weilai, Leichi, as their junior partner, only needs to use their leftovers.

To a certain extent, Leichi is making money by utilizing the redundant resources of Shanchi and Weilai. Technically, it has the support of its two older brothers, Shanchi and Weilai, and the factory and equipment were obtained by Weilai when it was established to solve the historical problems of Zhongtai.

While suppliers were busy preparing for the launch of the new car in April, Tan Jincheng returned to the capital after spending a few days in Ningbo.

This time I don't need to stay too long, I'm just here to attend an opening ceremony.

On the internet, the PBC School of Finance is definitely not as famous as the business school that Li Changjiang spearheaded. Some female celebrities would prefer to go there to find a rich husband, but in terms of prestige, PBC is much higher.

Tan Jincheng was somewhat shocked when he saw his group of 'classmates'.

The joint venture between the central bank and Qingmu has existed for a long time, and this year is just a restructuring. In addition to well-known entrepreneurs from all walks of life, well-known figures from the banking system in various regions and people from Qingmu attended the opening ceremony.

It can be described as understated yet luxurious, especially in terms of wood processing. There are quite a few technical experts in the related industry, and Tan Jincheng felt that the trip was worthwhile.

If he were to invite some big shots to help Wei solve some technical problems in the future, that would be a piece of cake. There are quite a few such people among his 'classmates'.

At 27, Tan Jincheng was the youngest student in the 2012 finance class, and naturally received a lot of attention.

"I heard that President Tan is planning to get into semiconductors?"

As the opening ceremony began, the leaders gave speeches. Tan Jincheng, who was sitting in the middle of the third row, was pulled back to reality by a question from a bigwig next to him. Half a month had passed, and although it had not been officially announced, it was no secret at the top that Weilai Automobile was preparing to invest in semiconductors.

When we were introducing ourselves, this person was from the Jiangcheng banking system. Speaking of which, Hubei Province is quite impressive these days, whether it's high-tech industries, especially semiconductors, or the automotive industry.

Let alone Jiangcheng, even in Jingmen, a fourth-tier city that is not well-known nationwide, there are industrial bases for many well-known automobile companies, such as Great Wall and Changfeng.

Dongfeng's influence in Hubei Province is undeniable.

Weilai also has cooperation with Dongfeng in the field of new energy. In the early days of its establishment, it even received help from Dongfeng. Unfortunately, this major automobile industrial province has gradually fallen behind after the rise of new energy vehicles.

"We do have this idea, but it's still in the planning stage."

Regardless of whether the acquisition of Nvidia shares is successful, Weilai is determined to develop its own automotive-grade chips. If it can't acquire Nvidia, it can try other companies. If the US doesn't work, it can try Europe.

Even if we can't acquire it overseas, we'll complete the project domestically; in short, this money has to be spent.

With an initial investment of $10 billion, which is more than 60 billion RMB, I don't believe we can't build a small semiconductor company.

"Mr. Tan, would you mind exchanging business cards?"

Actually, he was acting on someone else's behalf. Tan Jincheng wanted to get into semiconductors, and whether it was building his own factory or acquiring a company, it was a huge project. Every city wanted to recruit him, but today's occasion wasn't suitable for discussing these things.

In addition, although the two are classmates, it is the first time they have met, so it is not appropriate to talk about these things directly.

"No problem, my pleasure."

Tan Jincheng could probably guess a little. Although they were classmates, he didn't seem to have any business in Jiangcheng that required their help, so there was no need for this person to be so enthusiastic.

It's highly likely that it's Wei Lai's semiconductor project; when he first entered the market, many people were very kind to him.

"After the event, we'll have a dinner party. Just like when we were in school, we'll elect someone like a class monitor. Mr. Tan, since this is your first time participating, you probably don't have much experience. Just follow me."

"Thank you, Mr. Yang. You can just call me Xiao Tan."

That being said, wouldn't you call this a kind of clique culture?
Tan Jincheng was somewhat unaccustomed to this circle when he first entered it. The entrepreneurs he had associated with before had business and personal relationships, but at most they could only be considered as dealing with matters on a case-by-case basis.

If you get along well, spend more time with those you can connect with; if you don't get along, you won't do business with them again after the first time.

He also had contact with the local government, but it was mostly a gentleman's friendship. There were many jackets and coats here, and the atmosphere was relatively serious, which he found quite uncomfortable.

But with the business at this stage, and a period of change, it's hard for him to stop even if he wants to. Sigh.

The two-hour event ended around noon, and the group drove to a nearby hotel. Today's lunch was a buffet, but the food and drinks weren't the main focus; they simply exchanged pleasantries and greetings over clinking glasses.

Tan Jincheng, being the youngest person present and carrying a major project plan, unsurprisingly attracted everyone's attention. Of course, everyone was very mindful of the appropriate level of attention he received.

Since the semiconductor project cannot be discussed openly yet, the conversation naturally shifted to automobiles.

At the Beijing Auto Show in April, Weilai Group will launch three new models, including a mid-size SUV, and its promotional campaign has already begun.

"Xiao Tan, your ES6 is really cool. If you ask me, my sales might be more than expected."

The ES6 is undoubtedly the most stunning car among the mass-produced models. Along with the ES6 and Aion S, the BYD Qin, the first new energy vehicle to usher in the BYD dynasty era, also made its debut at the Beijing Auto Show.

Similarly, many other new energy vehicles were also showcased at the Beijing Auto Show, marking an explosive growth in the number of new energy vehicle releases by major automakers this year.

However, the most discussed models are the Weilai ES6, Aion S, and BYD Qin, with the Weilai ES6 being the most discussed.

With a guide price of up to 54.8 yuan (before subsidies), it is not only the most expensive model under the Weilai brand, but also the most expensive domestic new energy vehicle.

Currently, the only new energy vehicle on the market that can exceed the price of the ES6 is Tesla's sports car, which coincidentally is also sold by the Weilai Group.

As for the BYD Qin, its suggested retail price is between 18.98 yuan and 20.98 yuan.

Hehe, is it expensive? Actually, it's not expensive at all. These days, subsidies for new energy vehicles are huge, but the prices are also really high. The Qin's pricing can be said to be very reasonable.

The Zhidou on the market is similar to the Wuling Hongguang MINI of later generations, but in terms of features, it is far superior to the Hongguang MINI.

How much will it cost? Starting at 15.88 yuan, that's how ruthless it is.

Starting this year, new energy vehicles have entered a phase of substantial subsidies. The first step was the exemption of vehicle and vessel tax, and subsidies have been gradually implemented. As a result, major automakers have begun to engage in rampant subsidy fraud.

"I really don't dare to have high expectations for this. I just hope that consumers will be kind in their comments."

So what if the sales figures are unexpected? Based on current sales expectations, the ES6 will definitely be sold at a loss. Even if it sells three to five thousand units, it won't make a difference.

The ES6 doesn't follow the same path as the Aion S, and its price is so high that it's unlikely to be purchased by local governments under normal circumstances. Tan Jincheng doesn't have high expectations for sales this year.

As for Tan Jincheng's sales expectations for the ES6, they are not without a goal: 300 units, and he aims to sell one unit per day.

That's why the Weilai ES6 is being offered through pre-orders and is positioned as a premium product. Even if it means losing money, the priority is to build a good reputation first.

How many BYD F3 DM models have been sold? It seems like only a few thousand have been sold over the years. I heard from Brother Boatman at the last meeting that this car will be discontinued next year.

(End of this chapter)