Economic Observer Network reporter Liu Xiaolin Economic Observer reporter learned from informed sources that in response to the transmission failure with a high complaint rate of Wuling Hongguang, SAIC-GM-Wuling has been evaluating the impact and discussing solutions internally, and it is likely that after the recall of millions of vehicles in July 2021, a large-scale recall will be launched again in the first quarter of this year, or hundreds of thousands of vehicles.
It is reported that the products involved are mainly 6-speed manual models, which mainly appear on the Wuling Hongguang series models after 2019.
Wuling Hongguang is the main product line of SAIC-GM-Wuling, with a price of between 30,000 and 80,000 yuan. Among them, Wuling Hongguang Micro Car is known as a generation of "God Car", SAIC-GM Wuling has shaped the national reputation of "God Car Creator", and has successively launched a number of best-selling models including Hongguang S, Hongguang PLUS, and Hongguang MINIEV. In 2020, the total annual sales of Wuling Hongguang reached 270,000 vehicles, which is the main best-selling model of SAIC-GM-Wuling.
Information from major domestic automobile complaint platforms shows that the large number of complaints against Wuling Hongguang models has been going on for many years, and before 2021, SAIC-GM-Wuling has not made a public official response and provided a one-time solution.
SAIC-GM-Wuling complaint on the car quality network
In July 2021, SAIC-GM-Wuling announced that it would recall nearly 1.44 million (1,436,997 million) vehicles due to the risk of engine damage, involving seven models of its Baojun brand and three car series of the Wuling brand, setting a record for the largest single recall in the history of its own brand. If the recall for transmission failure is launched again, it means that SAIC-GM-Wuling will have two large-scale recalls within half a year, which is rare in the field of independent brands.
On January 11, 2022, SAIC-GM-Wuling released official sales data showing that cumulative sales in 2021 reached 1,760,176 units. According to this calculation, if the recall for Wuling Hongguang is implemented, it is likely that the total number of two recalls of SAIC-GM-Wuling in half a year will exceed the total sales volume of the whole year of 2021.
For the 1.44 million vehicles recalled in July 2021, SAIC-GM-Wuling promised to replace the crankcase forced ventilation valve for each vehicle, when domestic media roughly estimated that it would cost about 70 million yuan based on the market price of the part. Saic Motor's 2020 financial report shows that SAIC-GM-Wuling's net profit attributable to the mother in that year was only 142 million. A recall costs half of the previous year's net profit, does another recall mean "one year in vain"?
Senior industry insiders close to SAIC-GM-Wuling believe that although SAIC-GM-Wuling continues to sell well, it has not yet found the correct answer to the proposition of how to balance the three aspects of expanding sales, improving quality and ensuring profitability. Perhaps, in its insistence on the low-priced and low-end product route, this itself is a pseudo-proposition that is difficult to achieve.
The Death of the Grand Light
According to the annual summary data of China Automobile Recall Network, in 2021, independent brands have made great breakthroughs in the number of recalls and the total number of recalls, with a total of 33 recall announcements issued throughout the year, and the total number of recalls reached 204.6636 vehicles, which is much higher than the same period in the calendar year. Among them, SAIC-GM-Wuling "contributed" 70%.
Wuling Hongguang series is the pillar product of SAIC-GM-Wuling brand. In 2013, on the basis of the well-known "minivan" Wuling Hongguang, Wuling launched an upgraded model for the passenger car market, the Hongguang S, and became another best-selling model. At present, Wuling Hongguang's fuel vehicle product series includes Three MPV of Hongguang S, Hongguang S3 and Hongguang PLUS, as well as the micro-car Wuling Hongguang V.
Wuling Hongguang
The reporter saw on a number of domestic automobile complaint websites that the complaints against the Hongguang series models were very intensive, and the problems were mainly concentrated in several major problems such as transmission abnormal sound, inability to shift gears, off-gear, and setbacks.
It can be seen that in 2013 and before, user complaints about Hongguang were mainly concentrated in the front and rear axles and suspension systems, body accessories and electrical appliances, and a small range of unprovoked flameouts; after the launch of Hongguang S in 2013, large-scale complaints about engines and transmissions began to "dominate the screen", during which manufacturing process problems including body rust were also added, and this phenomenon has continued to this day.
In the complaint record of 2021, complaints about the engine and transmission of the 2019-2021 hongguang products have become the protagonists, but the complaints against the 2014, 2015, 2016 and 2018 models are still continuing.
Public data shows that in 2019, 63.6% of SAIC-GM-Wuling's sales came from the Wuling brand, and in 2020, this proportion rose to 73.6%. Among the Wuling brands, the sales volume of the Hongguang series in the past two years accounted for 38.3% and 23% respectively. Among them, Hongguang S ranked third in the sales volume of its own brand MPV vehicles in 2020, and is the main best-selling model of SAIC-GM-Wuling. This scale basis also makes the quality problems of the macro optical system far-reaching.
Although complaints about Wuling's quality problems have lasted for many years, according to the information of the China Automobile Recall Network, from the first recall of SAIC-GM-Wuling in 2008 to 2020, only three recalls have been made for Wuling brand models, which is also the first three recalls of SAIC-GM-Wuling for its own models (during which a recall for Chevrolet Lechi was implemented).
The three recalls were 26,076 Wuling Xingwang buses in 2008, 10,136 Wuling Zhiguang and Wuling Hongtu buses in December 2009, and 12,150 Wuling Hongguang buses in early 2011. The reasons are "the tolerance of the float assembly of the oil level sensor and the oil storage tank in the tank is too large, which may cause the oil level indicator to be inaccurate", "due to the mismatch of the rear brake cylinder model, it may cause deviation when braking at high speed", and "one of the fastening bolts of the middle seat and the fuel tank fit size are too large, resulting in oil leakage in the tank." ”
In the nearly 10 years since then, the Wuling brand has not been recalled again. There were seven recalls between 2013 and 2020, all of which were directed against the Baojun brand.
Chronic diseases are hard to go by
Publicly available complaint records and user experience show that not only Hongguang, "abnormal sound" is the common complaint of consumers against SAIC-GM-Wuling models, and the abnormal sound occurs in different parts, and the engine and transmission are the hardest hit areas.
On July 16, 2020, at the 3.15 party postponed due to the epidemic, the problem of Baojun 560 gearbox failure and still not improving after the recall was exposed. Seven months later, IN February 2021, SAIC-GM-Wuling announced that it would "recall again some of the 2017 Baojun 560 DCT cars" for a total of 19,680 vehicles.
The announcement said that the recall belongs to the May 2019 recall of the 2017 Baojun 560DCT automatic transmission car recall activity, which was carried out under the condition that the State Administration for Market Supervision and Administration launched a defect investigation. "Affected by the investigation, SAIC-GM-Wuling Automobile Co., Ltd. decided to take recall measures." Passive recall has a strong meaning.
The May 2019 recall announcement showed that the risk of fragmentation of the transmission clutch shock absorber stemmed from a software calibration problem in the engine control module (ECU), and the most obvious symptom of this risk was the "transmission anomaly" with the highest complaint rate.
In July 2021, SAIC-GM-Wuling initiated a recall of 1,436,997 vehicles. It involves some of the Baojun 310 series, Baojun 360, Baojun 510, Baojun 730, Baojun RS-3, Baojun RM-5, Baojun RC-5 series, Wuling Light, Wuling Rongguang series, and Wuling Hongguang series vehicles produced between December 4, 2018 and January 11, 2021.
The reason for the recall is that some of the vehicles in question have "insufficient wear resistance of the engine crankcase forced ventilation valve spool", and the oil consumption accelerates after the spool wears, which may cause engine damage in extreme cases and pose a safety hazard. If used continuously, there may be an unreasonable risk of emissions in extreme cases.
"Although the large number of recalls is related to the high sales of SAIC-GM-Wuling bicycles, the intensive complaints and large-scale recalls that have been delayed for several years and involve multiple generations of models have made it difficult for SAIC-GM-Wuling to deny that there are indeed problems with its quality and safety control system and service system." The above-mentioned industry insiders close to SAIC-GM-Wuling said. SAIC-GM-Wuling has indeed achieved the first place in China in meeting the consumer demand for low-end automobiles, but "cost performance" should not only refer to low prices, but also the bottom line for performance, quality and safety assurance.
Of the seven recalls against Baojun in the eight years mentioned above, four involved defects in the engine and transmission. Among them, the recall of Baojun 630 (1.8L) in October 2016 was also due to "insufficient wear resistance of the engine crankcase forced ventilation valve spool", which was the same as the large-scale recall of 1.44 million vehicles in July 2021.
That is to say, 5 years later, the same problem is still unresolved.
After four consecutive years of high growth from 2015 to 2018, SAIC-GM-Wuling experienced two consecutive years of decline in 2019 and 2020, and in the retrospective of the reasons for the decline, quality and service problems are one of the reasons that cannot be bypassed.
Two recalls in a year?
Due to the huge market stock, saic-GM-Wuling's recall has a wide impact on both consumers and enterprises. Putting aside the impact on word-of-mouth, from the perspective of recall costs, if there is another large-scale recall, it is equivalent to SAIC-GM-Wuling "one year of white dry". This is also the dilemma of SAIC-GM-Wuling.
The reality of "limited profitability and huge pressure on large-scale recall costs" has highlighted the shortcomings of SAIC-GM-Wuling's corporate development model again.
SAIC-GM-Wuling's major shareholder, SAIC Motor Group, has reported that from 2015 to 2020, the net profit of SAIC-GM-Wuling was 5.015 billion, 5.198 billion, 5.332 billion, 4.187 billion yuan, 1.699 billion yuan and 140 million yuan, respectively.
In terms of corresponding sales performance, from 2015 to 2018, SAIC-GM-Wuling sold more than 2 million for 4 consecutive years, which also directly brought about an increase in net profit. In 2019, SAIC-GM-Wuling's sales fell from 2.06 million vehicles in the previous year to 1.66 million vehicles, a decline of 20%, but the net profit fell by 40%, and the profitability of bicycles was further weakened.
In 2020, due to the impact of the epidemic, SAIC-GM-Wuling sales continued to decline by 4% to 1.6 million units, while net profit fell by 90%, leaving only 140 million. In this period, SAIC-GM-Wuling has spent a lot of money to fight the epidemic, but the price of the electric vehicle MINIEV is inverted, and the decline in sales of Baojun are also the main reasons.
In 2021, SAIC-GM-Wuling sales have rebounded. According to the official caliber of SAIC-GM-Wuling, the cumulative sales of the whole year reached 1,760,176 units, an increase of 13.5% year-on-year, ranking first in the sales volume of national brand single car companies. In terms of profit, in the first half of 2021, saic-GM-Wuling's net profit rebounded to 413 million yuan, but the profit of bicycles was still only 700 yuan. For the whole year, nearly 1/4 of sales came from MINIEV, which will make its profits thin again.
In fact, even in 2017, when SAIC-GM-Wuling's sales peaked, with an annual sales of 2.15 million units, SAIC-GM-Wuling's bicycle profit was less than 2,500 yuan. For comparison, Geely's bicycle profit in 2018 exceeded 8,000 yuan.
The quality of the brand is solving the problem
Objectively speaking, in the past few years, SAIC-GM-Wuling has been trying to transform. In 2018, SAIC-GM-Wuling announced that it will invest about 11.5 billion yuan in the next three years to build advanced passenger car products and leading new energy, intelligent networking and autonomous driving technologies to upgrade products, brands and technologies.
In April 2019, the "New Baojun" brand was launched, playing the slogan of "brand up", and wanted to make profits from the range of more than 100,000 yuan. This is the correct choice made by SAIC-GM-Wuling for the long-term development of the enterprise. However, the correct direction of the general direction has not been supported at the technical and executive levels.
Baojun brand sales continued to decline after reaching 1 million in 2017, and have retreated to 400,000 vehicles in 2020. Although Baojun's annual sales in 2021 have not yet been announced, a sharp decline is a foregone conclusion from the year-on-year decline of more than 50% in the first 11 months of 2021. In this regard, the conclusion given by the industry is still that "quality drags down sales".
From the effect point of view, the official pricing of Baojun products has not yet exceeded the upper limit of 150,000, and the mainstream hot-selling models are still concentrated below 100,000 yuan. In July 2020, with the release of the E300, a micro-electric vehicle with a starting price of only 64,800 yuan, New Baojun once again took the low-price route.
The survival route of low price as the core competitiveness brings about the logical derivation of "continuously compressing costs and ensuring the output of high-quality products and services", and at present, it seems that SAIC-GM-Wuling can hardly deny the reality of this logic.
In fact, in the past few years, the admiration and doubt of the "god car" have been coexisting. However, during the new crown pneumonia epidemic in 2020, the outstanding contribution of SAIC-GM-Wuling's "what the people need, we will make" beyond the individual interests of the enterprise, as well as the second wave of "Shenche" effect brought about by the birth of Hongguang MINIEV, have made SAIC-GM-Wuling's brand appeal at the social and industry level reach unprecedented. This further obscures the enormous challenges it faces as an automaker in terms of sustainable profitability.
The lively "internet celebrity reputation" did not bring a premium to the brand. The latest official data from SAIC-GM-Wuling shows that in 2021, Wuling's entire brand will sell 1.4494 million vehicles, and under the pull of electric vehicles, its proportion in the total sales of SAIC-GM-Wuling has exceeded 80%, and the role of the top beam and pillar has been unprecedentedly strengthened.
The price segment of the Wuling model is 42,800-82,800, and all the living space is confined to the low-end consumer market with high tolerance for quality and high price sensitivity. Among them, under the premise of not reaching the technical standards required for subsidies for new energy vehicles, the price of the electric vehicle Hongguang MINIEV is only 28,800-38,800.
The availability of Hongguang MINIEV in terms of price, the "regularity" that reaches the bottom line of passenger car standards, and the ingenuity in appearance design quickly captured a large number of consumers, creating a sales myth of 200,000 units in 200 days.
Wuling Hongguang MINIEV electric vehicle
In 2021, Hongguang MINIEV sold nearly 400,000 vehicles, accounting for nearly 1/4 of SAIC-GM-Wuling's total sales, which is obviously not a "blessing" for SAIC-GM-Wuling's profit structure.
When MINIEV first began to sell, SAIC-GM-Wuling insiders told the Economic Observer Network reporter that Hongguang MINIEV, which broke through the bottom line of user price psychology, was "indeed selling at a loss." As we all know, the role of SAIC-GM-Wuling as a "point contributor" in SAIC Group has made MINIEV lose its commercial position from the beginning of its birth, even including the normal "commodity" attribute. For SAIC Motor, compared with the cost of purchasing new energy credits, the "no profit, high sales" MINIEV is obviously a more cost-effective choice.
But the real problem is that not only to fill the loopholes in quality and safety needs financial support, but also to develop electric intelligence as a symbol of corporate competitiveness, but also needs a steady stream of capital investment. From the perspective of the profit curve, the positive solution of driving the brand premium by improving quality and technology has not been effectively realized on the transformation road of SAIC-GM-Wuling.
In fact, "inability to recall" was once a common dilemma for independent brands. The domestic automobile recall system was implemented in 2004, and the initial independent brands never appeared on the recall list, until 2011, of the 70 recalls in China throughout the year, only one case was still a recall of independent brands.
This is not because the quality of independent brands is excellent, but from two reasons, one is that at the beginning of the implementation of the car recall system, it did not emphasize "mandatory". Second, independent brands are in the early stage of development, and most of the products are low-end economic models, and the profitability is limited.
Ten years have passed, independent brands have occupied half of the domestic automobile market, established a high standard quality control system and rapid recall response mechanism, and have also become the basic enterprise management capabilities of independent brands. For SAIC-GM-Wuling, how to properly respond to large-scale quality complaints from users will be a double torture of quality and safety control and corporate profitability.