On January 23, Great Wall Motor Co., Ltd. released its 2021 performance express. In 2021, Great Wall Motor's total operating income was 136.317 billion yuan, an increase of 31.95% year-on-year. Net profit was 6.781 billion yuan, an increase of 26.45% year-on-year, and net profit after deduction of non-attributable net profit was 4.29 billion yuan, an increase of 11.8% year-on-year. According to the research report of Minsheng Securities, Great Wall Motor's sales/profit targets for 2021 are 1.49 million units/6.8 billion yuan, respectively, and the actual completion degree is 86.0%/99.7% respectively.
The announcement said that the increase in net profit attributable to the company's shareholders year-on-year was mainly due to the increase in vehicle sales. According to the 2021 production and sales data released by Great Wall Motors, Great Wall Motors sold 1.2809 million units in 2021, an increase of 15.2% year-on-year. It is worth noting that Great Wall Motor's cumulative sales of new energy vehicles in 2021 are 137,000 units, accounting for only 10.7% of total sales.
Transformation of new energy Short-term profitability is difficult
As a representative brand of new energy under Great Wall Motor, Euler will sell 135,000 units in 2021, an increase of 140% year-on-year, but only about 10% of Great Wall's overall sales. Weipai, represented by the hybrid, sold 58,000 vehicles throughout the year, down 26% year-on-year, and after the first integration of coffee products, the brand's monthly sales in December exceeded 10,000 units.
Great Wall Motors is seriously biased, and this problem has not been solved for a long time. According to sales data, fuel vehicle sales accounted for nearly 90% of total sales, haval brand annual sales of 770,000 units, tank brands delivered 85,000 vehicles in the whole year, in addition, the Great Wall pickup truck sales in 2021 233,000 units.
According to the 2025 strategy released by Great Wall Motor in June 2021, by 2025, it will achieve global sales of 4 million, of which 80% will be new energy vehicles. Judging from the current distribution of product lines in the Great Wall Motor market, Great Wall Motors needs to use the remaining 4 years to achieve this transformation goal, which is quite difficult.
With the promotion of the "double integral" policy, Great Wall Motors' fuel SUV-led pattern may be shaken, and the new energy market will become the core power point of Great Wall Motors in the next 5 years. Zhang Xiang, an analyst in the automotive industry, said that the product structure of Great Wall Motors is mainly SUVs and pickup trucks, and cars account for a relatively small proportion. If you do new energy, SUV is also generally more energy-intensive than cars, and the mileage is shorter than that of cars, and it will be more difficult to meet national regulations. Great Wall Motors has only started to do new energy in the past one or two years, starting later than traditional car companies such as GAC and Geely.
In addition to the difficulty of challenging new technologies, it is difficult to make a profit in the short term. In 2021, Tesla, Weilai, Ideal, Xiaopeng and other new car-making forces are currently in a state of loss, with the subsidy policy declining, new energy vehicles will occupy more investment expenditure, Great Wall Motors in the short term profits or difficult to return.
What's more, in the fiercely competitive market environment of new energy vehicles, the Euler brand is also facing large-scale user complaints, and in December last year, CCTV Finance exposed the Great Wall's Euler good cat "the car machine system chip is not in line with the publicity", and since then this incident has been on the hot search. Recently, Euler has once again been concerned by netizens because of the problem of "battery upgrade", and Euler new energy vehicles may face greater market challenges.
Taking Tesla, represented by new energy vehicle companies, as an example, since the production of pure electric models in 2004 to achieve profitability for the first time in 2020, the entire input and output have gone through 7 years, even if the domestic head car-making new forces sales growth rate is relatively fast, but in the entire profit model is still in a state of loss, Great Wall Motors only rely on the Euler brand is difficult to compete in the new energy vehicle market, the development of hybrid product lines is also somewhat hasty.
In the new energy double credit policy, for many years to the traditional fuel SUV sales as the leading Great Wall Motors, there are still nearly 90% of the proportion needs to be gradually digested, the future generation of "negative points" also need to be purchased to offset, which may affect the great Wall Motors in the short term product structure and profit increase. Zhang Xiang said that Great Wall Motors began to transform new energy out of the "double integral" policy, and the sale of fuel vehicles will produce a lot of negative points, and spending money to buy points will increase the cost.
Insufficient capacity to integrate idle production bases
In 2021, Great Wall Motors launched a number of new cars, among which the launch of Haval Divine Beast, Great Wall Pickup Truck, Tank 300/500 and other models has enhanced the market competitiveness of Great Wall Motors' products.
Tank 300 has also been suspended for bookings, with actual deliveries even less than half of the order volume, and last year there were cases of dealers selling cars at a higher price. According to Minsheng Securities, Great Wall Motor's sales volume is expected to reach 1.9 million units in 2022. Year-on-year increase of 48%.
In the face of continuous sales growth, due to the epidemic situation and the lack of cores and other factors, the lack of production capacity of Great Wall Motors has become more and more prominent. Judging from the layout rhythm of Great Wall Motors in the past two years, the integration of idle production capacity has become an important part.
In May last year, Great Wall Motors officials said that production capacity was affected by the shortage of chips, and production was lower than that of the same period. At the same time, in order to balance the production capacity of each model, in the case of insufficient chip supply, the shortage of hot-selling models such as Haval H6 will inevitably increase.
In order to expand production capacity, in 2021, Great Wall Motors has won the production bases of Zotye such as Hanteng and Hanlong, and revitalized the Cheetah factory for transformation, and put into production its hot-selling product Tank 500. Recently, Linyi Zotye Automobile Base was also acquired by Great Wall Motors. Some insiders said: "Great Wall Motor's revitalization of the original Zotye Linyi production base is conducive to activating idle production capacity, integrating and coordinating regional resources, and driving the development of regional related industries, which has a positive pulling effect." ”。
In this regard, Caijing Auto contacted the relevant people inside Great Wall Motors, who said that "Great Wall Motors and Linyi Municipal Government officially signed a contract on the Linyi vehicle and parts production base project. The signatories for this project are Great Wall Motors and Linyi Municipal Government, and no other third parties are involved. In fact, after the Zotye factory was repossessed by the Linyi Municipal Government, Great Wall Motors signed a contract with the Linyi Municipal Government. ”
Zhang Xiang, an analyst in the automotive industry, believes that China's automotive industry is now upgrading and transforming, and the survival of the fittest is the survival of the fittest. Great Wall Motors currently belongs to the first group of brands among its own brands, which has great advantages and is in short supply in the market, which also provides confidence for its expansion of production capacity.
The growth rate of the domestic market has slowed down, and the investment in the overseas market has increased
According to the data, in 2021, Great Wall Motor sold 143,000 vehicles overseas, an increase of 103.7% year-on-year, a record high. Overseas sales growth is almost 7 times the overall sales growth rate, and the current proportion of total sales is only 11.1%. The cumulative overseas sales of Great Wall Motors have exceeded 900,000 vehicles, and the export of complete vehicles has reached more than 170 countries and regions. This means that the growth rate of Great Wall Motors in the domestic market has begun to slow down, and there is a lot of room for improvement in foreign markets.
Zhang Xiang, an analyst in the automotive industry, believes that Great Wall Motors is competitive in overseas markets. Especially in the field of SUVs has been accumulated for many years, such as the Middle East, Eastern Europe and other markets are also more favored by SUVs, so Great Wall Motors is also continuing to expand overseas factories and markets.
Recently, Great Wall Motors officially took over the Plant in Iracemapolis, Brazil, and is expected to start production in the second half of 2023, with an annual production capacity of 100,000 units, which will radiate throughout Latin America in the future. According to the Core Market Strategy for Brazil released by Great Wall Motors, it will invest more than 10 billion reais (about 11.5 billion yuan) in the next 10 years to deepen the layout of the local industrial chain, and plans to launch 10 new electrification products within 3 years, aiming to become the leading brand of new energy vehicles in the Brazilian market.
As of this year, great wall motors have formed 13 domestic full-process vehicle production bases, four overseas full-process vehicle production bases, and five overseas KD plants, including the Tula plant in Russia, which was put into operation in 2019, and the Rayong plant in Thailand, which was put into operation in 2021.
Among them, in the Russian market, Great Wall Motors has ranked in the TOP3 of the SUV market; in the Australian and New Zealand markets, it has become the Chinese brand with the fastest sales growth in the local market; it has continued to maintain its leading position in overseas markets such as South Africa, Saudi Arabia and Chile; and the layout in the Thai and European markets has also begun to land. According to the plan, Great Wall Motor will also build a new KD factory in Egypt, Pakistan and other markets, further enriching the company's global manufacturing capabilities and supporting the delivery of a number of hot products overseas.
In addition to large-scale acquisitions and investment development, the transformation and operation of multiple plants will inevitably lead to an increase in short-term investment costs. According to the 2025 strategy released by Great Wall Motors last year, by 2025, the operating income will exceed 600 billion yuan, and its R&D investment alone will reach 100 billion yuan in the next five years, which will also have an impact on the profits of Great Wall Motors in the next five years. Zhang Xiang said that Great Wall Motors is now a critical period of development, and if it does not continue to go up, it will face the risk of being eliminated, so the hand of reform is also very large.
In the current market environment, the high-end process of Great Wall Motors' brand continues, but the market performance is not ideal. In the face of fierce competition in the new energy vehicle market, Great Wall Motor's new energy brand only has the support of Euler, although it has been invested in the direction of pure electric, hybrid and other directions, but from the perspective of the distribution of the entire market sales, the strong trend of its fuel vehicle market is still difficult to hide the obvious gap in the new energy market. In the next 5 years, there are still many challenges to whether Great Wall Motor's net profit can continue to break through.
Some insiders said that in 2022, the "adversity" of traditional car companies and even new energy vehicle companies has arrived, and by 2025, the automobile market or a comprehensive transformation of new energy, I wonder if Great Wall Motors at that time can still maintain its industry status in the era of traditional fuel vehicles?