Luxun Precision: The company does not build the whole vehicle, but cooperates with Chery New Energy to develop and build the automotive ODM business

Jiwei Network news, on February 13, Luxun Precision said in the record of investor relations activities released that Smart EV is an opportunity that Chinese automakers have not encountered in a hundred years. Smart EV has created a new business opportunity and brought many new entrants to the market. But also because of the rapid development speed and cruel competition, new entrants often have advantages in electrification, intelligent driving, and intelligent networking, but lack the foundation of traditional car companies in the automotive industry, such as the understanding of vehicle-level quality standards, system capabilities, platform development capabilities and experience accumulation, manufacturing qualifications and manufacturing capabilities, supplier resources and management capabilities, dealer channels, etc. The opportunities brought by the Smart EV include not only the whole vehicle, but also the more vitality of the Tier1. The market size of Tier1 itself is almost 70% of the total output value of all car companies, such as the world's four major Tier1 manufacturers Bosch, Denso, ZF, Magna, established in more than 50 years, the revenue scale is more than 30 billion US dollars, there is no Chinese enterprises. Among the top 100 Tier1 manufacturers in the world, there are only 8 Chinese companies.

Luxun Precision believes that under the new pattern, the market needs ODM to build cars. Chery's vehicle research and development base has also improved rapidly in recent years, and in the learning mode of double T (Toyota R&D quality system and Tesla subversive innovation), it grew against the trend last year, and it is also the largest export volume of domestic brand car companies. Luxun Precision's experience and market reputation in consumer electronics over the years can cooperate with Chery to develop another new industry - to build a good car for others. This is in line with the needs of market development, and it also meets the difficulties of the breakthrough in the growth of Luxshare Tier1. Luxshare Precision focuses on providing industry chain component solutions for the market, and is also committed to becoming the global leader in auto parts Tier1.

Luxshare Precision said that we want to seize this opportunity to achieve Tier1 take-off in the next 35 years. We needed a different support platform that would help us achieve 1 to 100 in the rapid implementation of important components from 0 to 1 and the rapid growth of scale. In addition to our own strength, partnership allows us to seize this window of opportunity.

Luxun Precision synergy ODM car investment, in addition to the need for more investment overseas, in the domestic ODM car, the current based on Chery's existing production capacity platform and the future Chery new energy related planning, Luxun Precision does not need too much investment, and aims to participate, focusing on Tier1, will be combined with interests to consider the decision. At the same time, Luxshare Precision stressed that Luxshare Limited is an investor in Chery Holdings, and Luxshare Precision does not manufacture complete vehicles, but cooperates with Chery New Energy to develop the ODM business of building good cars for others, and aims to seize the opportunity window to enter the world's leading Tier1.

Regarding the reasons for the cooperation between the two sides, Luxshare Precision said that over the years, Chery Group has a complete technology and product research and development system in the field of vehicles, especially in the vehicle manufacturing process, with an independent platform, which can provide Chery Automobile and other brand owners with comprehensive services from vehicle development to mass production, and has a strong and leading core competitive advantage in the industry. In addition to the advantages of technology and experience, Chery has mature production capacity, is one of the few partners in China suitable for the development of ODM car manufacturing business model, the company and Chery cooperation cost is relatively low, but has a higher and faster potential benefits.

In addition, both sides believe that the company's capabilities and experience in consumer electronics can be synergistic and complementary with Chery, and the odds of winning together in the face of the challenges of future automotive intelligence will be greater, and both sides also agree that the arrival of the FOUNDC model is inevitable. Through this cooperation, it will provide Cutting-edge R&D design, mass production platform and sea exit for Luxshare Precision's core auto parts business, and is committed to achieving the company's medium- and long-term goal of becoming a leading manufacturer of auto parts Tier1.

Regarding the market advantages of the joint venture, Luxshare Precision said that the joint venture company will do ODM platform development and vehicle assembly. Luxshare Precision has rich ODM experience in the consumer electronics, communications, and automotive fields, and has a very familiar grasp of the ODM business model, and at the same time, it can also provide empowerment for joint ventures in terms of core customer resources. Chery has been working in the field of vehicles for many years and has a deep understanding of vehicle products. When the ODM car business model was less than one million units in the early stage, the company's function was more to assist Chery to develop the ODM business and build the platform well, because there were essential business differences and management differences between doing brand and doing ODM. With the continuous development of the ODM business, the company's core components business will also be brought into play.

Luxshare Precision also introduced the internal and external automobile business. It said that the listed company's automobile business has been precipitated for more than ten years, mainly focusing on the "nervous system" of the whole vehicle, the main products are: connectors / connecting wires, low / high voltage vehicle wiring harnesses, special wiring harnesses, etc., the main customers include domestic traditional car companies, new car-making forces and some large Tier1 manufacturers.

In terms of synergy with Chery, Luxshare Precision's automotive business started from 0, achieved a breakthrough after 10 years of development, and reached the current revenue scale, so it is very difficult to achieve a breakthrough from 0 to 1 or 1 to 100. Especially in this period, if we follow the current rhythm and speed, we are afraid of missing the window. Especially when there is an ODM opportunity, we are also worried about losing the opportunity to enter key components, so Luxshare Precision cooperates with Chery at the current point in time. Chery's performance last year was relatively good, its strategy for the next few years is also very clear, and shipments are expected to continue to increase. In the view of Luxshare Precision, this has a very big help for its breakthrough from 0 to 1, 1 to 10 or 1 to 100.

As for the in vitro BCS, in addition to the original traditional business, intelligent cockpit, intelligent driving, power module, Internet of Vehicles and other services have been added, and customers have spread all over the world, including Volkswagen, General Motors, Tesla, BBA and Japan's three major brand customers.

Regarding the main customers of the newly established joint venture company, Luxun Precision revealed that as an ODM, more high-quality customers should be selected to serve and cooperate. At present, because of the existence of mutual commercial constraints, it is inconvenient to elaborate on customers and landing speed here, but the ODM business has a relatively clear landing project, which will be put into production in about 12-18 months. For ODM, in addition to the advantages of SmartEV in the network connection, the foundation of traditional cars is also very critical, so ODM can also shorten the problems of brand customers in terms of time to market and production, and more importantly, they can choose high-quality customers to cooperate. The joint venture is expected to focus on the business of foreign traditional brand car companies and the new SmartEV brand business in China. (Proofreader/James)