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Not bad technically poor marketing.
On March 29, Great Wall Motor released its 2021 financial report, and the data showed that in 2021, Great Wall Motor's revenue was 136.405 billion yuan, an increase of 32.04% year-on-year; the net profit attributable to the shareholders of the listed company was 6.726 billion yuan, an increase of 25.43% year-on-year; and the non-net profit attributable to the shareholders of the listed company was 4.203 billion yuan, an increase of 9.55% year-on-year.
Revenue and net profit have risen together, which is really rare in the automotive industry, which is plagued by the epidemic and the price increase of raw materials. In contrast, BYD, which is also the head camp of independent car companies, increased its revenue by 38% year-on-year to 216.142 billion yuan in 2021, but its net profit fell by 28.8% year-on-year to 3.045 billion yuan.
Looking back at the financial report data of previous years, the profit performance of Great Wall Motors has been good. Taking 2016 as an example, at that time, Great Wall Motors' revenue reached 98.616 billion yuan and net profit reached 10.551 billion yuan, which was higher than Changan Automobile (10.285 billion yuan), which had sales scale three times that of it.
However, since 2017, Great Wall Motor's revenue has always remained at about 100 billion, but the net profit has not exceeded 10 billion.
Source: Future Automotive Daily
According to the equity incentive plan, from 2021 to 2023, Great Wall's sales will reach 1.49 million, 1.9 million and 2.8 million vehicles; net profit will reach 6.8 billion yuan, 8.2 billion yuan and 11.5 billion yuan, respectively. From the actual situation, the completion of sales volume and net profit in 2021 is 86% and 99.7%, respectively.
The bottleneck of the Great Wall, how to break through?
The average price of bicycles exceeds 106,000 yuan
Judging from the financial report data, the vehicle business is still the main source of revenue for Great Wall Motors. In 2021, the sales revenue of Great Wall vehicles reached 121.3 billion yuan, accounting for 88.9% of the total revenue.
Behind this is the Great Wall's sharp increase in annual sales. In 2021, Great Wall sales increased by 14.79% year-on-year to 1.28 million units, far exceeding the overall growth rate of the passenger car market.
Specific to each market segment, first look at the field of new energy. In 2021, the cumulative sales of new energy vehicles in the Great Wall were 139,100 units, an increase of 137.29% year-on-year, accounting for 10.86% of the total sales, and the revenue was 11.098 billion yuan. Among them, Euler brand sales increased by 140% year-on-year to 135,000 units, which is the main force in the transformation of the Great Wall to electrification.
Euler's strong growth has made Great Wall Motors occupy the fourth position in the sales list of new energy manufacturers in 2021, and the top three are BYD, SAIC-GM-Wuling and Tesla. In contrast, the new faction camp "Wei Xiaoli" has not broken through the 100,000 sales mark in 2021.
Deep ploughing into the subdivision field is a major secret of the Great Wall's sales climb.
For example, the tank brand independent from the WEY brand focuses on the field of hardcore off-road SUVs. With excellent off-road capabilities and technology configurations far beyond the same price point, the tank brand delivered a total of 85,000 new cars in 2021, and the official revealed that the market share of tanks in hardcore off-road vehicles has exceeded 50%.
Following the success of the Tank 300, the Tank 500 also continued its hot momentum, and after the 2021 Guangzhou Auto Show opened the reservation, the order volume exceeded 20,000 units in just one hour. In order to mention the existing car earlier, many car owners even choose to increase the price to buy orders transferred by other car owners, and a large number of transfer orders for tanks 500 have been spawned on the second-hand goods trading platform such as idle fish and transfer, and the transfer price once exceeded 30,000 yuan.
Tank 300 Source: Tanks official website
Pickup trucks, as the originating business of Great Wall Motors, still maintain their head advantage in 2021. In 2021, the sales volume of the Great Wall pickup truck series was 233,000 units, and the cumulative global sales exceeded 2 million units, which is also the 24th consecutive year that the Great Wall has maintained the first sales volume of domestic and export pickup trucks.
Overseas business has also contributed a lot of revenue to Great Wall Motors. In 2021, Great Wall Motor sold nearly 140,000 new cars overseas, and its overseas revenue rose by 142.24% year-on-year to 16.16 billion yuan, accounting for 11.85% of the overall revenue.
Revenue soared, net profit also hit a new high in the past 5 years, how did the Great Wall do it?
Great Wall Motor officials said that it was mainly due to the increase in sales in the reporting period and the increase in bicycle revenue due to the upward brand. According to the financial report, in 2021, the average unit price of Great Wall Motors exceeded 106,000 yuan, an increase of 15.02% year-on-year. In contrast, the average unit price of Geely Automobile is 87,000 yuan.
The higher the average price of a bicycle, the higher the premium capacity of the brand. From January to February this year, the proportion of Great Wall Motor's sales of models of more than 150,000 yuan increased to 15.5%, and the proportion of intelligent models increased to 88.1%, which became a major reason for the sharp rise in its net profit.
Not bad technically poor marketing?
Revenue and net profit both increased, but the capital market did not give great wall enthusiastic feedback. Since entering 2022, Great Wall Motor's stock price has continued to be sluggish, as of press time, Great Wall Motor's stock price is reported at 27.42 yuan, a decline of more than half compared with last year's highest point, and the market value has shrunk by more than 380 billion yuan.
"Great Wall Motors has good system innovation, but the imagination space of the capital market has been overdrawn." Li Yang, who focuses on auto stock investment, believes that the optimistic expectations for the subsequent development of the Great Wall have been reflected in the stock price. "Whether it's sales volume or brand innovation, Great Wall Motor's stock price needs a bigger catalyst."
In fact, Great Wall Motors has been seeking change. In June 2021, Great Wall Motor announced its 2025 strategy, which plans to sell 4 million vehicles worldwide by 2025, of which 80% are new energy vehicles, with operating income of more than 600 billion yuan.
It is not easy to achieve the above goals, especially in the new energy sector, in 2021, the sales volume of New Energy models of the Great Wall will only account for 10.86% of the total sales. In contrast, BYD, which has a faster pace of transformation, has sold 593,000 new energy passenger cars in 2021, accounting for more than 80% of total sales.
"BYD is based on cost-effective products, and a relatively wide range of sales channels is the key to its upward movement." Zhu Yulong, an electric vehicle three-electric system and automotive electronics engineer, said that BEV switching lithium iron phosphate batteries have achieved cost reduction, bringing MORE pricing space to BYD, which is a very core factor (BYD can take the lead in achieving electrification transformation).
At present, almost all of BYD's main models have new energy versions. According to the data of the Association, in 2021, BYD Qin and Song are in the second place in the sales list of new energy cars and SUVs. The matrix of new energy products of the Great Wall is slightly thin, and the Euler brand is the main force, and there are only two models on sale (black cat and white cat have stopped receiving orders).
Euler Good Cat Source: Euler official website
Entering 2022, problems such as chip shortage and supply chain tension have intensified, and Great Wall Motors' transformation is facing more obstacles. In February 2022, the Euler black cat and white cat models stopped receiving orders, causing a lot of public opinion. Euler brand CEO Dong Yudong helplessly explained that the price of raw materials rose sharply, and the loss of black cat alone exceeded 10,000 yuan, bringing huge losses to the company.
At the same time, Great Wall Motor's sales in February were only 70,700 units, down 20.5% year-on-year, and also fell to the tenth position in the sales ranking of manufacturers in the association. The Great Wall responded that it was mainly due to insufficient supply of body electronic stability systems (ESP) produced by Bosch Automotive Components (Suzhou) Co., Ltd.
The fuel vehicle and new energy vehicle businesses are blocked at both ends, and the pressure on Great Wall Motors is obvious. However, in the view of Wei Jianjun, chairman of Great Wall Motors, what Great Wall Motors lacks is not products and technologies, but marketing, and the sales volume after the transformation of Wei Brand is not ideal, mainly because marketing is not in place, and relying on concept marketing is not as good as Wei Xiaoli.
Qiao Xinyu, CMO of Weipai, said that weipai will carry out reform and innovation in many aspects such as user operation and channel layout, and will also consider learning the playing style of new force car companies.
Securities institutions remain optimistic about the future of the Great Wall. Open Source Securities, Huaan Securities and West China Securities all gave "buy" ratings after the Great Wall released its 2021 financial report.
"Great Wall Motor is expected to have revenues of 192.05 billion yuan and 256.74 billion yuan in 2022 and 2023, and net profits of 10.06 billion yuan and 15.62 billion yuan, respectively." In the research report, China West Securities expects that the total revenue and net profit of Great Wall Motor will reach 330.99 billion yuan and 20.02 billion yuan respectively in 2024.
(Note: Li Yang is a pseudonym)
The author | Qin Zhangyong
Edit the | Li Huanhuan