Text | Shentucar, by | Zhou Jifeng, Editor | dawn
In 2021, Great Wall Motors shouted out such a plan: by 2025, sales will exceed 4 million, of which 80% will be new energy vehicles, with revenue of more than 600 billion yuan.
On March 29, Great Wall Motor (hereinafter referred to as Great Wall Motor) released its 2021 financial report.
In the first year of transformation, what is the report card handed over by the Great Wall?
Operating income of 136.4 billion yuan, an increase of 32.04% year-on-year, and net profit of 6.73 billion yuan, an increase of 25.41% year-on-year. The two most important indicators, revenue and net profit, Great Wall Motors have done well.
However, there is still a big gap from achieving the goal of "revenue breaking 600 billion yuan and sales breaking 4 million".
This independent brand, which started in Baoding, Hebei Province, has created many domestic hard goods in the past 30 years: Haval H6 and Tank 300, which are the favorite of macho men, and Euler black cats and white cats for urban female white-collar workers.
But in the following days, it had to face a series of challenges: two hot-selling electric vehicle models were forced to stop production due to "lack of cores" and rising raw material prices; the market response of hybrid products was flat...
The revolution has not yet succeeded, and the Great Wall still needs to work hard.
There are many brands, but the resources are not enough
In 2021, Great Wall sold 1.28 million vehicles, of which 137,000 new energy vehicles were sold. Relying on these 1.28 million vehicles, the Great Wall achieved revenue of 136.317 billion yuan.
In stark contrast to the revenue of 100 billion, the great wall's net profit was 6.725 billion yuan, and the net profit margin was 4.9%.
Among the more than 6 billion yuan of net profit, it also includes new energy subsidies. The Great Wall has been laid out relatively early on new energy vehicles and has eaten dividends. In 2021, the Great Wall received a government subsidy of 1.626 billion yuan for new energy vehicles. After removing the subsidies, the great wall's net profit is even smaller.
Sources / Financial Reports
Great Wall revealed that the company's overall average bicycle price exceeded 106,000 yuan. This also means that the average price of Great Wall products is not high, and most of them take the cost-effective route. The unit price is not high, and the gross profit margin is also low. In 2021, Great Wall's gross profit margin was 16.6%.
Source / Company Financial Report
The Great Wall has five major brands, Haval, Weipai, Euler, Tank, and Great Wall Pickup Truck. Every brand needs to invest in advertising and marketing. In 2021, great wall expenditure in this regard is 5.19 billion yuan.
These brands are also releasing new cars, which also require a lot of research and development expenses. For example, the 3.0T V6 engine and 9AT gearbox equipped with the recently launched Tank 500 model all come from Great Wall's self-research. Great Wall's R&D expenses increased from 1.74 billion yuan in 2018 to 4.043 billion yuan in 2021.
Frankly, these costs are not large. However, the gross profit of the Great Wall is low, which leads to the fact that although the Great Wall has been very economical and the cars have sold a lot, the profit has been very thin.
The financial data also reveals another problem with the Great Wall – insufficient resources.
In 2021, Great Wall established an organizational structure of "one car, one brand and one company". The multi-brand strategy meets the needs of different consumers and can also have a good ability to resist risks, but it also means that resources may be dispersed.
In 2021, the five major brands of the Great Wall launched 8 new cars. There are many product lines, many products, and many new cars. Evenly apportioned, a brand can only share in the marketing expenses of up to 1 billion yuan. For comparison, the ideal, which has always been known for its door-slamming, has sales and general management expenses of 3.492 billion yuan in 2021, and the ideal is only one brand and one car.
The goal is ambitious, but it's not done yet
After talking about revenue, let's talk about sales. From 2021 to 2023, great wall sales assessment targets are 1.49 million, 1.9 million and 2.8 million vehicles, respectively. In the first year of the sales assessment, the Great Wall failed to complete the target.
But the Great Wall's failure to achieve its goal is not accidental.
Source / Company official website, financial report
Great Wall owns five major vehicle brands, and recently incubated a new brand salon and released its first new car, the Mech Dragon. Not counting salons, the remaining major brands have their own dilemmas.
Haval is a major contributor to Great Wall sales, focusing on the production of SUVs. Sales in 2021 were 770,000 vehicles, accounting for 60.11% of Great Wall's annual sales. At present, the brand has 11 models, the most famous of which is the national blockbuster SUV - Haval H6. This "god car", which has been hanging on the first place in the SUV sales ranking for many years, will once again become the domestic SUV sales champion in 2021.
Image source / Screenshot of the company's official website
But Haval's sales peaked in 2017, with 850,000 vehicles delivered for the full year, and since then it has begun to decline. In 2021, Haval finally ushered in positive sales growth, but only sold 20,000 more than in 2020.
In the sequence of the Great Wall, Wei Pai is shouldering the heavy responsibility of upward assault, positioning high-end and intelligent. However, from the perspective of sales, the sales volume of Weipai in 2021 fell by 25.65% compared with last year.
Sales of Great Wall pickup trucks are almost the same as last year.
More noteworthy is the Great Wall's Euler brand. Euler is positioned as a female user and the product is pure tram. It is also an important sector for the Great Wall to leverage the new energy vehicle market. I have to say that Euler's products, positioning and marketing have been very successful. Sales in 2021 were 135,000 units, up 140% year-on-year.
Unfortunately, black cats and white cats, which contributed 60% of the sales performance of the Euler brand, were forced to stop taking orders in February this year. Dong Yudong, CEO of the Euler brand, gave this explanation: "It is helpless to stop taking orders, but the Euler brand has indeed encountered difficulties. Although Euler has the advantages of the industrial chain behind it, this fashionable and people-friendly car still brings huge losses to the company. Taking black cat as an example, after the sharp rise in raw material prices in 2022, black cats lost more than 10,000 yuan per unit. ”
Of all the brands, tanks have the best performance.
Tanks are targeting the blue ocean market of domestic hardcore off-roaders, which were just spun off from Wei in April last year. Before the independence of the brand, tanks have launched a blockbuster - tank 300. Tank 300 at a price of 200,000 yuan to fulfill a lot of macho men's off-road dreams. The Great Wall also relies on this product to achieve the myth of monthly sales exceeding 10,000 in the "traditional unpopular market".
After the tank 300 became popular, the tank continued to work hard and launched its second new car, the Tank 500. This model is also highly anticipated by tanks. Orders for the Tank 500 have been hot since the pre-sale began in November last year, and it is said that the number of orders for the first hour of the pre-sale has exceeded 20,000 units. There are even cases of "a single is difficult to find" and speculation.
But for tank brands, the biggest problem is that the demand is full and the production capacity can't keep up. Times Finance has reported that due to factors such as lack of core and production capacity, the pick-up cycle of the tank 300 has become about 7 months.
By 2022, the external challenges facing the Great Wall will be more severe.
In February this year, the Great Wall's sales fell by 20% year-on-year. Great Wall said that the main reason is the insufficient supply of body electronic stability systems (ESP) produced by Bosch (Bosch is the exclusive supplier of ESP configurations for Great Wall Motors' main models).
Capacity bottlenecks and raw material shortages may become two major obstacles restricting Great Wall's sales in 2022.
Can the transformation succeed?
In the Great Wall's five-year plan, new energy vehicles play an important role. According to the plan, the Great Wall will sell more than 4 million in 2025, of which 80% will be new energy vehicles. In other words, in three years, the annual sales of new energy vehicles in the Great Wall will reach 3.2 million.
However, it is not difficult to see from the analysis of the previous paragraph that the main performance of the Great Wall still comes from fuel vehicles.
In 2021, the Great Wall's new energy vehicles sold only 137,000 units, accounting for 10.7%. Compared with other traditional car companies, BYD's sales of new energy models accounted for 81.3% in the same period, and SAIC-GM-Wuling accounted for about 30%.
To increase the proportion of new energy vehicles from 10% to 80%, this means that the Great Wall needs to completely transform into a new energy vehicle company in just four years, while abandoning the original fuel vehicle market share.
The pressure of transformation is not small, but the driving force for the transformation of the Great Wall is not strong.
The biggest problem is that the Great Wall is actually very moist in the field of fuel vehicles: before there was a blockbuster god car Haval H6, now there are tank 300 a car is difficult to find, the recently listed tank 500, the order volume has been close to 50,000.
In the field of fuel vehicle SUVs and hardcore off-road, the Great Wall has played a piece of its own world. From the current point of view, this traditional car company also has no plans to cut off the fuel vehicle business in a large area.
In addition, in the field of new energy vehicles, the progress of the Great Wall is not very smooth.
At present, the dream of the Great Wall's new energy transformation is carried by the two major brands of Euler and Weipai.
Euler originally developed well, but recently encountered the problem of raw material price increases and parts shortage, and the best-selling black and white cat models stopped receiving orders. Without black and white cats, only good cats are left to support Euler's business.
In 2022, Great Wall plans to launch ballet cats, lightning cats, punk cats, these new cars are more expensive, we expect that the price of the product may be more than 200,000 yuan. Euler has previously launched small cars with low unit prices, and whether the more expensive ballet cats can be sold has become the key to the transformation of the Great Wall's new energy in 2022.
Speaking of Weipai, Weipai threatened to create "China's first luxury SUV brand" in 2016, and 2018 was the peak of the brand, with annual sales of 140,000 vehicles, and since then the performance has begun to decline, and by 2021, annual sales will only be 58,300 vehicles.
In order to reverse the decline, in 2021, Weipai carried out transformation, positioned high-end new energy vehicle brands, regarded new forces such as Weilai and Ideal as competitors, and took the hybrid route.
All along, hybrid cars have sold very well. Entering 2022, due to the rise in oil prices, the sales of hybrid vehicles have risen sharply, and data from the China Automobile Association shows that in February this year, the sales of hybrid vehicles increased by 3.3 times year-on-year to 75,000 units. Many car companies have also laid out hybrid technology this year.
The Great Wall has long smelled the development potential of the hybrid car field. In 2020, Great Wall released the lemon DHT hybrid system. Weipai CEO Li Ruifeng claims that the Great Wall's DHT is "the world's best new energy technology". The Macchiato DHT and latte DHT went on sale last year, but sales were less than satisfactory. For example, according to the official data, the cumulative sales of the Macchiato DHT for the whole year were 5145 vehicles.
Wei Pai is under more pressure in 2022, on the one hand, Wei Pai wants to reverse the decline in performance for many years. On the other hand, the brand is ready to challenge the high-end market and undertake the task of rushing the entire company of the Great Wall.
Weipai has only been fighting in the market of 150,000-200,000 yuan for many years, and now it has to switch to the high-end market of 200,000-400,000. In this market, profits are thick and giants are numerous. But whether it is product positioning, brand marketing or user operation, Great Wall is a novice. Whether Wei Pai can grab food is still unknown.
The Great Wall company has a strong sense of crisis. The Great Wall in 2021 has already had a landing layout in the fields of electrification, hydrogen energy and automatic driving. But in terms of the progress and speed of transformation, the Great Wall is indeed not fast enough.
In 2022, the new forces of car-making are marching forward. Many independent brands have explored their own transformation path. There is still a lot to be done in the Great Wall.