Author: Jeff
In July 2020, Wei Jianjun, founder of Great Wall Motors, said this in a reflection video: "Relying too much on the first thirty years, can Great Wall Motors survive next year?" ”
In 2021, will Great Wall Motors pull itself back from wei Jianjun's "life hanging on the line"? Behind the "glossy" financial report data, what difficulties and challenges does Great Wall Motors face?
Revenue and sales flew together, and profit margins declined
On March 29, 2022, Great Wall Motor released its annual report showing that the operating income in 2021 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.
As for the main reason for the increase in revenue, Great Wall Motors said that on the one hand, sales increased, on the other hand, the brand upward made the bicycle revenue increase significantly.
According to the data, in 2021, Great Wall Motor's sales volume was 1.281 million units, an increase of 14.79% year-on-year; the average bicycle price exceeded 106,000 yuan, an increase of 15.02% year-on-year; the sales of its five major brands in addition to Weipai increased across the board.
All the data seems to be answering Wei Jianjun's "Will Great Wall Motors survive next year?" In that sentence, Great Wall Motors not only survived, but also lived quite well. However, the fly in the ointment is that while sales have risen and the average price of bicycles has risen, Great Wall Motors' gross profit margin has fallen to the lowest point in nearly 10 years.
Great Wall Motor's annual financial reports show that after great wall motor gross profit margin reached a high point of 28.61% in 2013, it continued to decline, falling to 16.83% in 2019, rebounding slightly to 17.21% in 2020, and the gross profit margin in 2021 fell to 16.16%. In this regard, Great Wall Motors said that it was caused by including transportation costs in accordance with regulatory regulations.
In stark contrast to the revenue of 100 billion, Great Wall Motor's net profit was 6.725 billion yuan, and the net profit margin was only 4.93%. This also includes subsidies of 1.627 billion yuan for new energy vehicles, and Great Wall Motors deducted non-net profit of 4.203 billion yuan.
The brand strategy of one mother and many children leads to the dispersion of resources
"The palms of your hands are all meat."
Despite the good wish of "more children are better to fight", Great Wall Motors launched six major brands of Haval, Wei, Tank, Euler, BC and Pickup trucks to support the "Great Wall Empire".
For these six major brands, in 2021, Great Wall Motors also established an organizational structure of "one car, one brand and one company".
"More children" can increase revenue and reduce risks to a certain extent, however, on the other hand, this also means that Great Wall Motors has to make trade-offs among these 6 children, which will also lead to great wall motors resources will be seriously dispersed, and even there may be an embarrassing situation of insufficient points.
For example, in 2021, the five major brands of Great Wall Motor launched a total of 8 new cars, as we all know, when each new car is launched, it needs to be promoted, advertised, and marketed. According to the 2021 annual report, Great Wall Motor's sales expenses for this were 5.192 billion yuan, which was only more than 1 billion yuan away from its net profit, an increase of 26.53% year-on-year. If it is evenly apportioned, a brand can share about 1 billion yuan in sales expenses. At the same time, the increase in brands and new models has also led to a surge in related labor costs.
Great Wall Motor's financial report shows that in 2021, Great Wall Motor's management expenses will be 4.043 billion yuan, an increase of 58.39% year-on-year. In this regard, Great Wall Motors said that it was due to the increase in the number of managers and the increase in equity incentive expenses.
From past experience, for Chinese auto brands, the pressure of multi-brand operation is greater than the opportunity. Because it is subject to the relationship of brand premium, it is impossible to break through the price ceiling, and having more children is not necessarily easy to fight, and it is more likely that internal friction is formed between brands. At the same time, there are more "children" and resources are too dispersed, which not only increases the cost, but also increases the risk, and it is easy to "gain and prosper, and lose and lose".
Moreover, "people have no far-sighted worries, there must be near-term worries", from the perspective of these brands under Great Wall Motors, in addition to the newly incubated brand BC, the other five major brands have their own "troubles":
Haval:
From the sales data, the Haval brand is still the sales pillar of Great Wall Motors, with sales of 770,000 vehicles in 2021, an increase of 2.6% year-on-year, accounting for 60.11% of Great Wall Motors' annual sales. But if you stretch the timeline, Haval's sales began to decline after reaching a peak of 850,000 units in 2017. Although In 2021, Haval finally ushered in positive sales growth, it only sold 20,000 more than in 2020.
Wei Pai
Weipai is shouldering the heavy responsibility of upward assault in the brand sequence of Great Wall Motors, and weipai's sales in 2021 will be 58,000 units, down 25.65% year-on-year, and the performance is sluggish.
Euler brand
The Euler brand is an important part of Great Wall Motor's layout of the new energy vehicle market, and with successful product positioning and marketing, its sales volume reached 135,000 units in 2021, an increase of 140% year-on-year. However, unfortunately, the "core change" incident of Euler good cat in 2021 affected the brand reputation to a certain extent, and the black cats and white cats, which contributed 60% of the sales performance of the Euler brand, were forced to stop taking orders in February 2022 because of the rise in raw material prices.
Great Wall pickup
In 2021, the sales of Great Wall pickup trucks will be 233,000 units, almost the same as in 2020, and how to maintain sustained growth in 2022 is a problem.
Tank brand
Relatively speaking, the tank brand independent from the Wei brand performed very well, with sales of 85,000 units. However, the tank brand has suffered from insufficient capacity. In this regard, Times Finance has reported that due to factors such as lack of core and production capacity, the pick-up cycle of the tank 300 is about 7 months.
The transformation still needs to be done
In 2021, Great Wall Motors shouted out such a plan: by 2025, the revenue will exceed 600 billion yuan, and the sales volume will exceed 4 million, of which 80% will be new energy vehicles. Although the revenue and car sales in 2021 are good, there is obviously still a big gap from this ambitious goal:
First of all, Great Wall Motors wants to break through 600 billion yuan in revenue, which means that in the next few years, there must be more than 100 billion yuan of revenue growth per year, and the difficulty can be imagined;
Secondly, how does Great Wall Motors achieve the goal of sales KPIs. In 2021, Great Wall Motors has not yet completed the sales assessment targets previously set (1.49 million, 1.9 million and 2.8 million vehicles from 2021 to 2023), and 2022 is likely to be difficult.
In February 2022, Great Wall Motor's sales fell by 20% year-on-year due to insufficient supply of body electronic stability systems (ESP) produced by Bosch, and the cumulative sales volume in the first two months was only 181949 units, down 18.42% year-on-year. Capacity bottlenecks and raw material shortages may become the two key factors restricting Great Wall Motor's sales in 2022.
In addition, the sales volume of new energy vehicles in the Great Wall in 2021 was 139,100 units, accounting for 10.86% of the total sales. If it is planned, after three years, Great Wall Motor's annual sales of new energy vehicles will reach 3.2 million units. This means that Great Wall Motors needs to completely transform into a new energy vehicle company in just 4 years, while abandoning the original fuel vehicle market share, is this possible?
In early April 2022, BYD announced a complete farewell to the era of fuel vehicles, however, for Great Wall Motors, if it bids farewell to fuel vehicles, this means that Great Wall Motors, which relies almost on fuel vehicles for revenue, will experience the pain of transformation. Judging from the data of Great Wall Motors in 2021, the main performance still comes from fuel vehicles, and new energy vehicles account for only 10.7%. Great Wall Motors, which is living in the field of fuel vehicles, is probably reluctant to cut off the fuel vehicle business in such a radical transformation. In addition, in the field of new energy vehicles, the progress of Great Wall Motors is not very smooth.
You know, Geely Automobile, which once released the electrification transformation in 2015, is still undergoing transformation at this moment.
As early as 2015, Geely Automobile released the "Blue Geely Action" in a high profile, taking the lead in announcing the electrification transformation among its own brands, and at the same time proposing the sales target of "by 2020, new energy vehicles will account for more than 90%".
In 2021, Geely Automobile sold a total of 1.328 million vehicles (including the 50% joint venture Company Lynk & Co), and the sales of new energy vehicles were only more than 100,000 units, accounting for 7.5% of its total sales.
Therefore, how to transform is probably the focus of Great Wall Motors' consideration in the next few years.
At present, the Weipai and Euler brands are the key to the transformation of Great Wall Motors, Weipai threatened to build "China's first luxury SUV brand" in 2016, but after reaching a peak of 140,000 sales in 2018, the performance began to decline, with sales of only 58,300 units in 2021. In order to reverse the decline, in 2021, Weipai carried out transformation, positioned high-end new energy vehicle brands, embarked on a hybrid route, and took new car-making forces such as Weilai and Ideal as competitors.
In addition, in 2020, Great Wall released the lemon DHT hybrid system, and Macchiato and Latte DHT were launched in 2021. According to official data, the cumulative sales of the Macchiato DHT in 2021 is only 5145 vehicles.
In 2022, more and more car companies have laid out hybrid technology, and the pressure on Weipai will be greater: on the one hand, it is necessary to reverse the decline in performance over the years; on the other hand, it is also necessary to challenge the high-end market and undertake the task of great wall motors. In the high-end market, there are many giants, and it is still unknown whether Wei Pai can grab food.
In addition, Euler originally developed well, but recently encountered the problem of raw material price increases and shortage of parts, the best-selling black cat, white cat models stopped receiving orders, and only good cats were left to support Euler's business.
In the face of the current situation, in 2022, the Great Wall plans to launch ballet cats, lightning cats, punk cats, and the unit price of these new cars is expected to be more than 200,000 yuan. Euler has previously sold cars with low unit prices, and whether the more expensive "cats" can be sold will be the key to the transformation of New Energy of Great Wall Motors.
In this regard, automotive analyst Zhang Xiang told Owl Technology: "Although Great Wall Motors is very crisis conscious, it has a landing layout in the fields of electrification, hydrogen energy and automatic driving. But in terms of the speed of transformation, it is still not fast enough. ”
In 2022, the new car-making forces continue to march forward, and many independent brands have also explored their own transformation path, for Great Wall Motors, there are still many things to do.
Perhaps, the current situation of Great Wall Motors is still suitable for Wei Jianjun's words in the reflection video in 2020: "What will happen in the future?" In my opinion, life hangs in the balance. ”