Author | Jia Weizhong
Source | Car selection network
BYD's suspension of fuel vehicles is the big news of the month, which won the applause of most media, but after the applause, I was a little worried.
Applause!
Recently, BYD's announcement of the suspension of fuel vehicles has won applause.
In early April, BYD issued the "Instructions on Stopping the Production of Fuel Vehicles" (hereinafter referred to as the "Instructions"). The "Explanation" shows: "According to the needs of the company's strategic development, the production of fuel vehicles will be stopped from March 2022." In the future, BYD will focus on pure electric and plug-in hybrid vehicles in the automotive segment. At the same time, BYD will continue to provide perfect service and after-sales protection for existing fuel vehicle customers, as well as the supply of spare parts throughout the life cycle to ensure worry-free travel. ”
After the release of the "Notes", many media gave high praise. Some media believe that "this announcement marks THAT bydir has become the first vehicle company in the world to completely stop production of traditional fuel vehicles." ”
Some media also believe that "as the head of the new energy vehicle business of traditional domestic car companies, BYD can be described as the most daring traditional car company, and this action also indicates a turning point in history." ”
In the eyes of most media, BYD dares to be the first in the world and deserves praise.
Cut off a relationship?
After BYD released the "Instructions", did it really cut off its relationship with fuel vehicles? Some media have given a negative answer.
The media analysis said: "BYD is the first car company in the world to stop production of traditional fuel vehicles, rather than the car company that has stopped production of fuel vehicles. Because BYD will continue to produce plug-in hybrid vehicles, such cars still have internal combustion engines and burn oil. ”
Since the internal combustion engine will still exist in some of BYD's automotive products, why did the company issue a "note"? Some media believe that "an important reason why BYD dares to take the lead in stopping production of traditional fuel vehicles is that the proportion of sales of traditional fuel vehicles has been insignificant, and the suspension of fuel vehicles has little impact on the company's performance." ”
According to BYD's March production and sales report, "IND's traditional fuel vehicles sold a total of 5,049 units in the first three months of this year, accounting for only 1.7% of the total sales of 291,000 vehicles." It is true that "the discontinued fuel vehicle has little impact on BYD's performance", so BYD took the initiative to abandon the traditional fuel vehicle.
However, comparing BYD's annual sales data in 2021 and 2020, the announcement shows: "In 2020, BYD sold 426,000 vehicles, of which 237,000 fuel vehicles were sold; in 2021, BYD's cumulative sales were 740,000 units, of which 136,000 were fuel vehicles." Obviously, the proportion of BYD's annual sales of traditional fuel vehicles has fallen from 55.5% to 18.3%.
In other words, it is not so much that BYD voluntarily abandons fuel vehicles, but rather that the market is gradually snubbing BYD's fuel vehicles. And it should be reiterated that BYD has not stopped production of traditional internal combustion engines.
Competition in the same industry
Since BYD has not stopped production of cars with traditional internal combustion engines, it means that some media have not established the statement of "abandoning the confrontation with multinational brands in the fuel vehicle market".
The reason is that consumers buy cars to compare between the same price point, taking the price range of 100,000-150,000 yuan as an example, which includes both traditional fuel vehicles, pure electric vehicles, and hybrids... In the economic downturn, sluggish demand, the competition in the same industry is unprecedentedly fierce, if you want to exchange for the real money and silver that consumers hold tightly in their hands, you must be tough.
At the same time, the appearance of competition in the automobile market is a product showdown, and behind it is the consumer's recognition of the automobile brand culture. Therefore, Geely and Great Wall, which are also private enterprises, have launched a new high-end brand on the basis of traditional brands to meet the diversified needs of consumers, which is precisely BYD's shortcomings.
The "BYD Replacement Flow Research Report" from the 58 Tongcheng Automobile Research Institute shows: "In the low-price range, BYD replacement users do not have obvious upgrade and replacement needs, the target model price range is mainly concentrated below 200,000 yuan, and the exchange is still based on economy; in the new energy field, BYD has an absolute advantage in the new energy replacement market, combined with the existing stock market exchange situation, the brand can continue to deepen in the field of new energy, launch low-cost commuter products, in order to obtain more customers." ”
It can be seen from the big data analysis report of the media that because BYD users "have no obvious needs for upgrading and purchasing", the suggestion given by big data is to "launch low-cost commuter transportation products to get more customers". This is in stark contrast to Geely and Great Wall's focus on high-end brands and meet consumption upgrades through brand upgrades, with the aim of keeping consumers on their own plates.
In short, big data's advice to BYD is to go down, while Geely and the Great Wall are seeking to attack upwards.
Earnings declined
Compared with BYD, most car companies have not given up traditional fuel vehicles, which is important because the new energy automobile industry is currently difficult to make a profit, and the improvement of new energy vehicle technology depends on the profits of traditional fuel vehicles. Isn't this clear to BYD?
Non also. Much higher than Geely and Great Wall's cash volume means that BYD is more worried about the future than the two companies. ACCORDING TOD's financial report: "As of the end of 2021, monetary funds will be about 50.46 billion yuan, an increase of 349% year-on-year; cash and cash equivalents will increase by 36.08 billion yuan, an increase of 1647.96% year-on-year." "During the same period, Geely and Great Wall's net cash was 20.8 billion yuan and 27.91 billion yuan, respectively.
The reason why BYD reserves much more cash than Geely and The Great Wall may be due to the decline in the company's profitability. The financial report shows: "In 2021, the company's net profit was 3.05 billion yuan, an increase of -28.08% year-on-year." In 2021, the revenue of new energy subsidies totaled 5.87 billion yuan, an increase of 255.2% year-on-year. ”
In this regard, some insiders pointed out: "BYD's profit decline, perhaps because the company's new energy vehicle sales doubled last year, swallowing too much profit, even if it gets a huge subsidy, it is difficult to recover the decline in profits." ”
If the above inference is true, then this year's new energy subsidies continue to decline, while raw material prices soared, lost the support of traditional fuel vehicles, and lack of high-end brands to attract consumers to buy BYD may be more difficult to achieve profit growth.
Overall, geely, Great Wall and BYD three private vehicle manufacturing enterprises, although they have their own characteristics in terms of operation, are all excellent enterprises in China's auto industry and carry the hope of China's auto development. Therefore, when I saw BYD issue the "Instructions on Stopping the Production of Fuel Vehicles" and heard too much praise and applause from the media, it made me a little worried.
(Image source: Internet)