Recruiting agents, Hengchi 5 off the line, can Evergrande Automobile turn over?

Text | Travel by wire, author | Zhou Xiongfei

Recently, Hengchi, a brand of Evergrande Automobile, released a message with the "recruitment of authorized agents" in its official Weibo, in its recruitment details page, it not only shows the operation mode of the future vehicle sales channel, but also stipulates the conditions for joining, such as recognizing the development model of Hengchi and the registered capital of not less than 5 million yuan.

Hengchi released the agent joining notice, screenshot from Hengchi official micro

In addition, Hengchi also calibrated the franchised store building standards, such as the exhibition hall area and high clearance details, and listed the process of joining, which shows that Hengchi has made a very detailed description of the agent's joining.

At the same time as the authorized agents joined, there were also offline experience activities for Hengchi 5 models.

According to the official introduction of Hengchi, during the "May Day" period, it held experience activities for Hengchi 5 models in offline experience stores in Guangzhou and Tianjin. In fact, since the end of March this year, there have been some news in the industry and the landing of Hengchi 5 offline experience stores.

As early as the middle of January this year, Hengchi officially announced that the first car of Hengchi 5 was officially rolled off the production line from the factory, 12 days earlier than the original time previously stipulated. It should be noted that Hengchi 5 appeared in the new car declaration directory of the Ministry of Industry and Information Technology in November last year.

From the first car of Hengchi 5 off the production line, to the holding of offline experience activities, and now to open the agent to join, this series of actions seems to announce that Hengchi 5 has entered the countdown stage of listed mass production. However, the industry is full of doubts about whether Hengchi can achieve this goal.

Since Evergrande obtained the car-making qualification through the acquisition of car companies in 2019, it began to embark on the road of new energy car manufacturing, and launched 9 models in one go at the 2021 Shanghai Auto Show, which once detonated the entire auto show. But then not only did none of these models really land in mass production, but Evergrande Automobile itself was also involved in the storm of suspension of work and production and debt.

By January this year, the models that could achieve mass production had changed from the first 9 models to the Hengchi 5, but to achieve mass production, it was first necessary to have sufficient cash flow to ensure stable production capacity. According to the performance data released by Evergrande Automobile at the end of August last year, it has accumulated a loss of 18.83 billion yuan as of the first half of 2021, and the loss is in the trend of expanding year after year.

It is precisely because there is no money, in the establishment of sales channels, Evergrande Automobile will choose a different franchise system from the "Wei Xiaoli" direct operation model. However, in the industry's view, although the threshold for Evergrande Automobile to join the channel is low, based on the well-known dilemma that Evergrande Automobile is currently in, there should not be many agents willing to join.

Today, although Evergrande Automobile seems to be moving on the right track step by step, it is still in a fog of uncertainty.

01 Who can represent Evergrande Automobile?

On the last day of the "May Day" holiday, a merchant page about "authorized agent recruitment" appeared on Hengchi's official Weibo, in which Hengchi made a detailed list of sales models, store construction standards, investment policies, qualification requirements and franchise processes.

In terms of sales model, Hengchi said that it will adopt the model of order-based sales and asset-light operation. Order-based sales, in short, is to arrange the factory to produce according to the order volume, and then deliver the produced products to consumers. Compared with the mainstream warehouse-based sales in the industry, which are manufactured first and then sold to the market, this practice can reduce the pressure on inventory in order to achieve the purpose of asset-light operation.

Asset-light operation is also reflected in the establishment of sales centers. According to the requirements given by Hengchi, its sales center needs to be established in the automobile business circle, the area of the exhibition hall needs to reach 200-300 square meters, the exhibition area of the exhibition car display area is greater than 150 square meters, and the clearance height should reach 3.5 meters.

Hengchi agents join the sales model and store construction standards, screenshot from the introduction of joining

Looking at this store standard alone, it seems to be very demanding, but in the industry, it seems to be the opposite.

"The 'auto business district' in Hengchi's requirements for building stores is not a shopping city business district with the layout of new forces such as Weilai and Xiaopeng stores, but an area such as an automobile city on the outskirts of the city." In the automobile city, the general 4S store will start from 2000 square meters, compared with Hengchi's 200-300 square meters sales center is too small. Liu Bin, domestic regional sales manager of the Mercedes-Benz brand, explained to the connection travel.

Perhaps it is precisely because of this that Hengchi will position the sales center as "small and fine". According to Hengchi's plan, such a sales center should support services such as sales and test drives. This also means that after the completion of the Hengchi sales center, in terms of function, it will be more biased towards the stores currently established by "Wei Xiaoli".

Similar to the standard of building a store, the qualification requirements for the agents listed by Hengchi also have higher restrictions in the eyes of the outside world, but in fact, the threshold is also very low. According to Liu Bin, although Hengchi requires the registered capital to reach 5 million yuan, it does not require the actual payment of 5 million yuan, which is a low threshold for joining.

According to the latest Company Law and related regulations, at present, the registered capital of a company only needs to register the total amount of registered capital, and it is not mandatory to submit a capital verification report, which means that it is not necessary to pay all the total registered capital at the beginning.

In contrast, other car companies have higher requirements for agents to authorize franchises.

Taking Xiaopeng Automobile as an example, as one of the new forces of domestic car manufacturing, although the layout of sales channels is mainly directly operated like Weilai and Ideal, it has also opened up a part of the franchise channels on this basis.

According to its official website, in order to become an agent of Xiaopeng, it must have no less than 3 4S stores, high-end brands first, and also requires that the annual revenue of the automotive business sector needs to reach more than 100 million yuan, and the asset-liability ratio is less than 70% "red line".

In Liu Bin's view, if according to Hengchi's standards, the investment in one of its sales centers will be very small, based on the agent's ready-made 4S store, plus more than 100,000 renovations, the overall cost will basically be around 1 million-2 million yuan.

For the general luxury brand 4S store, the cost of light decoration and equipment will reach tens of millions of yuan, and Hengchi's playing style is not an order of magnitude at all.

In terms of joining the process, Hengchi has also made certain simplifications.

Compared with the joining process of Hengchi and Xiaopeng, although both parties have as many as five steps in the process, including submitting the application, qualification review, signing the store construction agreement, store construction and store acceptance. However, in terms of details, Xiaopeng needs to let the agent pay a deposit in the process of signing the store construction agreement, while Hengchi does not have this requirement.

According to Liu Bin, generally speaking, the brand side will charge a deposit for the agent when joining, such as Xiaopeng's deposit of about 800,000 yuan, which is a means of restraint for the brand side to the agent. For Hengchi, perhaps in order to shorten the agent franchise process and time, this link is omitted first, but this does not mean that Hengchi will not charge a deposit afterwards.

In addition, in terms of the application for joining, Hengchi and Xiaopeng also have a difference. By checking the application forms of both parties, Lianxing found that the format of Xiaopeng's application is a document file, and in addition to the basic information such as the applicant's name and company name, it is also necessary to fill in the company's equity structure and its own advantages, etc., which is more formal and detailed as a whole.

In contrast, Hengchi's application form is not a formal document, but a simple filling in mini program. In terms of content, it is only necessary to fill in the basic information such as the applicant's name, company name, and current operating brand, which is simpler than Xiaopeng's application.

Hengchi (left) compares with the application form of the authorized agent of Xiaopeng Automobile, and the screenshot is from the application

From the low standard of building a store, to the omission of the franchise process, to the simplification of the franchise application, in the industry's view, Evergrande Automobile is most likely to further reduce the threshold for agents to authorize franchise and shorten the process of joining, so as to attract more agents to join and accelerate the layout of sales channels.

And all this preparation is also to better sell the car to pave the way.

02 Offline, open experience, Hengchi 5 to be listed for mass production?

The mass production time of Hengchi 5 is getting closer and closer.

According to the recent announcement released by Evergrande Automobile, Hengchi 5 will achieve mass production on June 22 this year. Liu Yongzhuo, president of Evergrande Automobile, also said in March this year that the work of Hengchi 5 is progressing smoothly and is making final preparations for the listing and mass production of Hengchi 5.

Hengchi 5 listed mass production planning time, screenshot from Evergrande Automobile announcement

The reason why Evergrande Automobile officially has the confidence to announce such news is also because Hengchi 5 has a series of favorable trends before.

Facts have proved that Hengchi 5 has achieved its downline as scheduled this year. On January 12 this year, Hengchi issued a notice on its official Weibo, announcing that the first mass-produced model of the Hengchi brand, the Hengchi 5, was rolled off the production line at the Tianjin plant, 12 days earlier than originally planned.

A month later, in the 353rd batch of automobile declaration information released by the Ministry of Industry and Information Technology, the name of Hengchi 5 appeared in the public information, and it should be noted that this is the second time that this model has appeared in the public list.

As early as last November, Hengchi 5 appeared in the Ministry of Industry and Information Technology's 350 batches of vehicle product publicity, according to the information given at the time, the model was produced and manufactured by Evergrande New Energy Automobile (Tianjin) Co., Ltd.

Hengchi 5 appeared in the ministry of industry and information technology new car announcement, screenshot from the official website of the ministry of industry and information technology

According to the model planning of Evergrande Automobile, Hengchi 5 length, width and height are 4725mm, 1925mm and 1688mm, the wheelbase is 2780mm, from the size point of view, Hengchi 5 and Xiaopeng G3, WM EX5, are compact SUV models; the price will be less than 200,000 yuan, benchmarkIng Audi Q3, BMW X1 and other models.

From the appearance point of view, Hengchi 5 has a streamlined body and hidden door handles, which is in line with the mainstream design style in the industry as a whole.

The body of Hengchi 5 is equipped with a drive motor from United Electronics, with a peak power of 150kW and a rated power of 60kW; electronic appliances have chosen a global control architecture jointly developed with Bosch; and in terms of power batteries, it is equipped with lithium iron phosphate batteries in the Ningde era.

In terms of power performance, Hengchi accelerates from 50 to 100 kilometers in 7-8 seconds, the maximum speed is 180km/h, and the CLTC cruising range can reach 602 km. According to the first electric network report, Hengchi 5 will also be equipped with the H-SMART OS Hengchi intelligent networking system jointly built with Tencent, based on this system, the model can achieve L2+ level automatic driving assistance function.

In the industry's view, Hengchi 5 entered the public list of the Ministry of Industry and Information Technology, which means that Hengchi 5 has passed the review of relevant departments and has the qualification for listing and sales. After all, the entry of vehicle products into the Ministry of Industry and Information Technology is a necessary review procedure before the product is listed.

During this year's "May Day" period, at the same time that Hengchi opened the recruitment of agents, it also held a static experience meeting of Hengchi 5 in Guangzhou and Tianjin experience centers, which was also the first offline appearance to the public after Hengchi 5 mass production vehicles rolled off the production line.

Hengchi 5 new car offline experience activities, screenshot from Hengchi official micro

Although the experience activities for Hengchi 5 were officially opened during the "May Day" period, according to Wired Travel, the Hengchi Experience Center in Guangzhou has been implemented in March this year, and its location is also located in the business district of Guangzhou, and the Hengchi 5 exhibition car has also been arranged in the store at that time.

From the visits and reports of many media, it can be seen that the Hengchi 5 exhibition car exhibited in Guangzhou and Tianjin Hengchi Experience Center has not changed much from the model data released by the Ministry of Industry and Information Technology, and belongs to the final form before the mass production and listing.

Now, whether it is hengchi 5 first car off the line and offline experience, or opened the agent franchise model, in the eyes of the outside world, evergrande automobile and Hengchi are on the right track of car manufacturing. As a result, many people began to think about the fate of Evergrande Automobile.

03Can Evergrande Auto turn over?

It is undeniable that Evergrande Automobile has been in a lot of holes at present.

On March 21 this year, Evergrande Automobile issued a suspension announcement, saying that at the request of the company, its shares were briefly suspended from 9 a.m. today.

As for the reasons for the suspension, Evergrande Automobile said in the "inside information" announcement issued later that due to the significant changes in the operation of the company's real estate sector since the second half of last year, a large number of additional audit procedures have been added for the current year, coupled with the relevant impact of the new crown epidemic, according to the information currently available to the company, the company cannot complete the audit procedures on schedule.

According to Tiger Securities data, Wired Travel did see that Evergrande Automobile's Hong Kong stocks were in a state of suspension, and its stock price and market value also stayed at HK$3.2 per share and HK$34.7 billion.

By looking through evergrande automobile's stock price and market value performance since its listing in 2008, China Online Travel found that it reached the highest value in February 2021, with its stock price reaching a maximum of HK$69 per share and a market capitalization of HK$60.83 billion in that month.

In contrast, Evergrande Automobile's stock price has fallen by 95.3%, and its market value has even evaporated by HK$26.13 billion.

In terms of net loss, Evergrande Automobile recorded 4.79 billion yuan, down 110.51% year-on-year. Such losses have begun in 2018, and the net losses in 2018-2020 are 1.428 billion yuan, 4.947 billion yuan and 7.665 billion yuan, which shows that its losses are in the trend of expanding year by year, and as of the first half of 2021, Evergrande Automobile has accumulated losses of 18.83 billion yuan.

According to Wind data, Evergrande Automobile's cash and cash equivalents in 2018-2020 were 1.6 billion yuan, 9.9 billion yuan and 10.5 billion yuan respectively. Although its cash reserves are still growing slightly as of December 31, 2020, its total liabilities have also increased significantly over the years, with total liabilities of $22.8 billion, $94.7 billion and $155.9 billion from 2018 to 2020, respectively.

Based on the above performance data, Evergrande Automobile can be said to have fallen into the predicament of debt and insufficient funds. Because of this, Evergrande Automobile announced in August last year that it would sell some of its projects and assets in order to repay its debts.

For Hengchi 5, it is difficult to have this strength.

First of all, from the appearance point of view, the design of Hengchi 5 is decent, and there are not many highlights; in terms of interior, from the current public information, although it has a triple screen design, it is different from the two-screen design of Weilai and Tesla, but this design has appeared as early as the ideal ONE, zero-run C11 and other models, which is not unusual.

In terms of cruising range, Hengchi 5 can achieve 602 kilometers, although it has exceeded the industry's passing line, but if this endurance level is compared in the track of new energy compact SUVs, it does not have much advantage. Because the maximum cruising range of the Nezha U and GAC AION Y, which are also compact SUVs, also exceeds 600 kilometers, the cruising range of models such as Xiaopeng G3 and Zero Run C11 has also reached about 550 kilometers, which is not much different from Hengchi 5.

As an intelligent aspect that is currently valued by consumers, public information shows that Hengchi 5 only has L2-level automatic auxiliary driving capabilities, compared with the higher-end urban road automatic auxiliary driving capabilities of Car companies such as Xiaopeng and great wall, which have also been unveiled to the outside world, and Hengchi 5 has a big gap.

In addition to the lack of advantages of the model itself, Hengchi's brand power and financial ability have also become an important factor restricting the listing and sale of Hengchi 5.

"Based on the current lack of capital reserves and the current situation of declining performance of Evergrande Automobile, it is still unknown whether it can support the listing and mass production of Hengchi 5 in the future." Even if mass production can be achieved in the end, Hengchi's brand power has been exhausted with the occurrence of previous layoffs, asset sales and other events, not to mention that many consumers do not know the brand. Zhang Xiang, a special expert of the China Bo Lian Think Tank, told The Link Travel.

Hengchi 5, the source of the picture Hengchi official micro

Even so, for Evergrande Automobile, in the current context of new energy vehicles is still the outlet of the industry, car manufacturing is already an extremely important "life-saving straw", which must be grasped.

(In the text, Liu Bin is a pseudonym.) ）