Sales fraud and quality crisis are concurrent, and it is difficult to escape the brand trust crisis
Leap Auto encountered dealer backlash and user collective complaints, which is obviously the "sequelae" left by its early years of running all the way and racing horses, which is a direct confirmation of the intensification of various contradictions.
Source|See column
Industry scandals such as quality issues in the automotive industry are nothing new. Moreover, even international brand-name cars and domestic listed companies are not exempt from vulgarity. Not long ago, their own dealers exposed "sales fraud and quality problems", which plunged the Hong Kong listed company Leap Auto into a public opinion crisis.
According to media reports, the cause of the incident was near the release of Leap's earnings report, and a dealer broke the news that pushed Leap Car to the cusp. In the video, the dealer mentioned that the sales of Leap cars were fake, and the quality was worrying. Although Leapmotor has repeatedly issued clarifications, netizens do not buy it, and public opinion continues to ferment.
Companies are in a crisis of trust, and the first thing is their product sales. Although the official response of Zerorun was timely, it still affected the purchase mentality of many consumers, and customer loss was inevitable. At that time, there were many stores in Yemen.
As the fourth new car-making force to successfully land on the capital market after "Wei Xiaoli", the previous zero run was incomparable. In contrast, it is also worrying about the sustainability of the future development of the Leap Car that has been running wildly.
Dealers anti-water, consumer complaints, Zero Run was "pinched" by two ends
As a listed company, whether the financial data is beautiful is an important basis for obtaining investor support. It is understood that the dealer broke the news that Zerorun sold fraud in December last year, coerced dealers to list in the name of employees to rush sales, there is no professional after-sales, the quality of new cars is worrying, C11 test drive to the store immediately has quality problems, product quality problems are frequent.
It is worth mentioning that after Zerorun issued a public statement denying the relevant information, the dealership manager released a video again and appeared in response, which can provide test drives and exhibition vehicles as evidence for public complaints against Zerorun. The store manager also said in the video: "Welcome netizens to the store to check the quality of Leap cars."
At the same time, the dealer manager said that he could provide information such as the frame number of the vehicles falsely listed nationwide in December. Moreover, the dealer also said that he was kicked out of the work group because he reflected the problem of fraud to Zero.
At the same time, Leap was also accused of forced buying and selling, forced deduction of forced deductions and forced car distribution by dealers, and under the words of dealers, netizens also had to doubt the letter and re-examine the brand of Leap Auto.
Although Zero Run has issued several articles to clarify and explain, outsiders do not know what the facts and truth are. However, the occurrence of this incident also made the outside world see that the relationship between Zerorun and its dealers is not harmonious, and there may even be conflicts of interest and contradictions.
It is understood that in addition to being frequently questioned on the dealer side, Leapmotor is also not flattering on the consumer side.
For example, in the past period, Zerorun has frequently reduced prices. However, some car owners said that there was a reduction in the price of Leap Motor. Recently, many consumers have complained to major media and complaint platforms that the C11 series cars they purchased at Leapmotor have been greatly reduced, and the configuration of the handheld cars does not match the publicized configuration when ordering. Consumers said that Leap Auto's move was not informed to customers in advance, nor was it reflected in the configuration list when ordering, questioning the manufacturer's false publicity and deceiving consumers.
Moreover, this kind of complaint is not an isolated case, there are also consumer feedback: "Leap car secretly reduced, gear lights, cosmetic lights, switch lights and other configurations concealed and secretly reduced, suspected of fraud." Request to unsubscribe or deliver as configured in the announcement. ”
Through the black cat complaint verification, the cumulative number of complaints of Leap Auto is as high as more than 1,000, and there are still a large number of complaints that have not been resolved. Looking through the complaints, most of them are related to car quality and after-sales refund disputes. This also means that Leap Auto not only loses the "people's heart" in the dealership, but also in the eyes of consumers, its quality and service are difficult to match the brand status of Leap Auto.
Revenue skyrocketed but losses increased, and profitability was questionable
After the Leap Auto went public, investors were hopeful about it. However, in 2022, Leapmotor released its first annual report after listing, which was far from investors' expectations.
The data shows that the operating income in the reporting period was 12.385 billion yuan, a year-on-year increase of 295.41%, and the net loss attributable to the parent company was 5.109 billion yuan, a year-on-year increase of 79.53%.
At the same time, according to the data at the end of 2022, Leapmotor has a total of 548 sales stores in 137 cities across the country, with an average monthly sales of only 2.08 vehicles per store, which not only makes it difficult for car companies to sustain, but even the wages of in-store personnel cannot afford. Extending the long-term cycle, while the revenue of Leap Auto has increased year by year, its profit is still far away.
At the same time, after the withdrawal of the new energy state, the new energy vehicle market fought a price war, and Leap Auto was also forced to get involved, since March this year, Leap Auto released four new cars, and brought price reduction news, and the price reduction range is often 3-50,000 yuan.
In fact, under the price war of new energy vehicles, it is not impossible for car companies to reduce marginal costs and achieve profits. Previously, Zhu Jiangming, the founder of Leap Auto, also said on the profit side: "It is expected that when the company's sales reach 500,000 vehicles, the gross profit margin can be positive through scale effects." ”
However, in the past 2022, the annual sales of Leapmotor Auto were 111,200 units, although it achieved a year-on-year increase of more than 150%, but there is still a huge gap from its gross profit margin turning positive. What is more deadly is that at the beginning of 2023, Leap Auto did not continue to advance with the general market situation after the epidemic and the industry trend picked up.
For example, in January 2023, Leapmotor delivered a total of 1,139 units, down 86.59% month-on-month and 85.9% year-on-year. 3,198 units were delivered in February, down 6.9% year-on-year. You know, this kind of sales is almost in the bottom position among the new forces of car manufacturing. In this regard, Leapmotor said: "The reason for the decline is mainly that the company was iterating models from January to February, and mainly completed the SOP and production line introduction of the 2023 model. ”
However, it is embarrassing that in March, although the sales of Leap cars increased slightly month-on-month, they were still in a sharp downward trend year-on-year. According to public sales volumes, in March, Zerorun sold only 6,172 units in a single month, an increase of 93% month-on-month and a year-on-year decline of 38.6%. It can be seen that throughout the first quarter, Leap Auto still has not come out of the haze of declining sales, and the data of more than half of the sales discount is enough to show that Leap Motor's turnaround may be hopeless in the short term.
Financial data show that Q1 Leapmotor achieved revenue of 1.443 billion yuan, down 28% year-on-year and 52% month-on-month, operating loss of 1.1596 billion yuan, and net loss attributable to parents of 1.133 billion yuan, compared with a net loss of 1.0422 billion yuan in the same period last year.
It is worth mentioning that according to the previously announced goal of Leap Auto, the sales target of Leapmotor in 2025 is 800,000 units. However, from the current sales and growth rate of Leap Auto, the distance between Leap Car and this target can be described as heavenly.
The moat is not deep, and it is difficult to highlight the encirclement
For Zerorun, it is gratifying that after the second quarter, its sales situation has improved. April sales went further to 8,726 units; In the just-concluded May, Leap Car sales reached 12,058 units, an increase of 38.18% month-on-month, returning to the "10,000 Vehicle Club". This also means that after a short sales adjustment, Leap Car has increased its sales tenfold in just 5 months.
However, the reason for the sharp increase in sales may be related to the sharp price reduction of many models. Looking closely at the comprehensive strength of Leap Auto, the industry is also very worried about whether its moat is deep enough.
First of all, the global self-research and self-manufacturing chips of Zerorun may not be enough to form its core competitiveness. This can be seen through its independent R&D investment and strength capabilities.
According to the prospectus, Leapmotor will use about 40% of the proceeds from the listing on R&D, about 25% on enhancing production capacity, about 25% on business expansion and brand awareness, and about 10% on working capital and general corporate purposes.
But in fact, there is not much technology accumulation before its launch. For example, according to the prospectus, from 2019 to 2021, the R&D investment of Leapmotor was 358 million yuan, 289 million yuan and 740 million yuan, accounting for 306.4%, 45.8% and 23.6% of the total revenue in the same period, showing a significant downward trend.
It is worth noting that its R&D investment is less than double-digits, which is far from the top three "Wei Xiaoli". For example, in 2019-2021, NIO spent RMB4.429 billion, RMB2.488 billion and RMB4.592 billion, while Xpeng Motors spent RMB2.070 billion, RMB1.726 billion and RMB4.114 billion; Li Auto's R&D expenses were CNY 1.169 billion, CNY 1.100 billion, and CNY 3.286 billion, respectively.
This also means that after the listing of Leap Auto, it is particularly difficult to catch up with the head of the industry with the help of capital.
In addition, some models originally positioned as mid-to-high-end models are constantly reducing their prices due to price wars, and gradually blurring their positioning and undermining brand value.
For example, the 2023 Leap T03, which is positioned as an A0-class car, has a price reduction of up to more than 20,000 yuan; The 2023 Leap C01, which is positioned as an intelligent luxury medium and large electric sedan, has a price reduction of up to nearly 60,000 yuan; The 2023 Leap C11 pure electric version of the intelligent super enjoy electric SUV will be reduced by up to 30,000 yuan.
It can be seen that in terms of brand power, product power, technical ability, product quality, after-sales service, etc., there are practical problems and obstacles in Leapcar. Moreover, in terms of the relationship connection with dealers and end users, Leapmotor has repeatedly touched their bottom line, which has also buried hidden dangers for its long-term development.
As a rising star second only to the new energy vehicle troika "Wei Xiaoli", when Leap Auto began to enter the game, it was full of strength, so it also quickly established its brand influence, sales occupancy, and successfully landed in the secondary capital market, and its rapid development speed is undoubtedly worthy of recognition.
However, the so-called speed is not enough. Now Leap Auto has encountered dealer backlash and collective complaints from users, which is obviously the "sequelae" left by its early years of running all the way and racing horses, which is a direct confirmation of the intensification of various contradictions. And once the Leap Car cannot properly clean up the "endgame" left by the past, the potential crisis brought to the leader in the future will also be self-evident.
It is believed that Leap Auto, which has returned to the right track in terms of sales and restarted its growth model, has long been prepared for these variables.
This article is for knowledge sharing only and does not constitute the provision or reliance on investment, accounting, legal or tax advice. Any investment decision made on this basis is at your own risk.