Behind Geely's record sales of new energy: Lynk & Co turned from profit to loss
Recently, Geely Automobile announced its latest sales figures. The company's passenger car sales in August were 152626 units, up more than 10% month-on-month and about 25% year-on-year, the best August sales in history, and has achieved seven consecutive months of year-on-year and month-on-month growth. While sales of new energy vehicles have reached new highs, profitability is being tested.
Sales of new energy vehicles reached a record high
New energy vehicle sales hit a new high, which was a highlight of Geely Automobile's sales in August. In August, Geely Automobile's sales of new energy (including Geely, Lynk & Co, Zeekr and Ruilan) were 47,299 units, a year-on-year increase of more than 26% and a month-on-month increase of more than 15%, setting the best new energy vehicle sales in history, with new energy vehicles accounting for about 31%.
Among them, Zeekr delivered 12,303 units in August, a year-on-year increase of about 72%, setting a record high for the monthly delivery of Zeekr From January to June this year, a total of 42,633 units were delivered, a year-on-year of 124%. In the pure electric vehicle market of more than 300,000 yuan, the brand has a market share of 27.4%. Up to now, the cumulative delivery volume of the Zeekr brand has exceeded 140,000. Geely Galaxy's new mid-to-high-end new energy series "Geely Galaxy" sold 11,117 units in August, an increase of more than 10% month-on-month, and Geely Galaxy L7 achieved monthly sales of more than 10,000 consecutive units in the third month of its launch. Geely brand's popular fashion pure electric series geometry sold 17,836 units in August, an increase of more than 42% month-on-month. In addition, the battery replacement brand Ruilan Auto sold 3,423 units in August.
In August, sales of the Geely brand (including geometry) 118204 units, up more than 13% month-on-month and 23% year-on-year, setting a new high for the year. Among them, the sales volume of the "China Star" high-end series was 31,548 units, an increase of about 14% month-on-month and a year-on-year increase of about 39%; Boyue L sales were 11,619 units, with continued positive growth month-on-month; The cumulative sales volume of the Emgrand family officially exceeded 3.7 million units on the 14th anniversary of its listing. Lynk & Co's sales in August were 18,696 units, a year-on-year increase of about 24% and a month-on-month increase of about 9%, achieving positive month-on-month growth for seven consecutive months.
In terms of exports, Geely Automobile Group's export sales in August reached 24,713 units, up about 21% month-on-month and 26% y/y, also hitting a record high. According to Geely's semi-annual report, exports accounted for 17% of the group's total sales. However, at present, the export products are still mainly fuel vehicles.
The overall "increase in revenue does not increase profit", and Lynk & Co turned from profit to loss
However, as sales continue to increase, Geely Automobile is also facing the status quo of "increasing revenue without increasing profits". Geely Automobile's 2023 half-year report previously released showed that in the first half of the year, the company's operating income reached 73.182 billion yuan, a year-on-year increase of 26%; The net profit attributable to shareholders of listed companies was 1.57 billion yuan, a slight increase of 1% year-on-year. While sales growth drove revenue growth, profit could not keep up with the growth of operating scale, but overall it was still at a steady level.
At present, Geely Automobile's total cash level is RMB33.64 billion, and operating cash flow has increased by 9.1% to RMB10.7 billion. At the same time, Geely Automobile has continuously increased its investment in R&D for intelligent electrification, with a total R&D investment of CNY 5.91 billion, a year-on-year increase of 62.8%.
According to the financial report, the average selling price of Geely's bicycle in the first half of the year was 101,200 yuan, a year-on-year increase of 7%; Overall gross margin was 14%, flat year-on-year. The increase in the price of bicycles is inseparable from the rapid sales growth of the Zeekr brand. Moreover, the average order amount of the main sales model Extreme Krypton 001 exceeded 336,000 yuan. It is worth mentioning that Geely's revenue from sales of automobiles and related services in the first half of the year was 60.284 billion yuan, a year-on-year increase of 22.52%; The revenue from sales of battery packs and related parts was 5.955 billion yuan, more than three times that of the same period last year. This is also due to the increase in sales of new energy vehicles led by Zeekr, which has helped the sales of battery packs and related parts to increase revenue.
In the case of sales-driven revenue growth, Geely's net profit in the first half of the year stagnated slightly, which is also related to the company's large-scale new energy vehicles and the large investment of its new brands in product research and development, channel layout, etc.
According to the half-year report, Geely's sales expenses in the first half of the year were 4.768 billion yuan, a year-on-year increase of 44.35%, mainly affected by the construction and operation of direct sales channels of Zeekr; Administrative expenses amounted to RMB4.867 billion, an increase of 4.4% year-on-year, mainly due to investment in new energy business. Among the two major new energy brands positioned as mid-to-high-end and high-end, Zeekr delivered 42,600 new vehicles in the first half of 2023, a year-on-year increase of 124%; Revenue was 21.283 billion yuan, a year-on-year increase of 141%. Although the net loss increased by 49 million yuan year-on-year, the steady growth of sales volume contributed to the group's revenue.
Compared with the pure electric luxury brand Extreme Krypton, Lynk & Co, which is positioned as a mid-to-high-end company, sold 82,037 units in the first half of the year, a year-on-year increase of 6.2%, and its revenue was 12.462 billion yuan, which was the same as last year. This means that the average price of the brand was dragged down by the "price war" in the case of increased sales, and it decreased slightly year-on-year. At the same time, the net profit also changed from a profit of 200 million yuan in the same period last year to a loss of 660 million yuan. According to the financial report, the performance of the Lynk & Co brand has declined due to the active expansion of innovative business models and new energy transformation in overseas markets, which has a certain negative impact on the group's performance. However, the profitability of the Group's overall fuel vehicle sales business is still good, and the continuous diversification of revenue sources can provide stable support for the Group's performance.
In fact, compared with the sales volume of Extreme Krypton month, which gradually exceeded 10,000, the Lynk & Co brand, which had a good reputation, fell into a downturn in the field of new energy. Among Lynk & Co's new energy series products, the highest sales volume of 09 EM-P, the average monthly sales in the past six months has just exceeded 1,000 units. As for the new energy versions of Lynk & Co 01, 05 and 06, the cumulative sales of each of them in the past half year are only three digits.
Earlier, a senior executive of Geely Automobile told the media that Lynk & Co is currently facing a transitional transition period, increasing the investment in new energy and the depreciation and amortization of fuel vehicles, all of which have an impact on profits. He believes that with the launch of new energy products, Lynk & Co will quickly achieve a turnaround. Judging from the current performance of Geely Automobile, although the new energy business continues to develop, it is still difficult to expect this sector to bring good profitability to Geely in the short term. Next, it depends on whether the sales structure of the enterprise can be further improved and the number of new energy vehicles sold can reach a sufficient scale.
Written by: Nandu Bay Finance Agency reporter Liang Luozhe