Author: Xing Shubo
On April 19, Wei Jianjun, the founder of Great Wall Motors, soared to 240km/h at the age of 60 at his Xushui test site.
Bosses who like cars know how to build good cars. In contrast, Li Shufu, the boss of Geely who once shouted that "cars are wheels and sofas", has never publicly expressed his liking for cars. Geely is nothing more than an investment in his countless businesses.
In the early days, the quality of domestic cars was poor, and there was no cost-effective ratio of quality and price: although the price was cheap, the quality and reliability were difficult to describe. For example, in the early days, BYD F3 was easy to rot the chassis, and "Chery Chery car repair queue" became a bad stalk, the Great Wall had large fuel consumption, and Geely loved to have many small problems with oil leakage.
After that, BYD improved quality by learning from Toyota's lean production, and Chery and Great Wall solved the problem by independently developing three major parts. Geely is the only one that has chosen to invest and acquire and take the route of introduction and absorption.
Since then, Geely has launched many star models such as the Lynk & Co 01, Geely Xingyue and Polestar 2 using Volvo architecture, especially the Lynk & Co team's feat of winning six championships in five years on the TCR World Tour, which has successfully established Geely's current status.
But at this time and that time, Xiao Tiantian ten years ago is now Mrs. Niu. Volvo is now a burden to Geely. On April 21, Geely reduced its stake in Volvo AB, involving an amount of about HK $10 billion. Geely's announcement was also succinct and to the point: the cash-out transaction involved the repayment of bonds.
Since Volvo Cars was listed in Sweden in 2021, it took only three years for Geely Holding to reduce its stake from 100% to 78.7% of Volvo Cars.
Volvo has an organization of car owners, called Volvo Miracle of Life Club, which was first established in the United States, and the members of the club are consumers who survived the protection of Volvo cars in major traffic accidents.
CNN reported that Volvo owners had zero fatalities as of 2020. But later, a report by the Insurance Institute for Highway Safety (IIHS) showed that Volvo's flagship model XC60 (2014-2017) had the highest driver mortality rate among luxury SUVs in its class, even higher than those of Honda and Toyota.
The move shattered the myth of Volvo's safety in North America. In China, Volvo sales are also declining.
The sluggish sales are just the appearance, and there are at least three reasons why Geely has reduced its stake in Volvo.
- "Volvo's price-to-quality ratio is too low"
"I am the first owner of the Lynk & Co 01. I bought it for Geely and Volvo back then. When I bought it, I found that the center console was uneven and the body was rusty. Let's think it's half the price of a Volvo, and it's normal to have a little problem. "Xiao Wang is an old owner of Lynk & Co 01 and has been driving for five years now. He told the author that at first the car felt good, with the texture of Volvo's chassis and was very sporty. However, since the third year, the car machine has been stuck and the engine has failed frequently, and it has to be repaired almost every month, but it has not been repaired well. The most unbearable thing is Lynk & Co's automatic start-stop function, which can't be automatically turned off, and it has to be automatically turned off every time you get in the car, which is "annoying".
Xiao Wang's reflection of assembly problems, car machine problems, etc., are not only Lynk & Co, but also common in the models cooperated by Geely and Volvo. The Volvo brand itself has not escaped the curse of quality, and it is as ghostly as a dogskin plaster.
10 years ago, major car companies were playing cost-effective marketing, which is simply understood as who has faster speed and more configuration at the same price. Geely relies on Volvo to create a quality-price ratio of marketing, with better safety, reliability and more stable quality at the same price. But now Volvo is suffering from a quality and reliability crisis, and the quality-to-price ratio has become lower.
According to the results of the 2023 new car quality survey released by J.D. Power, an American automotive quality research agency, Volvo ranks at the bottom of the quality ranking.
From a domestic point of view, the real user complaint information of the car quality network shows that many Volvo owners have complained about paint quality problems in many locations such as the door, hood and engine compartment of the vehicle, and even some models have quality problems such as serious oxidation of body chrome parts and cracking of sealing strips.
"Volvo's price-to-quality ratio is too low. A 2023 XC60 owner told the author. "Volvo's current problems are all about price for volume. I picked up the car last year, and at that time, the 4S store had a discount of up to 100,000 yuan. Good value for money. With 350 torque and 184 kW (250 hp), it performs very well for the price range. But after picking up the car, the small problems continued, the start-stop battery will be broken within 2 years, the paint surface is blistered, the steering wheel is old and ringing, and it is also deviated. Leakage from the evaporation tank of the air conditioner. Although the price is low, Volvo is also a luxury brand, and the quality is really not flattering. It feels like cutting corners in order to bring the price down. ”
- Geely doesn't want to give Volvo a blood transfusion
Feng Dan, CEO of Polestar China, once said frankly: "Although Polestar cars have been in China for five years, we have neither quality nor brand in the Chinese market, which is some of the detours we have taken, and some of the tuition fees we have paid. ”
Finally, in February this year, Zhejiang Geely Holding Group announced that Volvo would stop providing funds to Polestar cars.
"If Volvo is still called a rich car like before, maybe the local tycoons are still willing to buy it, but now it will definitely not work. Baidu engineer Haidong analyzed that Geely acquired Volvo's two major assets, the brand and the automotive research and development platform. Polestar's failure to sell shows that consumers don't recognize the brand. It's just like Honda's high-end brand Acura died violently in China back then. The high-end sub-brand is not good, so that the high-end of the parent brand is blocked, but it will drag down the sales of the parent brand, and the gains outweigh the losses, so it is better to cut through the mess quickly.
"After all, Volvo's SPA platform was a technical architecture 10 years ago, and it was really advanced at that time, such as the function of losing wheels in a collision to save your life. Later, it cooperated with Geely on the CMA platform, and now the life-saving function of losing wheels is also available in many Geely cars. The main problem is that the SPA architecture was developed for large SUVs at that time, but Geely's most of them are small SUVs and sedans, and it is difficult to adapt to the domestic market environment without upgrading the architecture. How many large SUVs are sold in China? China is dominated by small SUVs and sedans. Haidong said.
According to the data, as of 2017, in order to complete the upgrade from Volvo SPA architecture to CMA architecture, Geely spent 12 billion yuan, and the landlord had no surplus food, so that Geely developed the pure electric platform Haohan platform, although the publicity was based on cooperation with Volvo, but in terms of software and intelligence, it can be said that it is fully independent and deeply self-developed.
It can be seen that Geely's brand and technology platform, after ten years of digestion and absorption, has basically completed the Li Dai Taozhuang, and Geely has become synonymous with safety in domestic cars. A few days ago, I heard that Zhou Hongyi was going to sell Mercedes-Benz for domestic new energy, and ZEEKR directly drove a ZEEKR 009 to the downstairs of the 360 headquarters, and also introduced the double A-pillar design of this car to Zhou Hongyi. And this design is exactly the same as the Volvo EM90.
At present, Volvo's sales are sluggish, and for Geely, it is from hematopoiesis to blood transfusion, which is the fundamental reason for Geely's reduction.
- It's always cool to change the shell
Volvo's traditional engine-chassis-transmission technology is no longer an advantage. In the future, Geely will rely on its own pure electric hybrid platform to dominate the world.
In 2023, Volvo recalled a number of models, including the V60, V90CC, and XC90, with a total of 4,103 units, all of which were new models of the 2023 model. The cause of the recall is the unstable compatibility of the brake control module software and hardware.
The incompatibility of software and hardware exposes the shortcomings of Volvo's software, which is difficult to make up for by relying on hardware technology advantages such as engine, chassis and gearbox. At the level of software and intelligence, domestic manufacturers are strong.
In 2022, Geely acquired Meizu in order to build an Internet of Vehicles ecosystem. In 2023, the Lynk & Co 08 will be equipped with a Meizu car machine. And this year, Polestar unveiled the Polestar phone, based on Meizu's high-end phone, the Meizu 21.
Li Shufu mentioned, "Geely's current focus on the automotive business can form a good synergy with the mobile phone business, for example, at the software level, Geely believes that the two can empower each other." ”
At the software level, Volvo does not have the ability to transfuse blood for Geely, and in terms of electric and plug-in hybrid, Geely is a lifesaver for Volvo.
Volvo's sales figures for 2023. In 2023, it sold a total of 170,000 new vehicles in China, accounting for about a quarter of global sales, a year-on-year increase of 5%, of which new energy vehicle sales increased by 26% year-on-year.
Volvo also said that 2024 is a critical year for Volvo's electrification transformation, and the goal is to become a pure electric luxury car company by 2030.
Taking Volvo pure electric EM90 as an example, it can basically be regarded as a shell replacement Zeekrypton 009, the exterior and interior are the same, the hardware specifications of the intelligent driving scheme are almost the same, and even the screen is a specification. The biggest difference is that the power output of Volvo EM90 is half lower than that of Zeekrypton 009, but the price is 230,000 more expensive.
Not only Geely Volvo has changed its shell, but also Changan Mazda Beijing Auto Show will be launched recently, and the new electric BMW MINI has been reshelled from the Great Wall Ora Good Cat.
Domestic electric vehicles continue to lead in the supply chain, intelligence, power batteries, motor and electronic control, etc., and joint ventures and foreign brands have entered the electric vehicle market through joint design and other methods, which is really a helpless move. However, the shell version is more expensive than the original version, making it difficult for consumers to choose: whether to choose a brand of face joint venture or to choose a low-key and practical domestic independent is a problem, after all, their three-electric systems are the same.
For Geely, Volvo's burden, under the trend of electrification, consumers will obviously not buy it just by using ZEEKR to sell Volvo for a new standard. After all, Volvo is a second-tier luxury brand, the brand premium itself is not high, and there is no three-electric and intelligent advantages in the electrification track, which is difficult to impress the younger generation of consumers who pursue personality and performance.
Among the independent car companies, Geely may be the most domestic company like GM Ford and other American car companies.
GM has historically acquired Buick, Cadillac, Chevrolet, and Auckland cars, while Ford has acquired Mazda and Volvo.
During the acquisition, Ford absorbed Mazda's engine technology and Volvo's chassis tuning technology, developed the C1 platform and CD3 platform, and launched a number of models such as Volvo S40, Mazda3, and Ford Mondeo.
Another case is the People's Wuling. But what everyone doesn't know is that for a long time, Wuling Hongguang and GM Buick Kaiyue used the same L2B engine. Even Wuling in Southeast Asia, South America and other regions, GM replaced it with a Chevrolet logo for sale.
After that, Ford sold Mazda to Toyota and Volvo to Geely. At the time, there were comments that GM was an investment company in addition to selling cars. GM not only makes money by selling cars, but also earns investment income by reselling shares in car companies.
In China, it is Geely that can afford to invest in the car rim.
Different from what the outside world sees, the real Geely Automobile's Geely, Lynk & Co, Geometry, Galaxy and other brands do not have trademark rights and have no car-making qualifications. Their trademarks and car manufacturing qualifications are licensed to these brands by affiliated companies.
For example, the major shareholder of ZEEKR is Shanghai Huapu Guorun Automobile Co., Ltd. Shanghai PwC's major shareholder is Value Century, which in turn is a subsidiary of Geely Automobile. Geely Automobile's production qualifications and brands are authorized by Geely Holdings. Layers of nesting dolls are more complicated than Qing court dramas.
Geely Holding itself is only an investment and financing institution and does not participate in the production and operation of automobiles. The advantage of this is that it is more convenient for investment and financing, and will not be involved in the automobile business, which is also the advantage of Geely's acquisition of Volvo and Daimler's shareholding. However, the disadvantage is that Geely Automobile loses its vehicle production qualification and becomes an auto parts integrator. Geely Automobile's Lynk & Co and Zeekr are also in this model, the parent company has the qualifications and brands, and the subsidiary is only responsible for production, sales and industrial chain integration.
"The territory is large, the brands are many, the involvement is wide, and the distribution is scattered". Media person Zhao Xuan said that the Geely model has alienated financial capital from industrial capital, resulting in the expansion of Geely Holdings' assets to more than 640 billion yuan. However, the investment landscape is complex, and the result is that the financial balance is broken, and funds are gradually tightened.
"The absolute scale of Geely's short-term/long-term borrowings + bonds payable has reached nearly 150 billion yuan, and the operating profit and net profit have been decreasing in recent years, which means that it will be more difficult for Geely Holding to continue to maintain a tight liquidity balance for a long time. Zhao Xuan said.
The requirements for the rate of return of financial capital are much higher than those of automobile industry capital. The profit margin of the automobile industry is generally around 5%, and financial capital requires a higher rate of return, but it also brings greater risks.
The most typical case is the LETV ecology with a market value of 100 billion, because a small financing loan from China Merchants Bank was overdue, which led to the collapse of the LETV empire. In 2009, GM had no choice but to file for bankruptcy because the scale of its debts was out of control.
Geely Holdings is far from getting out of control of its debt, and is mainly dependent on the growth of its car sales. But the empiricism that relied on investment and acquisition in the past is time for change. From this point of view, Geely's reduction of its holdings in Volvo and the return of funds to develop its own brand is a very good start for Geely to change its development direction, and it is also a necessary step for Geely to gradually change from financial capital to industrial capital.
In the electric era, the importance of cost performance is higher than the quality-price ratio. Geely's marketing foothold needs to change.
From the point of view of product marketing, cost-effectiveness is generally considered during the market development period. The quality-price ratio is only considered at the maturity stage. For example, in the early stage of the development of domestic smartphones, Xiaomi, Meizu and even Huawei's early operator contract machines rarely exceeded 2,000 yuan. And now they have launched high-end mobile phones at the price point of 5000 to improve the quality.
The era of oil trucks has developed for more than 100 years, and it is right to advertise quality at the same price during the mature market period. At that time, BYD was still producing the 39800 BYD F3, which was cost-effective. The Toyota Corolla of the same level can sell for 100,000 plus, but the sales are even better. The reason for this is that the Corolla is of better quality, more durable, and has a higher quality-to-price ratio. Although consumers spend more money on car purchases, they worry less about later maintenance and maintenance, which is equivalent to saving money in disguise.
However, in the field of electric vehicles, only 30% of the electric cars are currently penetrated. The number of cars is even more miserable. In 2023, the number of motor vehicles in the country will reach 435 million, and the number of new energy vehicles will only reach 20.41 million, accounting for only 5.5%. This shows that the electric vehicle market is still in the development period, and the first thing for new energy vehicle companies to do is to make the electric vehicle cake bigger, not better.
Geely has tasted the sweetness in the past in the quality-price ratio model. Now, Geely needs to change its mind. After all, the quality-price ratio marketing Geely is the teacher, but the cost-effective Geely is the student. In fact, Geely is doing just that. From Volvo's broken price, to Geely's Lynk & Co, Extreme Krypton, Jiyue, and Galaxy intensively released new cars to snipe Xiaomi Su7, the six major factions besieged Guangmingding, and the cost-effective war was about to break out. It's just that if you can take into account the quality in addition to the price and performance, maybe Geely's car will sell better.
Extreme Krypton Xiaomi booth confrontation Image source: Xiaohongshu
Finally, there is a detail that needs everyone's attention. In the Jiyue incident last week, most netizens were analyzing the relationship between Jiyue and Baidu. But for Geely Automobile, the real producer of Jiyue, few people commented. This incident at least shows that Geely did not rub into the traffic of Jiyue this time, as if it was not biological.
As the fourth largest car company in China, Geely must learn to use manufacturing thinking to build an independent and controllable wholly-owned product line. Relying on the brand premium obtained by acquisition is a shortcut after all. In essence, the market performance of its own brands such as Zeekr Lynk & Co has been better than that of acquired brands, and this year is another big year for price wars, and it can no longer rely on Nordic mythology to tell stories.
In February this year, in the face of BYD's price war, Geely still surpassed BYD's sales and became the first brother in domestic sales. Although it fell back in March, it was still in the first echelon. At the beginning of April, Geely announced a comprehensive subsidy of up to 45,000.
It seems that lowering the price is simpler, crude, and more effective than advertising Volvo's seat belts. The answer to this year's auto market marketing has been announced, and it will be up to Geely to see how it will take over next.
Resources
https://new.qq.com/rain/a/20240202A029C500 Volvo 2023 Public Opinion Yearbook|Year-end inventory
https://www.dongchedi.com/article/6987992773207261727 introduction of Geely's latest pure electric vehicle development platform, SEA, and vast architecture technology
https://new.qq.com/rain/a/20240206A02QYI00 Volvo no longer "transfuses" Polestar, what is Geely's intention to take over in an all-round way?
https://finance.sina.com.cn/jjxw/2024-04-15/doc-inarwtzz1736948.shtml Why is Geely in a hurry? Let's look at the cause and effect of the Geely model
https://zhuanlan.zhihu.com/p/666696747 shell rose by 230,000, how did Volvo EM90 have the courage?