In recent years, under the wave of new energy, the automobile manufacturing industry has ushered in unprecedented changes in the past century. The status of traditional fuel vehicles has been challenged, and the new energy vehicle market has exploded rapidly. In July this year, the retail penetration rate of new energy vehicles in China was as high as 51.1%, and the monthly sales exceeded that of fuel vehicles for the first time.
In this era of change, traditional fuel vehicle companies are facing the major issue of new energy transformation. Considering that some countries will ban the sale of fuel vehicles around 2030-2035, traditional fuel vehicle companies may only have a 5-7 year transformation window, how to balance the development rhythm of fuel vehicle business and new energy vehicle business has become a topic that many fuel vehicle companies must deal with carefully.
In this regard, Geely Automobile has become a typical example of the new energy transformation of traditional car companies, ranking first among its own brands of new energy vehicles and the first of its own brands in domestic sales of fuel vehicles. It can be said that Geely Automobile's transformation performance far exceeds that of other traditional car companies.
In the recently released 2024 semi-annual report, Geely Automobile's performance hit a record high, undoubtedly demonstrating its outstanding achievements in new energy transformation and providing a breakthrough path with great reference value for other car companies.
According to the financial report, in the first half of this year, Geely Automobile's total revenue exceeded 100 billion yuan for the first time, a record high, which can be called Geely Automobile's "strongest semi-annual report in history".
Specifically, Geely Automobile's revenue reached 107.31 billion yuan, a year-on-year increase of 47%; After deducting non-recurring gains and losses, Geely Automobile's profit attributable to shareholders in the first half of the year was 3.37 billion yuan, a year-on-year increase of 114%.
For investors, although Geely Automobile's high-growth performance figures are very eye-catching, the comprehensive strength of Geely Automobile's response to industry changes is also more noteworthy behind the figures.
01 Breakthrough in an all-round way, with both revenue and sales reaching new highs
Since the beginning of this year, the overall growth rate of the automobile market has slowed down, retail sales have continued to grow negatively from April to June, and the sales of a large number of car companies in the first half of the year have declined year-on-year, and the sales of individual joint venture car companies have even been close to "halving". At the same time, with the intensification of competition, the price war in the automobile market has become increasingly fierce, and the gross profit margin and net profit margin of car companies have generally been under certain pressure, and some old car companies have even suffered large-scale losses in the first half of the year.
Under these circumstances, Geely's revenue hit a record high and its profit achieved high growth. Judging from the two key data in the semi-annual report, Geely Automobile's performance far exceeded market expectations.
The first number is sales. For all car companies, although sales volume cannot solve all problems, it can solve most of the problems, and the core reason is the scale effect that dominates the automotive industry: the higher the sales volume, the lower the cost, and the profit performance is often better.
In the first half of the year, Geely Automobile Group's cumulative sales reached 956,000 units, a record high. Among them, the cumulative sales of new energy vehicles exceeded 320,000 units, also a record high, a year-on-year increase of about 117%, and the proportion of new energy products continued to increase.
In terms of export business, Geely Automobile Group's cumulative export sales in the first half of the year reached a new high of 197,000 units, a year-on-year increase of more than 67%, and the growth rate of overseas markets continued to lead the industry.
In the current market, the decline in sales does not necessarily affect the short-term profits of car companies, but it means that the chances of car companies staying at the table in the end will become smaller. In the changing market, Geely Automobile has not only stabilized its own sales base, but also achieved rapid growth, undoubtedly demonstrating its strong competitiveness.
The second data is gross margin. In the previous era of fuel vehicles, the gross profit margin reflected the results of the upward trend of the car company's brand. In the current market price war, the change in gross profit margin can better reflect the market competitiveness of car companies' brands and products.
In the first half of this year, Geely Automobile's gross profit margin reached 15.1%, rising steadily. On the one hand, this comes from the scale effect brought about by the increase in sales, and on the other hand, it comes from the continuous optimization of the product structure.
Taking fuel vehicles as an example, it is an indisputable fact that the sales of fuel vehicles have declined in recent years, while Geely Automobile has maintained its leading position in the market by optimizing its product line and focusing on superior products. In the first half of the year, Geely's high-value products represented by "China Star" sold 206,000 vehicles, a year-on-year increase of 56%, accounting for about 27.7% of Geely's brand sales (including geometry). The increase in the proportion of high-value products has driven Geely Automobile's gross profit margin to rise steadily.
Geely Automobile's revenue and sales performance, which is significantly different from other fuel car companies, proves that Geely Automobile has not only stabilized the basic market of fuel vehicles under the wave of new energy, but also achieved a leading advantage in the transformation of new energy.
02 Troika, the acceleration of new energy transformation
From the perspective of sales structure, Geely Automobile's high sales growth is inseparable from the outbreak of new energy business. In the first half of this year, Geely Automobile's sales of new energy products increased by 117% year-on-year, consistent with the changing trend of "strong electricity and weak oil" in the market in the first half of the year.
At present, Geely Automobile's new energy business is divided into three parts: Geely Galaxy, Lynk & Co and Zeekr. The rapid development of these three brands reflects Geely's accurate judgment of industry trends and the steady pace of top-down execution.
As early as 2018, Geely launched its first plug-in hybrid new energy model, the Lynk & Co 01 PHEV, which undoubtedly reflects Geely Automobile's leading judgment in strategy.
In the first half of this year, Lynk & Co's new energy business achieved excellent results, with a cumulative sales of 64,000 new energy vehicles, accounting for more than 50%. At the same time, Lynk & Co released its first pure electric car, the Lynk & Co Z10, in June this year, supplementing Lynk & Co's new energy product system.
The ZEEKR brand was established in March 2021 and is positioned as a high-end smart electric brand. At the time of the establishment of ZEEKR, the C-end market of new energy vehicles in China had not long exploded, and the products on the market were mainly mini cars and mid-to-high-end trams. In the first half of this year, ZEEKR delivered 88,000 vehicles, winning the sales champion of more than 200,000 Chinese pure electric brands in 2024, and ranking first among new forces in the annual sales target achievement rate.
In May this year, ZEEKR successfully completed its IPO and officially landed on the New York Stock Exchange. Only 37 months from its establishment to listing, ZEEKR has set a record for the fastest IPO in the history of new energy vehicle companies. In the second quarter of this year, excluding the impact of share-based payments, the ZEEKR brand is close to breaking even (according to Hong Kong Financial Reporting Standards).
With the changes in the market, the new energy vehicle market in the price range of 15-200,000 yuan has begun to explode, and at the same time, plug-in hybrid (including extended range) models have ushered in rapid growth, Geely launched the Galaxy brand in February 2023, positioning it as a mid-to-high-end new energy brand, improving the layout of Geely Automobile's new energy products. In just over a year since its establishment, Geely Galaxy has launched three products, Galaxy L7, L6 and E8, as well as the Galaxy E5 launched in August this year, constituting Geely Galaxy's product layout of "pure electric + electric hybrid, sedan + SUV".
In the first half of this year, Geely Galaxy sold a total of 81,000 vehicles, a year-on-year increase of about 742%, with an average monthly sales of more than 10,000 units, which is quite good for a new brand.
Since the breakthrough of the C-end market of new energy vehicles in the second half of 2020, it has been 4 years since the outbreak of the domestic new energy vehicle market. In the past four years, it can be seen that Geely Automobile's new energy business has grasped the rapid layout of market changes and achieved a transformation speed far beyond its peers.
In just four years, it has created a new energy "troika" and gained a firm foothold in the highly competitive market, which is a key point that is difficult for most other car companies to do, which undoubtedly reflects Geely Automobile's strong technology and product strength.
03 Innovation-driven, create a more powerful product experience
In the automotive industry, no matter how good the strategy is, it also needs to conquer the market with products, and behind the products needs deep technical reserves to support. The rapid development of Geely Automobile's new energy business is inseparable from its strong technology and product strength brought by its continuous investment in scientific and technological innovation.
In the past 10 years, Geely Automobile has invested more than 200 billion yuan in research and development. In the first half of this year, Geely Automobile's total R&D investment reached 7 billion yuan, an increase of nearly 18% year-on-year.
These R&D investments have led to leading technological results. In the first half of this year, Geely Automobile continued to innovate in many aspects such as intelligent driving, intelligent cockpit, artificial intelligence, and on-board chips, and made a series of major breakthroughs.
ZEEKR's full-stack self-developed Haohan Intelligent Driving has obtained L3 autonomous driving test licenses in Shanghai and Hangzhou; Geely's self-developed first automotive-grade 7nm intelligent cockpit chip "Dragon Eagle No. 1" in China has been installed on models such as Lynk & Co 08 EM-P, Lynk & Co 07 EM-P, and Geely Galaxy E5. In January this year, Geely released the Xingrui AI model. In addition, Geely has also created high-value technology applications such as the Aegis short knife battery, the Galaxy 11-in-1 intelligent electric drive, and the GEA global intelligent new energy architecture.
These technological achievements did not stay on paper, but were actually transformed into Geely Automobile's product strength.
Taking Geely Xingrui AI model as an example, this is the world's first full-stack self-developed full-scene AI model in the vertical industry of automobiles, which has been installed on a variety of intelligent electric products such as Galaxy L6, Galaxy L7, Galaxy E8, etc., which not only has the most complete professional knowledge reserve in the automotive industry, can answer questions for users, but also can realize intelligent interaction, and realize functions such as role playing, AI navigation, itinerary control, news broadcasting, telling jokes, AI picture books, and Chinese-English mixed reading with real and vivid synthetic voice. And have the ability to create MVs by themselves, generate exclusive wallpapers and other generation capabilities.
The application of these leading technologies constitutes Geely Automobile's robust technical chassis and brings strong product strength to Geely Automobile's products. Relying on these technical reserves, Geely Automobile is able to accurately seize opportunities when the market changes, and quickly promote the transformation of new energy.
From the perspective of the industry, at present, new battery technologies such as solid-state batteries have reached the critical point of breakthrough, and artificial intelligence has shown unprecedented explosive power driven by large models.
In this critical period, car companies that lack technical reserves will face huge challenges, while car companies represented by Geely Automobile that have long adhered to technology investment and have deep technical reserves will usher in huge development opportunities and open up new development space.
Since 2018, the domestic auto market has entered a state of stock competition, and the structural changes brought about by the new energy wave have further intensified the speed of survival of the fittest among car companies, and car companies have entered a hard-fought comprehensive strength competition.
In recent years, Geely Automobile's business performance in the new energy transition period fully reflects Geely Automobile's long-term strategic vision, excellent management ability and strong execution ability as an industry leader.
Guohai Securities pointed out in the research report that the high-end Geely automobile brand has risen, the sales of models have increased steadily, and the profitability has been further recovered under the scale advantage. The company has a comprehensive strategic layout, while maintaining the steady growth of domestic business, it is expected to accelerate the development of overseas markets, which is expected to bring additional profit contribution.
In the critical period of technological change, Geely Automobile's comprehensive strength has been verified in the high growth of performance. Looking forward to the future, Geely Automobile has enough strength to maintain its leading position in the industry and open up a broad imagination space. For investors, this may be a rare investment opportunity.