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How to use the M5 to judge the investment and consumption value of a car.

Author | Guan Tao

Editor | Xiaobai

The general trend of the world is mighty and powerful. It did not exist because of Yao, nor did it perish because of Zhou. It is nothing more than the two words "trends".

Looking back to the time when Great Wall Motor (601633.SH, 02333.HK) found its strength in the 100,000-150,000 yuan price range with its popular car Haval H6, and won the SUV sales championship for a total of 103 months.

At a time of great success, the "WEY" luxury SUV was born, which has a sense of "giving you glory with my surname" and also reflects the confidence in reverse research and development.

But the vigorous era of new energy has begun. After experiencing "disdain, despise, and incomprehension" and continuous losses, NIO, Xiaopeng and Li Auto were reborn in 2020, and the new king seems to be looming.

Who would have thought that with its long-standing hybrid and battery technologies, BYD (002594.SZ, 01211.HK) would take off in 2021, with annual sales of 710,000, 1.86 million, and 3.02 million units, becoming the first automaker in my country to achieve annual sales of 3 million units. Since the production of fuel vehicles will be completely stopped in March 2022, there is one more feat to be achieved before the 3 million mark: new energy.

Amid the bustling crowd, BYD shouted "Together we have become Chinese cars", which was quite domineering like the Qin Emperor's "uniting the nine states and unifying the world".

However, before the leader of the Di Alliance could give orders to the heroes, the words "far ahead" broke through the night sky, and Huawei's Wenjie M7 was born. With its excellent high-level intelligent driving, the cumulative orders of Wenjie's new M7 exceeded 80,000 units in 50 days after its launch.

Just when everyone thought the world situation was set, in March 2024, the long-awaited Xiaomi Motors finally arrived, and the marketing genius Lei Jun also used a resounding victory to show everyone what the innate holy body is: Xiaomi SU7 was on the market for 24 hours, with 88,898 units pre-ordered. Boss Lei used his strength to carve out a place for himself at the table.

If we use one sentence to summarize the domestic new energy vehicle market in 2024, it is "both the winner and the loser will be determined, as well as life and death." Who can stay at the table will be revealed by the end of the year.

Based on this, Fengyunjun will make a comprehensive review based on the sales volume in the first half of 2024 and the performance of some listed companies that have disclosed their performance forecasts. (Note: Unless otherwise specified, the sales data in this article are from Dongchedi)

An industry with a strong heart should dare to face the excellence of others

According to data released by the China Association of Automobile Manufacturers, my country's automobile production and sales in the first six months of 2024 were both around 14 million units, of which passenger car production was 11.886 million units and sales were 11.979 million units, up 4.9% and 6.1% year-on-year respectively.

Behind the calm data lies the strong vitality of China's automobile industry.

First, there is the rise of domestic brands. In the first half of 2024, the sales volume of domestic brand passenger cars was 7.419 million units, a year-on-year increase of 23.9%, and the market share was 61.9%; second, new energy vehicles continued to maintain strong growth momentum, with production and sales volume approaching 5 million units, both up more than 30%, and a market share of over 35%; finally, going abroad to explore the world, with automobile exports in the first half of the year also increasing by more than 30% year-on-year, reaching 2.793 million units.

Of course, although domestic brands are rising strongly, and some car founders have said, "I have everything Tesla has, and he doesn't have what I have," the Model Y is still the sales champion in the first half of 2024, and this champion does not need any adjective embellishment.

(As of July 12, data for the past six months, the same below)

You should know that the car behind Model Y is BYD Seagull, an affordable entry-level commuter car. As the well-deserved leader in the field of new energy vehicles, Tesla obviously has more to learn from.

In addition, although the fuel-powered vehicles were defeated frequently in the news, Nissan Sylphy still ranked third with sales of over 160,000 in the first half of the year. This veteran who has been the national fuel-powered vehicle sales champion for four consecutive years seems to be still strong.

In addition, Lavida and Sagitar also have a place in the top ten list, and Sylphy is the only three fuel-powered models in the top ten.

Following the Sylphy is BYD Qin PLUS-DM, another flagship model of BYD. Of course, since BYD's flagship model Qin L-DM-i was not launched until the end of May 2024, its sales in June alone have already reached 14th place. It is worth looking forward to whether it can dethrone the Sylphy in the future.

(Qin L-DMI June sales ranking, source: Autohome)

It must be said that BYD does have the demeanor of a king. Among the top 10 models, 5 of them, including Seagull, Qin PLUS-DM, Song Pro DM-i, Song PLUS DM-i, and Yuan PLUS, are from BYD.

Therefore, let’s start with Leader Di.

BYD, Great Wall, Geely, Changan, the competition

BYD's full-year sales target for 2024 is more than 3.62 million vehicles. According to its production and sales report for June 2024, a total of 1.613 million vehicles were sold in 2024, which has achieved 45% of the annual target.

(BYD June Production and Sales Express)

In terms of models, BYD's hybrid models accounted for a record high of 55% in sales in the first half of 2024, with sales of 881,000 units. On the one hand, the fuel tank is currently the most effective way to get rid of mileage anxiety; on the other hand, the fifth-generation DMI hybrid technology represented by Qin L has indeed made a sensation in the entire market and attracted more buyers.

(Source: Choice Terminal, Chart: Market Capitalization APP)

To see how well BYD's plug-in hybrids are selling, open Dongchedi and you will find that the top 10 best-selling plug-in hybrids in June are all from BYD.

In the first half of 2023, BYD sold 1.2556 million vehicles, accounting for 41.5% of the total sales that year. If the proportion remains the same in 2024, the annual sales will be around 3.9 million vehicles, which is expected to exceed the annual sales target. Therefore, we can see that JPMorgan Chase recently estimated that BYD's sales in 2024 will reach 4 million vehicles.

Of course, BYD also faces its own challenges. Fengyunjun believes that they mainly come from two aspects: intelligent driving and high-endization.

Everyone has their own opinion on smart driving. Today we will mainly talk about high-end driving, because this data is most convincingly demonstrated by sales volume.

BYD's high-end brands mainly include Yangwang, Denza, Leopard 5 and Song L, which is comparable to Model Y. Needless to say, Yangwang sold 5,500 units of this million-level luxury car in the first half of the year thanks to its two magical skills: swimming and turning around on the spot.

However, the Denza brand, Denza N9 and N7 are seriously divided. Denza D9 DM-i sold more than 50,000 units in the first half of the year, ranking first among all medium and large MPVs; while the cumulative sales of Denza N7 in the first half of the year were only 5,956 units. It should be noted that this was also a competing model for Model Y.

This sales volume is far from that of Song L, which will be launched at the end of 2023. In the first half of 2024, Song L sold nearly 30,000 units, ranking 10th in the mid-size SUV market in the 180,000-250,000 yuan price range.

Objectively speaking, the sales volume of Song L really surprised Fengyunjun. When it was launched, the car price war was in full swing. On the other hand, the Wenjie M7 was launched, and the price range of Song L overlapped with that of M5 and M7, which forced the final price of Song L to be lowered from "220,000 yuan" during the pre-sale to "189,800 yuan".

Within the BYD brand, in the same price range, Song L's sales volume is second only to Tang DM. To sum it up in one sentence, its performance after its launch is just average.

(15-25 price range, mid-size SUV ranking in the first half of the year)

Finally, let's talk about Leopard 5. As BYD's first off-road model, Leopard 5 sold 18,283 units in the first half of 2024. As BYD's breakthrough from "0-1", this is certainly worthy of recognition.

But compared with veteran off-road vehicles like Great Wall Motors, it is indeed much inferior.

The sales of the Tank 400 and Tank 500 in the same price range exceeded the Leopard 5 in the first half of the year. Not to mention the entire tank family, the sales of the Tank 300 exceeded 40,000 units in the first half of the year.

The sales volume of the Tank family increased by nearly 100% year-on-year to 116,000 units in 2024, which is also the main reason why Great Wall Motor's net profit in the first half of the year increased by 4 times, and is expected to reach a maximum of 7.3 billion.

After failing to please new consumer groups with its "Cat and Dog" series and being too slow to respond in the hybrid field, Great Wall Motors, a veteran off-roader, finally regained its competitive advantage in the off-road field it is best at with its Hi4-T technology and returned to its core target customer group.

(Source: Market Capitalization APP)

Of course, the Tank brand's success cannot cover up the slump of the Ora brand and the weak presence of the WEY brand. The former's sales fell by more than 30% in the first half of the year, and the latter's annual sales of the entire brand did not exceed 50,000 vehicles.

Although Geely Automobile (00175.HK) has not disclosed its semi-annual report, according to its published sales data for the first half of the year, total sales increased by 41% year-on-year, and it proactively raised its annual sales target from 1.9 million vehicles to 2 million vehicles, appearing to be full of confidence.

As a high-end new energy product under Geely, Zeekr's sales increased by 106% in the first half of the year. Its best-selling model Zeekr 001 sold 54,600 units, which is better than Didi's Han.

Compared with the surge in performance of Great Wall Motor, Changan Automobile (000625.SZ) issued an announcement of expected performance reduction in the first half of 2024, which is related to the consolidation of Deep Blue Auto into the financial statements and the recognition of 5.02 billion investment income in the first quarter of 2023.

(Source: Changan Automobile Announcement)

However, like Geely, Changan's major sales units maintained double-digit growth in the first half of 2024, and the data was relatively balanced, but balance or calmness can also be said to be the background color of Changan Automobile.

Whether it is the earliest Alto and Benben, or the current Ford, Mazda, Qiyuan, Changan CS, and even Deep Blue Auto and Avita, most of Changan's brands enjoy a certain market popularity, but it is difficult for them to completely penetrate the market with a blockbuster product like BYD, making competitors feel cold on the back.

Taking the high-end new energy product Deep Blue S7 as an example, its sales volume in the first half of the year was 37,795 units. Not to mention the Model Y that ranks ahead of it, the Tiguan L, Tanyue, Tang DM, and Hongqi HS5 all seem to be well-known but not as popular. However, this also indirectly illustrates the market situation of Deep Blue S7.

Objectively speaking, Changan Automobile has been one of the fastest-turning traditional automakers, and the results are acceptable. In comparison, both SAIC and GAC saw their sales decline by 12% and 26% respectively in the first half of the year.

(SAIC Motor's sales in the first half of 2024)

(GAC Group's sales in the first half of 2024)

When talking about Changan, there is one brand that cannot be avoided after all, Avita. Of course, the one that cannot be avoided is Huawei.

Seres, who changed his fate against the will of heaven, hopes to have a son like Sun Zhongmou

Looking at China, if there is a company that claims it can reshape a company and help it change its fate, it must be Huawei. From Xiaokang Auto to Seres (601127.SH), Huawei uses data to tell everyone what empowerment means.

(Source: Market Capitalization APP)

According to the 2024 semi-annual profit forecast announcement released by SERES, total revenue in the first half of 2024 will exceed 60 billion yuan, and net profit will be as high as 1.7 billion yuan, marking the first profit since its cooperation with Huawei in car manufacturing.

But what’s interesting is that after the performance forecast was released, SERES’ stock price fell for several days in a row.

From the sales perspective, the best-selling M7 in the world had a total sales volume of 106,500 units in the first half of the year, which is about half of the Model Y, ranking 10th without any qualifier. It is the only model in the top 10, except for the Model Y, that is priced in the range of "250,000 to 350,000 yuan", which shows its strong market appeal.

The second is the M9. As a luxury SUV priced from 469,800 yuan, the M9 sold 58,800 units in the first half of the year, with a gross sales volume of nearly 30 billion yuan. This record makes the U8 pale in comparison.

The least sold is the M5, with sales of 15,200 units in the first half of 2024. As a model that basically overlaps with the M7 in price range but is significantly smaller in size, the first question that many consumers ask is often "Why not buy the M7?" This is also the reason why the M7 has become the main best-selling model.

But in Fengyunjun's opinion, this also provides a standard from the side. If a car is priced lower than the M5 and its sales volume is also lower than the M5, it will not be a good choice from either an investment or consumption perspective.

In short, it is no exaggeration to say that Huawei has helped SERES to change its destiny. This is also the main reason why BAIC BluePark (600733.SH) and JAC Motors will cooperate with Huawei to launch the Enjoy and Premium models.

Seeing this, some friends will definitely say that we should not over-mythically praise Huawei. The sales of the Avita series produced in cooperation with Changan and the Zhijie S7 produced in cooperation with Chery do not seem to be very good.

According to the data, the Zhijie S7 sold nearly 17,000 units in the first half of the year, and the Avita 11 and 12 sold just over 18,000 units in total, which means they are almost the same as the Wenjie M5.

In Fengyunjun’s opinion, in addition to the fact that SERES is the first company to cooperate with Huawei in car manufacturing and has the first-mover advantage, it also has a lot to do with the internal synergy of car companies.

For SERES, it had no other choice but to try hard to make the Q-series a big hit, so there was no internal reaction. However, in many car companies, “If you sell well, we will appear incompetent, it will occupy resources that should have been allocated to us, it will form competition with us, and the final reward will seem to have nothing to do with me…”

Profitability, a new proposition for new forces

Finally, let’s take a look at the new forces.

From any perspective, Ideal is the most successful company among NIO, Xiaopeng and Li Auto. With refrigerators, color TVs and sofas, Ideal Auto (02015.HK, LI.O) earned 11.7 billion in 2023, compared with a loss of 21.1 billion for NIO (09866.HK, NI0.N) and 10.4 billion for Xpeng Motors (09868.HK, XPEV.N).

(Source: Market Capitalization APP)

Looking only at the absolute values, except for Ideal MEGA, the sales of Ideal L6 to L9 in the first half of the year were pretty good.

However, as the only automaker in the industry that has a high degree of overlap with the industry in terms of price range and models, it is definitely a lie to say that it is not affected by the industry's sales. The sales of all L-series models in the first half of 2024 were lower than the same period last year. Sales in the first half of the year can still maintain growth, mainly due to the L6, a high-volume model launched in the first half of the year.

(Data source: Car Owners’ Home, Market Value Chart, 10,000 vehicles)

Borrowing the above knowledge points, judging the sales of L6 by the M5 is obviously quite good.

Compared with Ideal, NIO's sales are one level lower. The sales volume of NIO ES6, the best-selling model, was 31,900 units in the first half of the year.

Compared with NIO, Xpeng's sales are about to drop to the next level. The best-selling Xpeng G6 sold 15,357 units in the first half of the year, just hovering around the reference line based on the M5.

Of course, for Xiaopeng and Weilai, their advantage is that they have already raised a considerable amount of funds through listing. For new car-making forces that have not yet been listed, including Nezha Auto, listing financing has become the only chance to survive.

(Source: Market Capitalization APP)

Profitability is the primary issue that a car company must face at this stage, but many car companies have not even achieved sales, and are trapped in a vicious cycle of "the more they sell, the more they lose." Of course, for some people who are still at the PPT concept stage but claim to be the godfather, it is time to go to bed.

Conclusion: Finding the valuation anchor for new energy vehicle companies

Finally, let’s talk about valuation.

Fengyunjun believes that for a car company, the price-to-sales ratio is the most appropriate valuation model. Judging from historical data, 1 is a relatively reasonable valuation center.

With this valuation center, combined with your judgment on the market space of the intended investment target, it is easy to come up with a relatively reasonable valuation benchmark.

On top of this benchmark, add in considerations such as brand, product strength, and profitability, first select the overall and then screen them one by one, and everyone will be able to find their own answer.

2024 will definitely be the most competitive year in the history of new energy vehicles, especially with Di Wang frequently flexing his muscles, and the two catfishes Huawei and Xiaomi entering the market one after another, car companies without sales will no longer have any hope, and everyone is fighting desperately to stay at the table.

But this does not mean that the outcome has been decided. What will follow will be a battle over technology routes, intelligent driving, and profitability. It will be even more exciting to see who will win.

Finally, let me say something that may not be a big deal. If there is only one solution for intelligent driving, or only a few solutions, for those companies that spend billions of dollars every year on researching intelligent driving, if they realize their own limitations as soon as possible, join the competition if they can't win, and cut related expenses, wouldn't their profits be greatly improved?

Of course, many companies will say that it has no soul.

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