Wei Jianjun of Great Wall Motors: I want to be a defender of the order of the automotive industry
2024-08-12
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"I want to be a defender of the order of the auto industry." This powerful statement comes from the interview documentary of Wei Jianjun, chairman of Great Wall Motors, which was released on August 7. In the documentary, Deng Qingxu, CEO of Sina Finance, and Wei Jianjun had an in-depth conversation about the unusual "volume" of the current Chinese auto market. Regarding the current chaos in the industry, Wei Jianjun even shouted, "Let's review the auto industry and see who has problems. The first one to review is Great Wall, and Great Wall will cover the expenses."
The current state of disorder and involution in the Chinese automobile industry requires someone to stand up and speak out. Therefore, this old auto industry man who has experienced many ups and downs in the industry and is also the only auto company leader in the industry who has been in office for 34 years has no choice but to stand up and give a sober reflection on the current situation of the industry, advocating that Chinese auto companies should seek truth from facts, face up to warnings, recognize the gaps, and jointly maintain the economic order of the automobile market and the development achievements brought about by reform and opening up. Of course, it is not just Wei Jianjun. More and more senior executives of auto companies have spoken out in public to maintain the order of the industry. Great Wall Motors has fulfilled its promise as a "defender" with multi-dimensional practical actions.
Maintain strong "hematopoietic" ability
"If a company does not have the ability to generate revenue and is not profitable, it will not go far. Can it go far relying on capital? Capital cannot just tell stories and concepts, it must be profitable." Wei Jianjun mentioned that because the threshold for electrification, especially pure electric vehicles, is not high, the competition is very fierce.
Great Wall Motors, which can "generate blood", expects a net profit attributable to the parent company of 6.5 billion to 7.3 billion yuan in the first half of this year, a year-on-year increase of 377.49% to 436.26%; it expects a net profit excluding non-recurring items of 5 billion to 6 billion yuan, a year-on-year increase of 567.13% to 700.56%. It is worth noting that in 2023, the company's net profit and net profit excluding non-recurring items will be 7.022 billion yuan and 4.834 billion yuan respectively. In other words, Great Wall Motors' net profit in the first half of this year is equivalent to the level of the whole year last year, and its net profit excluding non-recurring items is much higher than the whole year last year.
Behind this outstanding achievement is the high-quality development of Great Wall Motors, its adherence to quality, its continued increase in R&D investment, the constant stimulation of new quality productivity, and the further optimization of its product structure. At the same time, Great Wall Motors' "ecological overseas expansion" has achieved remarkable results, and it has continued to promote the comprehensive overseas expansion of research, production, supply, sales, and services, forming a full-power, full-category, and full-grade layout, growing both internally and externally, and driving a substantial year-on-year increase in net profit.
As the industry becomes increasingly inward-looking, Great Wall Motors firmly believes that stable and reasonable profits are the guarantee for the healthy development of the company and for creating greater value for users.
Use integration capabilities to control costs and achieve healthy development
"Our Great Wall's industrial chain is broad, deep and vertical. Our costs are not higher than anyone else's. If Great Wall really can't make money, others won't be able to make money either." Behind Wei Jianjun's words is the cost control capability that Great Wall has accumulated over decades.
After the "table-turning" price cuts pushed down the "dominoes" in the automobile market, the automobile industry has entered a more brutal "elimination" stage. At a time when the market structure is being reshaped, price competition has become the key to victory. Cost control capabilities naturally determine whether a company has a chance to survive to the end, and cost control capabilities are ultimately reflected in the company's ability to integrate the industry's vertical ecology.
In the era of electrification and intelligence, more and more companies have realized the importance of vertical integration capabilities, especially in key areas such as batteries, chips and intelligence, but it is too late to start laying out these areas now. Moreover, vertical integration is extremely difficult and is a true reflection of a company's strength. Since 2015, Great Wall Motors has begun to carry out in-depth layout of the entire new energy industry chain, creating a forest ecosystem oriented towards energy and intelligence, establishing the parallel development of hybrid, pure electric and hydrogen energy, and carrying out full industry chain layout in terms of intelligent driving, intelligent cockpit, and smart chassis. It has also incubated "unicorns" in the fields of Honeycomb Energy and Moment Intelligent Driving, becoming the "only one in China and only two in the world" to complete the flat, networked and decentralized full industry chain layout in the two major fields of energy and intelligence.
In fact, over the past decade, relying on a stable industrial chain, continuous R&D investment and strong "blood-making ability", Great Wall has always been a leader in financial indicators, operating quality, risk resistance and profitability among Chinese auto companies.
Besides price, technology is the foundation of the future
"When the waves of involution break through the bottom line of costs, if you only rank sales, what's the value of that? Why don't you rank quality?" Wei Jianjun said that Great Wall has a principle called market share with quality, that is, try not to do things that make losses. For example, in 2022, Great Wall Motors decisively stopped the then popular Ora White Cat and Black Cat models because of the heavy losses of single vehicles.
Following Wei Jianjun's logic, Great Wall's product and sales structure has been "improving" since the beginning of this year. Performance forecast data shows that in the first half of the year, of Great Wall's total sales of 559,669 vehicles, 140,533 were priced above 200,000 yuan, accounting for 25.11%, a year-on-year increase of 64.28%, and the profit per vehicle has increased significantly. In Wei Jianjun's view, compared with price wars, it is still more important for Chinese automakers to improve their R&D level, climb the technological peak, and pursue quality market share.
There is a slogan that is passed down by word of mouth among Great Wall people: "Over-investment in R&D". Wei Jianjun has also repeatedly stated that over-investment in R&D is not a waste, but a long-term investment. In 2022, Great Wall's R&D investment exceeded 12 billion yuan; in 2023, R&D investment exceeded 11 billion yuan; in the first quarter of 2024, Great Wall Motors' R&D expenses were 1.96 billion yuan, a year-on-year increase of 27.73%.
Long-term excessive research and development has brought about a technological explosion for Great Wall Motors - the country's first 6×6 super off-road platform, the off-road super hybrid architecture Hi4-T, the world's only horizontally opposed eight-cylinder engine in the motorcycle field and other technologies have attracted industry attention.
Models equipped with these leading technologies have stood out from the crowd. The Tank brand, which is priced at more than 200,000 yuan, has achieved cumulative sales of 116,000 units in the first half of this year, a year-on-year increase of 98.94%; the high-end new energy brand Wei has achieved cumulative sales of 19,867 units in the first half of the year, a year-on-year increase of 9.46%. This is the quality market share that Great Wall Motors is pursuing.
Conclusion
At present, the Chinese auto market is undergoing a major change, especially since this year, with the escalation of price wars, the industry has been "rolled" to the brink of crisis. Recently, Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology, also talked about "domestic consumer demand is not strong enough, market competition is extremely fierce, some disorderly competition has emerged, many companies have seen a decline in profits or even losses, and the number of arrears between companies has increased." In the industry, not only Great Wall, but also senior executives of many brands including Geely, Changan, GAC, and Weilai are calling for healthy competition, and some car companies have begun to publicly withdraw from price wars. Perhaps under the advocacy of everyone, the auto market in the second half of 2024 will usher in a new look. (Liu Aini)
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