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HiPhi Auto has good news again. On August 19, HiPhi Auto announced that its after-sales service centers and related cooperative outlets are gradually resuming the supply of spare parts.

Not long ago, the People's Court of Yancheng Economic and Technological Development Zone just accepted the pre-reorganization application of Human Horizons (Jiangsu) Technology Co., Ltd. (hereinafter referred to as "Human Horizons Jiangsu Company"). In addition, the restart of after-sales service this time cannot be separated from the help of Yancheng state-owned assets. All signs indicate that Yancheng has not given up on HiPhi.

On August 8, the People's Court of Yancheng Economic and Technological Development Zone accepted the pre-reorganization application of Human Horizons Jiangsu Company.

According to the decision issued by the above-mentioned court, as of April 30, 2024, the known debts that have not been repaid by Human Horizons Jiangsu Company exceeded the company's total assets, and the assets were insufficient to repay all debts, and it has the reasons for bankruptcy.

In order to solve the current difficulties of the enterprise, Human Horizons Jiangsu Company submitted a reorganization feasibility analysis report. Finally, the People's Court of Yancheng Economic and Technological Development Zone held that the pre-reorganization of Human Horizons Jiangsu Company would help improve the efficiency of enterprise reorganization, reduce the cost of enterprise reorganization, give full play to the function of the reorganization system to save distressed enterprises, better protect the legitimate rights and interests of creditors, and the debtor has pre-reorganization value and meets the pre-reorganization conditions, and decided to accept its pre-reorganization application.

On August 19, HiPhi Auto’s latest statement pointed out that as Human Horizons Jiangsu Company entered the pre-reorganization stage, three days ago, under the guidance of the interim administrator, Human Horizons Jiangsu Company, HiPhi (Qingdao) Automobile Sales and Service Co., Ltd. and Shanghai Yueda Intelligent Automobile Service Co., Ltd. (hereinafter referred to as “Shanghai Yueda”) and the after-sales service company specially established by Human Horizons Jiangsu Company signed an after-sales service entrustment agreement.

Specifically, from now until the completion of pre-reorganization and reorganization, Shanghai Yueda, a wholly-owned subsidiary of Jiangsu Yueda Automobile Group, is authorized to purchase HiPhi automotive spare parts and support HiPhi automotive after-sales service.

At present, the procurement of after-sales parts has started. HiPhi's after-sales service center and related cooperative outlets are gradually resuming the supply of parts. Shanghai Yueda is also actively preparing to increase service response in more than 20 cities. HiPhi said that this move will help gradually restore the coverage of HiPhi's after-sales service response and improve service guarantees for HiPhi owners.

Tianyancha's equity penetration shows that Shanghai Yueda, which accepted the commission, is indirectly controlled by the Yancheng Municipal People's Government. Both incidents conveyed Yancheng's positive attitude towards HiPhi.

Public data shows that Yancheng is one of the important automobile industrial cities in Jiangsu Province. It has now formed a full industrial chain of new energy vehicles including vehicle manufacturing, battery materials, automotive power batteries, motors, and electronic controls. Official data shows that in 2023, Yancheng's automobile industry achieved invoice sales of 97.17 billion yuan, a year-on-year increase of 32%; vehicle sales of 175,000 units, a year-on-year increase of 29.6%.

In fact, this historic commercial center is a latecomer in the automotive industry, having grown from nothing to what it is today in just over 20 years. The Jiangsu Yueda Group Co., Ltd. (hereinafter referred to as "Yueda Group"), which was established in 1979, has made an indelible contribution to its development into today's scale.

With South KoreaKiaYueda Group is the first company in northern Jiangsu to have sales of over 100 billion yuan. Public data shows that Yueda's revenue was 101.813 billion yuan and 110 billion yuan in 2015 and 2016 respectively. Among them, Yueda Kia sold 650,000 vehicles in 2016, ranking first in Jiangsu in terms of passenger car sales.

However, due to the tense Sino-South Korean relations and the fierce market environment in 2017, Yueda Kia's sales fell sharply that year. Yancheng's over-dependence on Yueda Kia also dealt a heavy blow to the entire city's automobile industry.

It was also in this year that Human Horizons Holdings Limited was registered and established. Under the wave of new energy, Yancheng chose to join hands with Human Horizons to establish Human Horizons Jiangsu Company, invest in and operate the HiPhi automobile brand, and expand the new energy vehicle industry chain.

HiPhi, backed by state-owned capital, once enjoyed great success. Its founder Ding Lei even confidently stated that Human Horizons has original capital from the United States and government investment. It has no plans to launch private placement in the society for the time being, nor will there be A, B, C, and D rounds of investment.

However, due to the huge gap between high-end positioning and product strength, sales cannot keep up with the speed of burning money. Public data shows that from 2021 to 2022, HiPhi Auto's sales were 4,237 and 4,349 respectively. In 2023, the third model, HiPhi Y, was launched, with sales of 1,606 units in half a year. Later, at the beginning of this year, HiPhi Auto was first caught up in rumors of "suspension of work", and the "explosion" was confirmed in February.

While HiPhi Automobile "exploded", Yueda Kia, as a leading local enterprise in Yancheng, turned its focus to overseas. In the first half of 2024, Yueda Kia sold 109,000 vehicles, more than half of which were exported. Therefore, some industry insiders believe that Yancheng did not give up HiPhi, on the one hand because it has a deep capital cooperation relationship with HiPhi, and on the other hand, it may also hope to use HiPhi Automobile to promote the transformation of Yancheng's traditional automobile industry to new energy, promote the development of the entire industrial chain, and then boost the local economy.

The research team of the Yancheng Municipal Government Social Science Fund (2022) "Research on the Current Development Status and Improvement Path of Yancheng Automobile Manufacturing Industry" once analyzed and pointed out that Yancheng's automobile industry has problems such as being large but not strong, and weak independent innovation capabilities. The research team said that Yancheng's automobile industry has always been highly dependent on Dongfeng Yueda Kia, but as Yueda Kia's market capacity has been continuously squeezed, the industrial share of Yancheng's automobile industry has also dropped from a peak of 28% to less than 10%.

In addition, the research team found that Yancheng's automobile and parts industry as a whole is large but not strong, with weak independent innovation capabilities, a large gap in high-end talents, and it is difficult to attract high-tech talents, and the loss of talents after introduction is relatively serious; the automobile industry is not concentrated enough, and Korean supporting facilities are relatively closed, which in turn restricts the development of the vehicle and parts industry.

The research team therefore suggested that Yancheng should use new energy vehicles as a breakthrough point to expand and strengthen the automobile industry, because new energy vehicles involve a wide range of upstream and downstream industries and have high industrial added value. Promoting the development of new energy vehicles and effectively driving upstream and downstream companies to settle in Yancheng can actively promote the economic development of Yancheng.

Written by: Nandu Wancai reporter Chen Jingan and intern Chen Yanyi