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arts｜"Chinese Entrepreneurs" reporter Ren Yafei

edit｜Ma Jiying

It remains a mystery when GAC Aion New Energy Automobile Co., Ltd. (hereinafter referred to as "GAC Aion"), which is valued at over 100 billion yuan, will be split and listed.

On August 6, the Beijing Equity Exchange issued an announcement on the "GAC Aion New Energy Automobile Co., Ltd. Equity Transfer". The announcement shows that the investment promotion entity is China Cinda Asset Management Co., Ltd. (hereinafter referred to as China Cinda), the disclosure start and end dates are from August 1, 2024 to January 22, 2025, and the reference price is displayed as "negotiable".

The same announcement mentioned: GAC Aion is currently preparing for an IPO on the Hong Kong stock market, and all preparations for the listing are currently proceeding as scheduled.

This makes the above equity transfer news somewhat puzzling.

In response to this, GAC Aion told China Entrepreneur that "this equity transfer is an internal asset disposal process of Aion's 'indirect' shareholders, and was not announced by Aion. The company's IPO progress is subject to the announcement of GAC Group."

According to the reporter, the "indirect" shareholder refers to Yingke Capital, a shareholder that made a strategic investment in GAC Aion in 2022. One of Yingke Capital's investors is China Cinda Asset Management. According to the Daily Economic News on August 6, GAC Aion was originally expected to go public within two years, but because the IPO time has been delayed, Cinda Asset Management needs to carry out asset disposal procedures, that is, this equity exit. In this regard, China Entrepreneur sought confirmation from GAC Aion, but no response was received as of press time.

GAC Aion has been planning for an IPO for a long time and has released listing information many times in the past two years.In response to rumors of a listing, in March this year, Gu Huinan, general manager of GAC Aion, said that GAC Aion is not short of money, "The IPO is not to raise money, the core is to solve the problem of system and mechanism." He also stated: "Now is not a good time for an IPO. The entire capital market is not good, including the mainland and Hong Kong markets. The progress of GAC Aion's IPO depends on whether the market can pick up in the future."

Judging from sales, GAC Aion is under considerable pressure.

Data shows that except for January this year, GAC Aion's sales from February to July have all declined year-on-year. In the first seven months of this year, GAC Aion's cumulative sales volume was 154,600 vehicles, a year-on-year decrease of 39.21%, and only 22% of the annual sales target of 700,000 vehicles was achieved.

The saturation of the online ride-hailing market and the increasingly fierce price war have put GAC Aion under attack from all sides.

01 The scroll is not moving

"Now everyone is trying to bargain for prices, but we really can't do anything about it," a salesperson at an Aion store in Guangdong said helplessly, "If you need a certain car, you can quote a minimum price."

Another Aion store salesperson in Changping District, Beijing, has the same distress. "In the past two years, the market conditions have been relatively good, and we could sell about 200 units a year, but in the first half of this year, we sold less than 60 units." According to the reporter, compared with last year, the store's discounts are also greater. For example, the AION Y 2023 Plus 610 Smart Edition, priced at 143,800 yuan, is currently offering a special car promotion in the store, with a cash discount of 20,000 yuan. If you choose to buy a car with a loan, the discount will exceed 30,000 yuan.

Photography: Ren Yafei

In August, the reporter visited several Aion stores in Chaoyang District and Changping District of Beijing and found that two best-selling models of the Aion brand, AION S and AION Y, had discounts of varying degrees. The lowest discount for the bare car was 10,000 yuan and the highest discount was 40,000 yuan. These were inventory cars produced at the end of last year.Several salespeople said that cars are difficult to sell this year.

GAC Aion was established on July 28, 2017, and is "the strategic core carrier of GAC Group's development of intelligent connected new energy vehicles". In the past few years, GAC Aion has grown rapidly. From 2019 to 2022, GAC Aion's annual sales will be 42,000, 59,500, 120,200 and 271,200 respectively. In 2023, GAC Aion's annual sales will reach 480,000, a year-on-year increase of 77.02%. In the new energy vehicle sales ranking, it is second only to BYD and Tesla China.

The rise in sales of GAC Aion is closely related to the market segments its products target.With its two models, AION S and AION Y, GAC Aion was once the "darling" of the online car-hailing market. According to data from Gasgoo Automotive Research Institute, from January to November 2021, GAC Aion's B-end sales accounted for 43%. Among them, the sales of the key sales models AION S and AION Y in the B-end market accounted for 63.01% and 20.33% respectively.

Entering 2023, a set of data released by the China Passenger Car Association shows that in 2023, a total of 848,000 new cars will be sold in the national online car-hailing market, of which GAC Aion will sell about 219,000 vehicles, accounting for 25% of the market. BYD is close behind with sales of 191,000 vehicles. This means that in 2023, the sales of the online car-hailing market will account for about 50% of GAC Aion's total sales.

According to a salesperson at an Aion store in Beijing, the store had just delivered more than 50 AION Y 2023 Plus 610 Smart Editions in July, and the buyer was a leasing company in Beijing.

However, the market dividends of online ride-hailing are reaching their peak, and the pressure on GAC Aion is obvious.

Data shows that the share of pure electric vehicles in the online ride-hailing market has increased significantly from 10.4% in 2016 to 84.9% in 2023.

Since 2023, dozens of cities including Guangzhou, Shenzhen, Sanya, Shanghai, and Zhuhai have issued risk warnings for the online taxi industry, indicating that the number of online taxis in relevant cities has reached saturation and the industry's prosperity is approaching the warning line. Sanya, Shanghai, and Guizhou have even suspended the acceptance of online taxi transport certificates.

According to the insurance data of the Aion brand compiled by Gasgoo Automotive Research Institute, in the first four months of this year, in the two major markets of B-end and C-end, GAC Aion's cumulative sales fell sharply compared with the same period last year. In the B-end market, the cumulative sales of the Aion brand were 47,000 vehicles, a year-on-year decrease of 26.6%. In the C-end market, the cumulative sales of the Aion brand during the same period were 39,000 vehicles, a year-on-year decrease of 26.4%. Specifically in terms of sales in various provinces and cities, Aion's sales in Guangdong Province, its base camp, fell significantly. The cumulative sales in Guangdong Province from January to April last year were 44,000 vehicles, but this year it has been reduced to 30,000 vehicles. Except for Guangdong Province, the cumulative sales of the GAC Aion brand in other provinces and cities in the first four months did not exceed 10,000.

Wang Ke, senior analyst at Analysys, pointed out thatThe decline in Aion’s sales is also related to its brand positioning."Aion has always been the representative of online ride-hailing. The current online ride-hailing market is basically saturated, and Aion cannot make any efforts in online ride-hailing. In addition, its long-term brand recognition and brand image are relatively low-end, so Aion is rarely considered as a family car."

02 Why online ride-hailing services have become a shackle

In the view of Gui Lingfeng, director of Korn Ferry Greater China, Aion is a typical example of the entire independent brand's upward development, that is, it has not touched on the essence of building a luxury brand: brand tone, group endorsement and system support.

Source: Visual China

In the past few years, Aion has relied on the online car-hailing market to cross the scale threshold in a short period of time, and has become the only state-owned new energy vehicle brand that has successfully transformed into a market-oriented brand. According to the announcement of GAC Group on the evening of October 20, 2022, its subsidiary GAC Aion raised 18.294 billion yuan in Series A financing and released 17.72% of its shares. Based on this calculation, GAC Aion's valuation at that time exceeded 100 billion yuan.

However, up to now, no automaker that relies heavily on the B-end market has achieved real commercial success. BYD also had a long history of new energy taxis in the past, but with years of technological accumulation, it has changed consumers' inherent perception of the brand.

In order to get rid of its dependence on the online car-hailing market, starting from 2021, Aion has taken a series of measures to reduce the proportion of B-end, such as launching Aion S Plus to replace the market of Aion S, which was originally labeled as online car-hailing, and launching Aion Y and Aion V.To drive an increase in the C-end share of the Aion brand.

In September 2022, GAC Aion launched its luxury pure electric brand, Haobo, and simultaneously unveiled the first electric supercar Hyper SSR with a price of over one million yuan. Subsequently, the company successively launched two mass-produced models, Haobo GT and Haobo HT. Among them, the official price of Haobo GT is 219,900 to 339,900 yuan, which is comparable to Tesla Model Y; the official price of Haobo HT is 213,900 to 329,900 yuan.

From a technical perspective, the Haobo brand is highly valued, including 800V 5C ultra-fast charging, magazine battery 2.0 technology, variable-focus laser radar, and urban NOA that can achieve nationwide coverage, etc. The Haobo brand is also actively building a charging and swapping station network. As of April 2024, Haobo has 1,200 super charging and swapping stations across the country, second only to the NIO charging and swapping network.

However, the introduction of new models and the construction of charging and swapping infrastructure did not bring about a significant increase in sales.Data shows that the total sales volume of the Haobo brand in 2023 is 8,087 vehicles. In June this year, the sales volume was only 904 vehicles, and the cumulative sales volume in the first half of the year was more than 6,000 vehicles.

Wang Ke believes that there are two key factors affecting the sales of Haobo: one is that the marketing offensive is not strong enough; the other is that some public opinion events are not handled properly. For example, negative events such as basketball players publicly complaining about failure to fulfill their promises and Zhou Hongyi having his hand pinched have all had an impact on Haobo.

In addition, competition in the new energy market is becoming increasingly fierce in 2024. Facing the internal competition in the industry, Wang Ke believes that Aion needs to further "enhance product strength and strengthen marketing and publicity."

03 Transformation is imminent

Behind GAC Aion’s slowdown is the dilemma that GAC Group is facing in its strategic transformation from oil to electricity.

At the 2024 China Automotive Chongqing Forum, Zeng Qinghong, chairman of GAC Group, criticized the serious "involution" phenomenon in the current automotive industry, and called on the automotive industry to adhere to long-termism and avoid endless price wars. At the same time, when the proportion of pure electric new energy vehicles reaches 50%, it should promote "equal rights for oil and electricity", that is, in terms of government procurement, car license plates, car purchase restrictions, consumer subsidies, etc., new energy vehicles and traditional fuel vehicles should enjoy equal rights.

Source: Visual China

In 2023, GAC Group sold a total of 2.505 million vehicles, a year-on-year increase of 2.92%. Its sales have been growing for three consecutive years and exceeded the 2.5 million mark for the first time.From January to July, GAC Group's cumulative sales volume was 1.0042 million vehicles, a year-on-year decrease of 25.83%.Among them, GAC Honda sold a total of 241,200 vehicles, a year-on-year decrease of 27.34%; GAC Toyota sold a total of 522,800 vehicles, a year-on-year decrease of 25.48%.

Since GAC Group's main sales and profits come from joint ventures GAC Toyota and GAC Honda, the group's performance is also under significant pressure. The financial report shows that GAC achieved revenue of 129.706 billion yuan in 2023, a year-on-year increase of 17.62%, but net profit was only 4.429 billion yuan, a year-on-year decrease of 45.08%. By this year, the company's operating income and net profit both declined. In the first quarter, GAC achieved revenue of 21.566 billion yuan, a year-on-year decrease of 18.79%; net profit of 1.220 billion yuan, a year-on-year decrease of 20.65%.

The decline in market share of joint venture products has also forced GAC Group to undergo a comprehensive transformation.

Take GAC Toyota as an example. According to data from the China Passenger Car Association, its market share was 4.2% in 2023. By July 2024, this share had dropped to 3.4%.

GAC Toyota and GAC Honda have already fully launched their electrification strategies. At the 2023 performance briefing, Zeng Qinghong said that joint ventures are an important part of GAC Group. On the one hand, the company's joint ventures strengthen the competitive advantages of fuel, especially HEV, and gain a larger share in the fuel vehicle market; on the other hand, they are actively promoting the transformation to new energy.

As GAC's independent brand, Aion is responsible for the development of GAC Group's new energy vehicles.

Regarding the continued decline in Aion sales this year, Gu Huinan once said frankly: "In the first half of this year, neither Haobo nor Aion launched new cars, and the technical route does not yet cover PHEV. It is normal to encounter difficulties temporarily."

He said that in the second half of the year, a new car will be launched every two months, and the products will enter a period of intensive launch. In 2025, REV (electric-oil hybrid vehicle), plug-in hybrid and extended-range models will be launched.

At the end of July this year, GAC Aion launched the new pure electric A-class SUV model Aion V Tyrannosaurus. As Aion's first global strategic model, the Tyrannosaurus is priced at 129,800 to 189,800 yuan and is mainly aimed at the mainstream family SUV market.

In addition, the product code-named "AY3" will be unveiled in August and launched in September; the product code-named "AH8" is Haobo's first full-size six-seater flagship SUV, which will be unveiled in September; the product code-named "AY2" will be unveiled at the Guangzhou Auto Show in November this year.

In order to seek new growth, GAC Aion has also begun to expand into overseas markets.In the first half of this year, GAC Aion has entered 19 countries and regions. Among them, on July 17, GAC Aion's Thailand smart factory was officially completed and put into production, with an estimated annual production of 50,000 units, and will gradually expand to 100,000 units in the future. The Indonesian factory will also be put into production this year. Next, GAC Aion will also enter Qatar, Mexico and other countries.

At the critical period of IPO, can GAC Aion rise to the challenge and break through the predicament?