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Amid fierce competition in the industry, indicators such as brand power, product definition, new product launch rhythm, and profit improvement are all testing major automakers.

Wang Zixi, researcher at Biaodian Finance and InvestmentTime.com

The semi-annual report disclosure is coming to an end.Xpeng Motors(Hong Kong stocks 9868.HK, US stocks XPEV.N),ZeekrAutomobile (US stock ZK.N),Geely Automobile(0175.HK) Three listed vehicle manufacturers disclosed their semi-annual performance results.

Among them, Xpeng Motors' revenue in the first half of the year increased by 61.2% to 14.66 billion yuan, and its net loss narrowed to 2.65 billion yuan year-on-year. The company's revenue increased significantly, driven by not only the increase in delivery volume, but also the growth in sales of technology research and development services brought about by "big and small" cooperation. Zeekr's total revenue also reached 34.78 billion yuan, a year-on-year increase of 63.5%; net loss was 3.83 billion yuan. Zeekr's parent company, Geely Automobile, recorded revenue of over 100 billion yuan, reaching 107.305 billion yuan; shareholders' attributable profit was 10.6 billion yuan.

In comparison, the revenue growth of Zeekr and Geely both benefited from the surge in sales. In the first half of this year, Geely's sales exceeded expectations, and both oil and electric vehicles grew, with a total of 955,700 vehicles sold; among them, Zeekr's sales doubled to 88,000 vehicles. Due to its excellent performance in the first half of the year, Geely Group raised its full-year sales target from 1.9 million vehicles to 2 million vehicles; but Zeekr's full-year target is 230,000 vehicles, and sales may be under pressure.

During the period, the gross profit margins of the three listed automakers increased in the first half of the year. Xpeng Motors' overall gross profit margin increased from -1.4% in the first half of 2023 to 13.5%; Zeekr's gross profit margin increased to 14.9%, and Geely Auto's gross profit margin increased to 15.1%, up 4.4 and 0.7 percentage points year-on-year respectively. However, the reasons for the improvement in profitability are different. Xpeng is mainly due to the realization of technology cost reduction, improvement of vehicle product portfolio, and high gross profit margin contribution of Volkswagen cooperation-related income; Geely is through product structure optimization and cost control.

As the "internal competition" in the automotive industry intensifies, whether brand power, innovative marketing and profitability can continue to improve have become key indicators to test automakers.

Xpeng gets rid of negative gross profit, will the new models take on the responsibility of "selling in large quantities"?

In the first half of this year, Xpeng Motors achieved total revenue of 14.66 billion yuan, a year-on-year increase of 61.2%. Among them, benefiting from the increase in delivery volume, automobile sales revenue increased by 55.7% year-on-year to 12.36 billion yuan; in addition to vehicle sales, services and other income also contributed 2.3 billion yuan, an increase of nearly 100%. A major factor in the surge in revenue was the growth in sales of technology research and development services related to the platform and software strategic technology cooperation between Xpeng and Volkswagen Group.

It is reported that on July 22, Xiaopeng and Volkswagen have signed a strategic cooperation and joint development agreement on electronic and electrical architecture technology. Both parties are fully committed to developing industry-leading electronic and electrical architecture for Volkswagen's CMP and MEB platforms produced in China. The "big and small" cooperation may continue to generate revenue for Xiaopeng.

In the first half of the year, Xpeng Motors suffered a net loss of 2.65 billion yuan, but the loss narrowed by nearly 2.5 billion yuan compared with the same period last year; the non-GAAP net loss was 2.63 billion yuan, and the loss narrowed by more than 40% year-on-year, mainly due to effective control of operating expenses, subsidy growth which significantly increased other income to 353 million yuan, and a significant improvement in gross profit margin.

Getting rid of negative gross profit has become a highlight of Xpeng Motors' operating performance in the first half of the year. According to the financial report, Xpeng achieved a gross profit of 1.98 billion yuan in the first half of the year, and the overall gross profit margin increased from -1.4% in the first half of 2023 to 13.5%; the gross profit margin of automobiles increased from -5.9% to 6.0%. The overall gross profit margin has increased significantly, mainly due to the realization of technology cost reduction, the improvement of vehicle product portfolio, and the high gross profit contribution of Volkswagen cooperation-related income.

The increase in gross profit margin may also confirm what He Xiaopeng, CEO of Xpeng Motors, said in the first quarter earnings call, that Xpeng's strategy will not focus solely on sales growth as before, but will pursue high quality and high efficiency.

In the first half of this year, Xpeng Motors' deliveries increased year-on-year to 52,000 vehicles, but compared with the same period,NIOCompared with the delivery volumes of 189,000 and 87,400 respectively, Xpeng's delivery volume ranked last among Wei, Xiaopeng and Li Auto.LeapmotorThe delivery volume of 86,700 vehicles also far exceeds that of Xiaopeng.

In addition to the lagging sales volume, whether the newly released MONA M03 on August 27 can shoulder the burden of "selling volume" is also facing uncertainty. The poster of the car shows that the starting price is less than 135,900 yuan, and it has intelligent driving capabilities, but the competition in the 150,000-level car market is particularly fierce. How much consumers will be favored by MONA's main intelligent driving advantage remains to be tested by the market.

Xpeng's revenue and gross profit in the first half of 2024 and the first half of 2023(Thousands of Yuan)

Data source: Company financial reports

Zeekr sales doubled, but delivery volume faced challenges

Xiaopeng is not the only company to see improved profitability. On August 21, Zeekr Auto, which is positioned as a high-end luxury brand, also released its financial report. Benefiting from the expansion of its product matrix and the luxury hunting coupeZeekr 001It is still very popular. In the second quarter of this year, Zeekr delivered a total of 54,800 vehicles, doubling the number from the same period last year.

The surge in sales drove Zeekr's revenue to 20.04 billion yuan in the quarter, up 58.4% year-on-year and 36.0% month-on-month. Among them, vehicle sales revenue contributed about 13.44 billion yuan, with year-on-year and month-on-month growth rates both in the "mid-to-high double digits". In the quarter, Zeekr recorded a net loss of 1.81 billion yuan, a year-on-year increase, but a month-on-month narrowing. According to non-GAAP standards, Zeekr's net loss was 860 million yuan, which was significantly narrowed both year-on-year and month-on-month.

It is worth noting that in the second quarter, Zeekr's gross profit margin was 17.2%, of which the gross profit margin of vehicle sales was 14.2%, both indicators increased by 4.9 and 0.6 percentage points respectively compared with the same period last year. In the financial report, the company explained that the increase in gross profit margin was attributed to the increase in profit margins of batteries and other components; the increase in vehicle gross profit margin was mainly due to the decrease in the cost of auto parts and materials, and was partially offset by the lower average selling price of Zeekr vehicles.

Overall, in the first half of this year, Zeekr not only doubled its sales to 88,000 vehicles, but its total revenue also reached 34.78 billion yuan, a year-on-year increase of 63.5%; the company's net loss was 3.83 billion yuan, almost the same as the loss amount in the same period last year; Non-GAAP net loss was 2.88 billion yuan, a year-on-year narrowing of more than 900 million yuan.

The improvement in profitability is also reflected in the gross profit margin. In the first half of the year, Zeekr's gross profit margin reached 14.9%, an increase of more than 4.4 percentage points from the same period in 2023. However, it should be pointed out that in order to sell more new cars, Zeekr's sales and management expenses increased by nearly 60% year-on-year, and the growth rate is about to catch up with the revenue in the same period.

In addition, Zeekr's July deliveries fell month-on-month to 15,700 vehicles; from January to July this year, a total of 103,500 vehicles have been delivered. However, according to the annual sales target of 230,000 vehicles, the first seven months have not yet achieved half of the target. If Zeekr wants to achieve the annual target, the monthly sales in the remaining five months must exceed 25,000 vehicles, which is a challenge for Zeekr.

Geely's revenue is impressive, but overseas sales may be affected

On August 21, Geely Automobile, the parent company of Zeekr, also announced that its revenue in the first half of this year exceeded 100 billion yuan, reaching 107.31 billion yuan, a year-on-year increase of 47%; among them, the revenue from the sale of complete vehicles was 87.48 billion yuan, an increase of more than 45%. The corresponding profit attributable to shareholders in the same period was 10.60 billion yuan, a year-on-year increase of 575%.

This is the first time that Geely's half-year revenue has exceeded 100 billion yuan, and the growth momentum mainly comes from a significant increase in sales. In the first half of the year, Geely sold a total of 955,700 vehicles, exceeding sales expectations. Based on the strategy of balanced development of fuel vehicles and new energy vehicles, the company's sales of fuel vehicles, plug-in hybrid vehicles, and pure electric vehicles were 635,500, 130,200, and 190,000 respectively, with growth rates all better than the relevant average growth rate of the Chinese passenger car market, especially plug-in hybrid vehicle sales, which surged nearly five times year-on-year.

According to a rough calculation, Geely's new energy vehicle penetration rate in this period is 33.5%, a significant increase from the same period last year.

In addition, under the fierce competition and intensified price war in the industry, Geely has improved its gross profit margin through product structure optimization and cost control. Geely's gross profit margin was 15.1% in this period, an increase of 0.7 percentage points year-on-year. However, the company's net profit attributable to the parent company soared, including the contribution of 7.47 billion yuan from the sale of part of the equity of the joint venture Horse Powertrain by Geely Automobile. Excluding this item and the impairment loss of non-financial assets, Geely's profit attributable to non-shareholders was 3.37 billion yuan, more than doubling year-on-year.

Based on the excellent performance in the first half of the year, Geely Group raised its full-year sales target to 2 million vehicles, from 1.9 million vehicles previously. In addition to the above-mentioned Zeekr annual target of 230,000 vehicles, the Geely brand target is 1.48 million vehicles.Lynk & CoIt is 290,000 vehicles.

Geely is not going to have an easy road ahead. For example, in the draft decision of the EU to impose final anti-subsidy duties on pure electric vehicles imported from China, Geely's tax rate is 19.3% among the three sampled companies. With the adjustment of tariffs, Geely's sales in the European market may be greatly affected.

Geely Auto 2024 interim results(Vehicles, million yuan, %)

Data source: Company announcement

Which company has the stronger product cycle?

In fact, 2024 is a big year for Geely Auto's products. In the second half of the year, the Geely brand plans to launch three new products, namely the mainstream pure electric SUV "Galaxy E5", the compact pure electric sedan "Star Wish" and a mainstream plug-in hybrid SUV in the Galaxy series. The Lynk & Co brand also launched two new pure electric products to explore the high-end pure electric new energy market.

As for the Zeekr brand, it will launch two new cars. It is expected to launch the Zeekr 7X in the third quarter and the Zeekr MIX in the fourth quarter. Both cars are pure electric models developed based on the SEA architecture. In addition, the company's management responded to user dissatisfaction caused by the replacement of related models, saying that the new Zeekr 009, 2025 Zeekr 001, and 2025 Zeekr 007 will not have annual model iteration plans within the next year from the date of product release, but normal OTA software upgrades will still be maintained.

Guosheng Securities pointed out that Xpeng entered a strong product cycle in the third quarter. In terms of models, in addition to the above-mentioned MONA M03, the company will also release the P7+ based on the new generation of autonomous driving hardware platform in the fourth quarter. The brokerage firm also predicts that Xpeng is expected to launch more than 8 new models in the next two years.

It is worth noting that as the industry continues to "involve", various automakers are accelerating their overseas layout. In the first half of the year, Geely Auto's export sales were 197,400 vehicles, accounting for 21% of the group's total sales. However, in addition to focusing on core strategic markets such as Europe and Asia Pacific, Geely Auto also needs to expand into markets such as Vietnam, Australia and New Zealand, and Indonesia. Xiaopeng is also accelerating its overseas expansion and gradually expanding into other markets outside Europe. As of the end of July this year, Xiaopeng has entered more than 30 countries and regions and has more than 70 stores.

Amid fierce competition in the industry, brand power, product definition, the pace of new product launches, and profit improvement are all testing major automakers.