Haval brand sales slump as SUV leader overtaken by Geely, Great Wall Motors increases investment in new energy

WEY brand performed flat, and Haval brand series models had weak sales. Recently, Great Wall Motor Co., Ltd. (601633.SH, hereinafter referred to as "Great Wall Motor") released the production and sales data for May. The data showed that Great Wall Motor's cumulative sales from January to May reached 409,300 vehicles, a year-on-year increase of 3.29%. Currently, only 35.28% of the sales target of 1.16 million vehicles this year has been achieved.

Among them, WEY brand sold 67,100 vehicles from January to May, and Haval brand sold 283,100 vehicles from January to May, down 17.24% year-on-year. In terms of subdivided models, in May, among Haval brand models, except for Haval H9, which increased by 30.42% year-on-year, the other 7 models fell by more than double digits, including Haval H8, which fell by 82.49%, and Haval H2, which fell by 67.27%.

A reporter from China Business News called and wrote to Great Wall Motors to ask whether there was pressure to achieve the annual sales target of 1.16 million vehicles and the reason for the weak sales of the Haval series of models. The relevant person in charge of its brand communication department said that they were busy with the World Cup in Russia and the leaders had no time to be interviewed.

Wan Chunlei, an automotive industry analyst, said in an interview with reporters that the price overlap among Haval series models has caused serious internal friction within the brand.

Haval series car sales are weak

Although the "magic car" Haval H6 still ranked first in SUV sales in May with 30,600 units, the fact that it fell 13.18% year-on-year in a single month cannot be ignored.

According to the sales data of Great Wall Motors in May, Great Wall Motors sold 70,900 vehicles in May, a year-on-year increase of 2.85%; the cumulative sales from January to May were 409,300 vehicles, a year-on-year increase of 3.29%. Overall, such sales performance is still good.

However, the sales of many models of the Haval brand, which is the main sales force of Great Wall Motors, have declined. In the cumulative sales from January to May, except for the Haval H6, which increased slightly by 0.51%, and the first high-end off-road SUV Haval H9, which increased by 65.09%, the sales of the other five models declined to varying degrees.

Not only Haval, but also WEY's sales have gradually entered a new normal after the new car effect faded. In 2017, the monthly sales of VV7 and VV5 models exceeded 10,000 many times. After entering 2018, the sales of WEY brand gradually declined from January to April, with sales of 20,289, 8,529, 14,130 and 13,139 respectively. In May, the combined sales of VV7 and VV5 were only 11,079.

All the above signs indicate that Great Wall Motors is facing an unprecedented sales crisis. It is worth pondering that Haval SUV has led the domestic SUV market for many years and has won the market sales champion for 15 consecutive years. Why is it performing poorly this year?

"Focus has always been the core strategy of the Haval brand," said Wei Jianjun, chairman of Great Wall Motors. Great Wall Motors has a complete SUV system of automobile brands, from small and compact to medium and large, and can be said to have penetrated every segment of SUV, but there is overlap in pricing and competition between brands (Haval, WEY) and models.

The reporter found that, except for the Haval H8 and H9, the other nine Haval H series models are priced within 200,000 yuan. Among the small SUVs, the H2 and H2s have overlapping prices, among the compact SUVs, the H5, H6, and H6 Coupe have overlapping prices, and among the medium and large SUVs, the H8 and H9 have overlapping prices.

In the SUV market of 70,000 to 150,000 yuan, Great Wall Motors has launched seven models, including Haval H2, H2s, H4, H5, H6, H6 Coupe and Haval M6. It is worth noting that the Haval H6, the "pillar" of SUVs, has more than 20 extended models with different colors and configurations. "This has caused serious internal friction within the brand," said Wan Chunlei.

A similar problem also exists in the higher price range of 150,000 to 200,000 yuan. The VV5 of the high-end brand WEY has a guide price of 150,000 to 163,000 yuan, and the VV7 has a guide price of 167,800 to 188,800 yuan. This is almost the same as the price of Haval H6 and H7. It is conceivable what choice consumers will make when comparing the SUVs produced by the same automaker, Haval H6 and H7, with the higher-end WEY brand. In Wan Chunlei's view, the relationship between brands is one of gain and loss.

Focusing on the SUV segment is an important development strategy of Great Wall Motors. It can be said that it has made Great Wall Motors what it is today, but "insisting on walking on one leg" has also brought a structural crisis to Great Wall Motors.

From an external perspective, the slowdown in the SUV market segment in recent years has also affected Great Wall Motors' sales to a certain extent. According to data released by the China Association of Automobile Manufacturers, the monthly sales growth of sedans exceeded that of SUVs for the first time in May this year, with SUV models growing by 6.51% year-on-year, far lower than the 12.09% growth of sedans.

Focus on new energy

For a long time, the domestic SUV market has been divided between joint venture brands and independent brands, each with its own market. Compared with joint venture brand SUVs, Chinese independent brands have more advantages in the SUV market segment. However, in recent years, major joint venture brand car companies have fought hard in the SUV market, new models have been launched continuously, car prices have been continuously reduced, and competition has been very fierce.

It is worth noting that Great Wall Motors, which specializes in SUVs and is the "dominant player" in the SUV field, was surpassed by Geely Auto in total SUV sales in the first quarter of this year. After the first quarter, Geely's cumulative SUV sales from January to May exceeded 371,700 units, while Great Wall Motors' cumulative SUV sales reached 350,300 units. Geely Auto continues to lead the SUV market.

Geely Auto, Changan Automobile and Great Wall Motor are known as the "three strongest" domestic brands, but the gap between the three companies has gradually widened in recent years. According to data released by the Industry Information Department of the China Association of Automobile Manufacturers, the top four in terms of sales volume from January to May were SAIC, Geely Auto, China Changan and Great Wall Motor, with sales of 1.0694 million, 652,700, 458,100 and 353,200 vehicles respectively.

Judging from the sales data, Great Wall Motors and Geely Auto are no longer on the same level. In fact, the sales growth rate is far behind that of Geely Auto. Data shows that Geely Auto sold a total of 123,000 new cars in May, a year-on-year increase of 61%; the cumulative sales from January to May were 638,100 vehicles, a year-on-year increase of 44%. As of May, 40% of the annual sales target of 1.58 million vehicles has been achieved.

Great Wall Motors sold 409,300 vehicles from January to May, up 3.29% year-on-year, achieving 35.28% of its annual target. In order to achieve its annual target, Great Wall Motors needs to maintain monthly sales of more than 100,000 vehicles in the remaining seven months.

"The main models of the three major domestic brands are all SUVs. As China's passenger car model structure shifts from sedans to SUVs, the sales of Chinese domestic brands have also shown rapid growth. Compared with Changan and Geely's full-model product distribution, Great Wall is almost fully focused on SUVs. Under the trend of China's model structure transformation, other domestic brands will also increase their investment in SUV models, which is both an opportunity and a challenge for Great Wall," said Lin Yahui, an analyst at TrendForce.

Why is Geely Auto's SUV gradually overtaking Changan Auto's SUV and performing better in passenger car sales?

"Geely Auto has done a lot of things in recent years, which Great Wall Motors has not done, or it does not have the convenience and platform to do it." Wan Chunlei said, "Geely not only acquired Volvo and Lotus, but also holds shares in Daimler. In addition to capital expansion, it also needs to build a world-class brand and reputation. In particular, the benefits that Volvo has brought to it are not only reflected in money and technology, but the integration of the entire industrial chain is the biggest gain for Geely Auto."

In fact, Geely Auto has transformed its external expansion into internal growth, but Great Wall Motors is conservative in its operations and has not made any special moves in this regard. It is reported that Great Wall Motors will further focus on SUV products in the future, but it is unknown how many years the high growth of the SUV market can continue. Once the SUV market heats up, where will Great Wall Motors go?

Obviously, Great Wall Motors has also realized the crisis in this regard and started to seek changes. Compared with the low-key in the past, Great Wall Motors began to pay attention to brand marketing and publicity. Wei Jianjun personally endorsed the WEY brand VV7. In May, Cristiano Ronaldo joined hands with Great Wall Motors to become the WEY brand spokesperson. The relevant person in charge of Great Wall Motors also told reporters, "We are very busy now, busy with the World Cup."

In the crisis, Great Wall Motors began to accelerate the layout of new energy vehicles. In July last year, Great Wall Motors acquired 25% of the equity of Hebei Yujie Automobile Co., Ltd. (hereinafter referred to as "Hebei Yujie") by increasing capital. It is reported that Hebei Yujie started with low-speed electric vehicles and obtained the qualification of new energy passenger vehicles in 2017. In February this year, Great Wall Motors joined hands with BMW, and the two parties will cooperate in the field of new energy vehicles in the form of a joint venture.

In addition, Great Wall Motors has established R&D centers in Shanghai, China, Japan, the United States, Austria and other places. Among them, Great Wall Motors has established a new energy technology R&D center in Japan, which is mainly responsible for the R&D of fuel cell vehicles and autonomous driving. Wei Jianjun once publicly stated that Great Wall will usher in the explosive period of new energy products around 2020, and the future battery energy density will also be above 260Wh/kg.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.