Author: Dian Chē Sēn
“How long can Hongguang MINI EV stay on the altar?”
You must be very familiar with Hongguang MINI EV, right? Its top speed is only 100 km/h, the longest cruising range is only 170 km, the length is less than 3 meters, and the width is less than 1.5 meters. These parameters are almost at the bottom of the list in electric vehicles, and its intelligence is even more irrelevant. Nevertheless, it still regards itself as extraordinary!
More and more addictive
On July 9th, SAIC Group, the parent company of Wuling Motors, released the production and sales report for June and the first half of 2021, stating that the group’s terminal retail sales in the first half of the year reached 2.946 million vehicles, a year-on-year increase of 29.7%; Among them, the retail sales of new energy vehicles reached 280,000 vehicles, a year-on-year increase of 412.6%. Among the 280,000 vehicles, Wuling Hongguang MINI EV contributed more than half of the sales, reaching 158,000 vehicles.
On July 10th, the official WeChat account of Wuling Motors announced that its popular model, Hongguang MINI EV, has sold 310,418 units in its first year, ranking first in China’s new energy vehicle market for 10 consecutive months.
Hongguang MINI EV was launched at the Chengdu Auto Show in July last year, with three models offered at a price range of RMB 28,800 to 38,800, and provided 120/170 km of NEDC cruising range. On the eve of this year’s Shanghai Auto Show, Wuling Hongguang MINI EV added a macaron version, which provides more choices in body color and other configurations, with a price of RMB 37,600/43,600.
To be honest, the high sales of Hongguang MINI EV reminds me of Chery QQ, which created a sales myth of 800,000 units sold in 7 years. Although one runs on fuel and the other runs on electricity, and there is a certain gap between the two in their birth environment, the overlap in price and model is not low, and even the interior configuration is almost the same. It is not unreasonable to regard them as “ancestors and grandchildren.” So, can Hongguang MINI EV still stay as vigorous as the “old grandfather”?It’s not unlikely, and it might even be more exciting. Judging from the current sales situation of the Hong Guang MINI EV and the national trend of new energy policies, it is highly likely that there will be a new addition to the list of cars with a sale volume of over a million, and there is even a great possibility of breaking the record set by the “old-timers”.
Hot Selling Logic
This statement does not idealize the Hong Guang MINI EV, which still remains the car that you would say has no airbags and only costs 28,800 yuan; it has no fast charging and only costs 28,800 yuan, and even if you say the cruising range is short, it can still only say that it only costs 28,800 yuan.
Indeed, other than the fact that it only costs 28,800 yuan, the Hong Guang MINI EV really doesn’t have much else to brag about. Even if you don’t like it very much, when you have to pay 30,000 yuan for a car that is not restricted by license plates or traffic rules for short-distance commuting, perhaps the Hong Guang MINI EV is the perfect choice.
In other words, for the same price as three Apple 12 Pro Max, you can solve the problem of low-budget car purchase, short-distance commuting, restricted license plates, high maintenance costs, and poor parking skills. Moreover, the appearance that doesn’t look low-end can also satisfy the desire to modify the car, who can resist it?
According to the manufacturer’s data, more than half of the users who have bought the Hong Guang MINI EV since its launch have customized their car with a trendy style. Among them, users aged 20-30 account for 40%, while users aged 30-40 account for 37%. The proportion of female car owners has reached 60%, and the overall user group is young.
In addition, the Hong Guang MINI EV’s sales success is inseparable from Wuling’s marketing strategy. Unlike the nickname “old man’s joy” for low-speed cars, the Hong Guang MINI EV was born with the emphasis on being “the choice of young people”. On social media platforms such as Douyin, Weibo, and Xiaohongshu, this recognition was constantly promoted and reinforced. Meanwhile, innovative marketing tactics such as various trendy modifications and cross-border collaborations were also employed to promote the Hong Guang MINI EV.
This is why we have enough reason to believe that it can continue to produce “mythical” sales.
It turns out to be “charity work”?
But what you may not have thought of is that, despite the sales success of the Wuling Hong Guang MINI EV at 310,000 yuan, it may still be limited to just covering its basic costs.According to the financial report of SAIC Group, the gross profit margin of its vehicle business has decreased from 11% in 2018 to 6% in 2020, while the overall gross profit margin of the enterprise is 12%. Preliminary estimates show that the known component costs of Wuling Hongguang MINI EV amount to between 14950 yuan and 23000 yuan, and taking into account other unknown component costs, taxes, R&D expenses, management, labor, transportation, and sales expenses, it’s hard to say how much profit can be made. So why did they keep selling such a “good-looking” car even if it doesn’t make money and just breaks sales records?
Actually, the reason is that the Hongguang MINI EV can earn “points”!
These “points” refer to the policy of Corporate Average Fuel Consumption (CAFC) credits and New Energy Vehicle (NEV) credits that are required for automakers. It was first issued by the government in September 2017 and implemented in April 2018.
The CAFC credit refers to the negative credit points generated if the actual fuel consumption exceeds the standard value, which requires buying positive credits from NEV to offset. The NEV credit can be obtained if the production of NEV exceeds a certain amount, but it cannot be carried over or transferred to the next year. This means that automakers must produce a certain number of NEV while producing fuel vehicles.
In short, if an automaker generates negative NEV credits, it needs to buy positive credits from other automakers at the end of the year to offset them, and may also face penalties such as fines, production reductions, etc.
Data shows that in 2020, SAIC-GM-Wuling’s NEV credits reached 440,477 points, ranking third in the Chinese auto market after Tesla and BYD. Therefore, the large number of credits generated by the Wuling Hongguang MINI EV can be used to offset fuel vehicles.
Each credit is valuable, and according to the latest information, there will be a shortage of NEV credits in 2021, and the transaction price of each credit may reach 6000-10000 yuan. Therefore, while selling a Hongguang MINI EV may not make money, the credit value it creates is very high. Whether from the perspective of “credit consumption” or actual profits, SAIC-GM-Wuling is a winner. This explains why, despite not making money, the manufacturer continues to sell the Hongguang MINI EV.### Don’t think you’re safe
But even if it’s just for earning “points” or creating a legendary story, don’t think the Hongguang MINI EV is safe. Recently, the U.S. men’s basketball team, known as the “ceiling” of the basketball world, suffered two consecutive defeats in the Olympic warm-up game, setting a record for the first time in the history of the U.S. men’s basketball team to lose consecutive warm-up games. This is a team that usually easily wins by dozens of points.
More than three months ago, the news of A0/A00-level electric vehicles, represented by the Hongguang MINI EV, being restricted from being registered was seen on Tieba and later confirmed to be true by 4S stores. Several models, including the Hongguang MINI EV, Ora Black/White Cat, and BYD e1, were affected. At the time, SAIC-GM-Wuling officials stated, “The new policy in Shanghai has not been officially released yet, so please refer to the final policy when it is announced.” Today, even though the new policy that was supposed to be announced at the end of May has not been released, it has already caused a significant change in the purchasing intentions of many potential car owners.
This sudden policy restricting vehicle registration has indeed left the Hongguang MINI EV and other A0/A00-level electric car enterprises at a loss. Although the Hongguang MINI EV only sells a few hundred units per month in Shanghai, which is inconsequential compared to the average monthly sales of over 20,000 units, one could never predict when or which cities, and possibly even multiple cities, might suddenly receive a “decree,” as there have been precedents.
In addition, on June 17th, the Ministry of Industry and Information Technology publicly solicited opinions on the recommended national standard “Technical Conditions for Pure Electric Passenger Cars,” which officially includes low-speed electric vehicles in the scope of pure electric passenger cars. After the standard is passed, the management of low-speed electric vehicles will be traceable. That is to say, these “old man’s cars” that have been wandering in the gray area of regulation for many years will no longer be allowed to run wild.
This may seem like a unified formalization of low-speed electric vehicles, but in fact, it may provide an opportunity for those “enterprising” low-speed electric vehicle enterprises to undergo a transformation. Reding is one of them!
Reding Auto was established in February 2008 and has maintained annual sales of over 200,000 units, firmly occupying the “leader” position in the national low-speed electric vehicle market. But it was two years ago that really made Reding Auto famous in the automotive industry.In April 2018, Reddin Auto acquired Shaanxi Qingxing and obtained the production qualification of new energy commercial vehicles. In January 2019, Reddin Auto acquired Yema Auto, which was struggling under the Fulin Group, for a total of 1.45 billion yuan. Reddin Auto now has four production qualifications: traditional passenger and commercial vehicles, new energy passenger and commercial vehicles.
As a result, Reddin Mangguo was launched, which is priced only one thousand yuan more than the Hongguang MINI EV, yet has better battery life and dimensions.
A total of five models of Reddin Mangguo were launched, with a price range of 29,800-54,900 yuan. If viewed as a micro electric vehicle for short trips, the strength of the Reddin Mangguo is quite good; it has two specifications of 25 kW and 35 kW electric motors, and provides 11.52 kWh, 17.28 kWh, and 29.44 kWh lithium iron phosphate battery packs according to different configurations, with NEDC range of 130 km, 185 km, and 300 km respectively. The high-end and top-level models are also equipped with rare fast charging function in the same class, which can be charged to 80% in 0.5 hour.
To be honest, each of these strengthened features solves the pain points for micro electric vehicles in the use process. However, most consumers’ impression of Reddin Auto is only in the era of “happy senior citizens”. Therefore, the inclusion of low-speed electric vehicles into the scope of pure electric passenger vehicles may give Reddin Auto an opportunity for a new “self-introduction”.
For Hongguang MINI EV, if these license plate restrictions are just unknown factors and can hardly be regarded as a real threat, or even the standardized “low-speed electric vehicles” can only deter certain regions such as Shandong, Henan, and Sichuan without causing much damage. Then, the following two are the real “competitors” in recent period.
On July 2, Chery officially announced that the first product series of its iCar ecosystem was named “QQ”, positioning as a “happy toy” for “Generation Z” consumers, and the first product will be named “QQ Ice Cream”, positioning as a pure electric premium small car, which will be launched within the year.The Chery QQ, which was defined as a “grandparent-grandchild” relationship, will be revived. Although it is not yet clear how much advantage the pure electric version of the Chery QQ product itself has, it may give this “grandchild” a lesson with the strong “QQ” feelings of the past.
Coincidentally, the second new punk car of the Punk Automobile Doraemon family, Punk Dodo, which was originally launched in June, has been adjusted to be launched in August. The new car is also positioned as a micro electric car, but adopts a five-door four-seater layout. It is reported that the future selling price will be between 30,000-50,000 yuan. According to previous news, the body size and interior configuration of the Punk Dodo are slightly superior to those of the SGMW Hongguang MINI EV. Even though the brand awareness of Punk Automobile is far from that of SGMW, it cannot be denied that Punk Dodo has the possibility of becoming the next explosive model.
In conclusion
To be honest, when you see an electric car that is small, cute, has four seats and a range of 120 kilometers or 170 kilometers, but the price is only between 28,800-43,600 yuan, many people will be attracted to it. This is what Wuling Hongguang wants, although the low-price strategy will reduce its own single-car profit margin, Wuling can continuously attract traffic with this characteristic, which is also a kind of success.
Of course, the footsteps of Hongguang MINI EV have not stopped. In addition to the launch of the Macaron series version this year, the convertible version of the Hongguang MINI EV has also received the latest news. It is understood that the convertible version of the Hongguang MINI EV will be mass-produced in China next year, and the selling price in Europe is currently set at 20,000 euros (equivalent to 156,000 yuan). The domestic selling price will definitely be lower than the export price and is expected to be within 100,000 yuan.
So, can the already legendary Hongguang MINI EV continue to break the “ceiling” of micro electric cars?
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.