Longing for a Lifeline that Can Rescue Great Wall

As one of the leading domestic independent brands, Great Wall has made great strides with its popular SUV models.

By the end of last year, the global cumulative sales of the Great Wall Haval series had exceeded 7 million units, with the best-selling H6 achieving 370,000 units in sales volume throughout the year, maintaining its position as the annual sales champion of SUV for the ninth consecutive year.

Having been dominating the internal combustion engine vehicle market with its H6, Great Wall now faces a new challenge from new energy vehicles. The Ideal ONE, a new entrant to the market, won the sub-segment championship with over 90,000 units sold.

There are many similarities between the two companies that have created two popular car models. Both Ideal and Great Wall have compared their own models to Toyota’s Highlander. As early as 2012, the Great Wall H8’s first product launched to compete head-to-head with the Highlander.

The founder of Ideal is named Li Xiang, whose surname sounds the same as the brand, “Li Xiang” meaning “ideal” in Chinese. Great Wall’s mid-to-high-end brand WEY is named after the surname of CEO Wei Jianjun. Even the two founders have some persistence. Li Xiang is persistent in developing range-extension technology, while Wei Jianjun is focused on SUV production.

In response to criticism last year from Feng Sihan, Li Xiang used the phrase “TMD” (an acronym for “too many damn”) many times in order to refute him. Recently, Wei Jianjun also made similar comments at a media dinner, responding to the common belief that “replacing the brand on Ideal ONE’s logo with a traditional one will not sell as many units.” He used the phrase “They know shit,” which seems to suggest that he was speaking to Li Xiang across space.

Although the two brands were born in different times, they share many similarities in some ways, and two similar persistent entrepreneurs standing in different camps will inevitably spark intense competition.

Li Xiang’s eagerness to curse was due to his range-extension technology not being labeled as a “stigma.” So what is Wei Jianjun anxious about?

Longing for a Lifeline that Can Rescue Great Wall

In the long run, there has been a belief among domestic car brands in China that could be similar to the “women, men, and dogs” theory of the Internet: “imported > joint venture > independent,” with joint ventures occupying most of the domestic mid-to-high-end markets, while independent brands have had to fight in the under 100,000 RMB range for a long time. Even the “seal” in the 100,000-200,000 RMB price range has only gradually loosened in recent years.

Due to the weakness of the domestic automobile industry’s technology in the early days of reform and opening up, it relied on imitation to survive, which is not to be blamed, and it cannot be denied that “imitation” has helped independent brands. If it were not for Toyota Corolla and Honda CR-V, there might be no BYD F3 or Great Wall Haval H6, but the negative impact is that the brand image is difficult to break through. Traditional independent brands have also embarked on a long and tortuous journey of brand exploration.

However, the emergence of new forces in the auto industry has broken this “unspoken rule” in the past five years.NIO sells cars in the price range of 300,000-500,000 yuan; although XPeng’s first G3 model has a low base price, its second model P7 has successfully climbed onto the 200,000 yuan level, and the fourth model G9 still has an upward trend. Even the Ideal ONE, which is considered to be a plug-in hybrid model in the field of traditional car companies compared to the Toyota Highlander, also sells for more than 300,000 yuan.

Although the overall sales volume is still far behind that of traditional car companies, it has taken the first step in the high-end of independent brands. Therefore, traditional car companies that have been suppressed by joint ventures for a long time are inevitably releasing some emotions. Li Shufu, who is in the same camp, also expressed dissatisfaction with internet car making in 2018.

However, Geely and Great Wall each have their own challenges. After the failure of the Geely Blue Plan, they need to rely on a new energy-based model, while the mid-to-high-end brand of Great Wall has always been difficult to make progress.

In 2016, Geely and Great Wall tacitly launched their own high-end brands – Lynk & Co and WEY. Two independent high-end brands that started at the same time are inevitably compared by people.

WEY brand also continues Great Wall’s style, still all SUVs, which is Wei Jianjun’s strong suit. In order to create a luxury concept, WEY hired Yan Si, who served as CEO of Audi for more than 30 years, and Pierre Leclerc, former design director of the BMW M series, to personally handleVV7 and VV5.

Due to the SUV reputation laid by the Haval H6 and the support of Great Wall, WEY’s sales growth is very rapid. The total sales volume of the two models exceeded 86,000 units in the first year of the launch, which only lasted for 8 months and 4 months.

However, soon after the VV7 and VV5 models were launched, WEY brand encountered an internal change, and the design director Pierre Leclerc resigned. Moreover, in the following two years, WEY brand changed owners three times, and two general managers, Yan Si and Liu Yan, successively resigned. Finally, Wei Jianjun took over WEY himself.

The internal management turmoil was reflected in the chaotic rhythm of product launches. From 2017 to 2018, WEY successively launched VV7, VV5, VV6 and P8, but there were no major movements in the next two years, giving people the impression of too much effort in the early stage and weakness in the later stage.

In contrast, Lynk & Co has a better rhythm, launching six models from 01 to 09 successively, and building a product line from compact SUVs to mid-to-large SUVs, sedans, and new energy vehicles.

Although both have the hope of upward development of independent brands, they are somewhat different in their cores. WEY is more like a product of Great Wall’s technological improvement, while Lynk & Co is a bridge for Geely to inherit Volvo’s technology.From CMA architecture to SPA architecture, Lynk & Co and Geely have cut their ties to Volvo technology fundamentally. By further transferring Volvo’s CMA modular architecture through Lynk & Co to Geely automotive products, multiple models such as Star Yue, Star Yue L, Star Rui, and Borui were created in 2019.

In 2021, Geely’s China Star series, built on the CMA architecture, sold a total of 210,000 units, which has caught up with Lynk & Co’s overall sales. Geely has won the sales crown for five consecutive years for certain reasons.

However, several models of WEY brand have failed to escape the shadow of Haval. The similarity of powertrain and chassis have led many users to call it a “shell car”, and it is also prone to be accused of copycatting, such as VV5 and Haval H6, and VV7 and Haval H7.

Looking at Great Wall’s sales in recent years, the total volume of Great Wall Motors did not increase significantly after launching the WEY brand in 2016, and even experienced a continuous decline.

In terms of marketing, Lynk & Co cut into the young market very cleverly, while WEY chose to promote with luxury and safety, directly challenging joint venture brands. If we view it from the perspective of Internet marketing, it is clear that young people have a higher consumption desire and acceptance of new things than middle-aged users.

In early 2021, WEY opened a brand new positioning, transforming from luxury and safety to intelligence, and changed the naming rule of the car series to the coffee series. Mocha, Macchiato, and Latte were successively launched. However, this also makes WEY, a brand born less than 5 years, lack continuity and iteration, with only 58,000 units sold in the whole year, even lower than the sales in the first year.

New energy vehicles are biased.

Although WEY is a thorn in the heart of Great Wall, the total sales of Great Wall Motors achieved significant growth in 2021, reaching 1.28 million units, a year-on-year increase of 15.2%, which is about 165,000 units more than the previous year.

In fact, half of the increase is contributed by OULA. By positioning itself as a women’s brand, OULA has successfully carved out a path in the niche market. In 2021, its sales reached 135,000 units, a year-on-year increase of 140%.

However, the transformation of Zeekr and the low profitability of SAIC-GM-Wuling have proven that micro-cars are not a long-term solution. Although the proportion of female car buyers has been increasing in recent years, they are usually limited to the micro-car market, which also means that the ceiling for OULA is limited. Especially the recent chip replacement incident has cast a shadow over this brand’s progress.

The attempt to upgrade new energy vehicles is entrusted to Salon, the sixth sub-brand of Great Wall Motors.Last year, at the Guangzhou Auto Show, the Salon Mecha Dragon made its official debut. With its unconventional appearance and high-end hardware, it immediately sparked a lot of discussions. However, there are still many questions to be answered about how to support its nearly 500,000 yuan price tag.

Whether it is the initial entry into the pickup and SUV market or the creation of the Haval H6, Ora Cat, Tank 300, Great Wall Cannon, and Mecha Dragon, Wei Jianjun’s ability to create popular products and market insight can be said to be on par with Li Xiang. In terms of experience and absolute quantity, he may even surpass Li Xiang. However, he still lacks the ability to compete at the high-end level.

In terms of absolute numbers, the Haval H6 is four times that of the Ideal One, but according to data from the China Passenger Car Association, the overall volume of fuel-powered cars in 2021 is 5-6 times that of new energy cars. Meanwhile, the single-unit price of the Ideal One is over 300,000 yuan, far higher than the price range of the H6 series at 110,000-160,000 yuan. In addition, the sales of H6 have been declining year by year, and its absolute competitiveness may have already fallen behind.

I don’t know whether it was because the H6 has been criticized for “imitating” the Honda CR-V, or because the first high-end product, the H8, was delayed three times due to the outsourcing of the gearbox. Wei Jianjun is very committed to technical research and development, from self-developed engines and gearboxes to investing 5 billion yuan to build the Great Wall Technology Center. Great Wall has invested heavily in the traditional three major components, which is worthy of recognition.

At the Shanghai Auto Show last year, Great Wall Motors unveiled the first domestically produced high-end powertrain, the 3.0T+9AT/9HAT, composed of the 6Z30 engine independently developed by Great Wall and the 9-speed hydraulic automatic transmission/P2 hybrid 9-speed hydraulic automatic transmission. This strengthened the discourse power of Great Wall’s high torque models.

However, as the penetration rate of new energy increased, Great Wall still launched large displacement products, while more new energy was achieved through hybridization, and only Ora, which makes micro-cars, and Salon, which has yet to be delivered on a large scale, were pure electric vehicle brands.

Compared with BYD, which had a new energy sales ratio of about 81.3% last year, the pure fuel sales ratio in December was only 5.3%. Similar to the Haval H6, the F3, a phenomenal model of the same brand, was also officially discontinued in October last year.

On the other hand, although Geely’s new energy ratio is also low, at only 7.5%, it has many brands in its lineup, such as Polestar, Geometry, Lotus, Volvo, Remote Wave, etc., covering B-side to C-side and hybrid to pure electric in many directions.

Conclusion

Like Li Xiang, Wei Jianjun is someone who often reflects and conducts timely self-reflection.

In front of the Great Wall headquarters in Baoding, there is a “Lesson Learned” monument on which the four mistakes Great Wall Motors have made are engraved.

2020 is the 30th year of Wei Jianjun’s career in car manufacturing. From a modification factory to a leading domestic brand, Great Wall Motors has reasons to be proud. However, in the short film “Can Great Wall Motors Survive Next Year?” released in the same year, Wei Jianjun took a reflective approach instead of celebration, aiming to inspire a sense of crisis throughout the company. In the film, he said:

“If we think we have succeeded, every successful past may hinder our future; If we can’t see the disruptive changes, then we are the ones being disrupted; If we dare not break the rules, the rules will soon become the shackles of our creation.”

According to an industry insider who has had a long-term relationship with Great Wall Motors, everyone within the company is very eager to succeed, and their goals and strategies for external communications are consistent.

So what is Great Wall Motors’ goal at this stage? By 2025, the company aims to achieve a global sales volume of 4 million vehicles, with new energy vehicles accounting for 80% and a business revenue of over 600 billion yuan. At present, the sales volume of Great Wall Motors is 1.28 million vehicles, and new energy vehicles account for nearly 10.7%. However, we have yet to see the disruptive changes mentioned by Wei Jianjun in the short film.

Can Great Wall Motors survive next year? The answer may seem obvious, but can they survive the next era?

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.