Dedee
At the end of 2019, the official “Chinese Character of the Year” was announced: “Stability” was selected as the domestic character of the year, while “Difficult” was selected as the international character of the year.
Almost at the same time, “The New Weekly” also announced the annual Chinese character “South”. Compared to the official international version of “Difficult”, the “South” character with its self-mockery and puns, like a brother-in-law taking his younger sister-in-law to the movies, instantly enlivens fans of national culture with their jokes – they may throw out a “Southern Wind” card indicating “I’m so in trouble”; or stack two “Southern Wind” cards together as “Adding South to the South”; or turn four “Southern Wind” cards upside down at the same time as “Completely Overthrown by the South”…
For countless people, whether the character is “Difficult” or “South”, it is the most deserving “Chinese Character of the Year” since this type of program appeared in China.
Over two years later, looking back at the auto industry in that year, having experienced the spring of 2022, it’s simply too interesting! There were indeed “South” moments and various anomalies, but more importantly there was vitality and change, as well as a variety of splendid dramas that made it hard to keep up.
Rebirth
In 2019, new forces in the automotive industry entered the “point of competition”.
In early January, Musk took the lead in launching an attack – a tweet about the groundbreaking ceremony of Tesla’s China super factory, which received 10,000 likes in just one hour.
The domestic Tesla fans were thrilled because this meant the long-range all-wheel-drive version and performance high-performance all-wheel-drive version of the Model 3 on the official website would soon drop in price.
The price decrease will reach more than 200,000 yuan, with the long-range all-wheel-drive version dropping from 499,000 yuan to 299,400 yuan once it is domestically produced; the performance high-performance all-wheel-drive version will drop from 560,000 yuan to 336,000 yuan.
At the end of May, Li Bin posted a selfie of himself at a beef noodle shop in Henan, as well as a photo of him and the shop owner.
These two typical steel-and-iron-straight-man selfies brought tears to the eyes of NIO fans. Because on that same day, the heavily loss-making NIO finally struck a deal and received 10 billion yuan in financing from Beijing E-Town Capital.
Just over two months later, NIO announced that the first owners of the ES8 and ES6 can now enjoy free battery swaps for life in addition to free lifetime warranty services, making NIO the first car maker to offer free battery swap services to individual customers.
The launch of the free battery swap business has brought NIO a brand new competition point in the car manufacturing industry.Although this business has been seen by the government or other companies as a thankless and costly task, especially since NIO’s July sales were only 1502 vehicles and the annual sales target was difficult to achieve. For countless people who are skeptical of NIO and China’s new energy vehicle sector, NIO’s move is simply a “double kitchen joy”, like a toad pretending to be a frog, both ugly and cunning.
The outside world has set a countdown for NIO, saying that it could be a period of six months or that the funds will be depleted in two to three months.
In October, an article entitled “William Li of NIO, The Most Miserable Person of 2019” emerged. Although the article joked that Li was the most miserable person of 2019, it spoke highly of him throughout. It pointed out that Li was a great talent who adhered to idealism and knew how to deal with people. NIO under Li’s leadership has a bright future.
In fact, NIO has already realized that sales volume should not be the only criterion for survival of a new energy vehicle company. If the battery swap business is successful, NIO may become the first Qin Shihuang in the auto industry to touch the power line, and win eventually.
With the official launch of ES6, NIO’s products and services finally began to meet market expectations in the third quarter.
On the eve of the third NIO Day on December 4th, NIO’s stock on the US stock market began to surge, rising more than 7% at one point, and then fell slightly. The next day, the stock opened at US$2.35/per share and the stock price soared again after hours, closing at US$2.44/per share, up 7.49%. Compared with the lowest point of US$1.19/per share before, the increase was 105%.
Li Xiang’s Ideal ONE finally started delivery in the same month, a little later than the originally planned time of November. Of course, there was also a pleasant surprise, that is, the delivery model upgraded from 2019 version directly to 2020 version.
On December 30th, 15 domestically produced Tesla Model 3 China-made versions were officially delivered to internal employees at the Shanghai Super Factory, which can be said to be a milestone “legend” in the auto manufacturing industry in China. It took only one year from the official groundbreaking and construction to the completion and production of the super factory.
By the way, just before NIO’s stock crazily soared the day before, the Ministry of Industry and Information Technology released the “Development Plan for the New Energy Vehicle Industry (2021-2035)” (for comments draft), which mentioned that although the market share of new energy in 2019 was only about 5%, it is estimated that the proportion of new energy passenger vehicle sales will reach about 25% by 2025.
Regrettably
In 2019, there was also a “refreshing” new car-making concept.In April, in order to obtain the production qualification for cars, Byton Motors acquired 100% equity of Tianjin FAW Huali Automobile, a wholly-owned subsidiary of FAW Xiali Automobile, for only CNY 1, which seemed to be without harm. In fact, in addition to obtaining the equity and manufacturing qualification, Byton Motors also took on the CNY 800 million debt owed by Huali Automobile and the salary of more than CNY 50 million for its employees.
Not long after, the founder and CEO, Carsten Breitfeld, suddenly announced his departure from Byton Motors and went to Iconiq Motors as the new CEO.
On July 20th, Leap Motor held an unprecedented and grand event called “Leap night” in the Bird’s Nest in Beijing, spending CNY 300 million. Famous speaker Gordon Ramsay and Kris Wu, who once considered himself big, were invited to the event. However, the real hero of the night was a new electric vehicle called Leap Motor Mate. According to the official statement, the Mate was carefully tuned by the founder of Real Leap Motor, Steve Leopard, and it is a micro electric vehicle with “sports car-level control” and price of CNY 1.8 million.
At the event, Chairman of Leap Motor, Wang Xiaolin confidently said, “If a car has the same performance as a Porsche 718, or even better than 718, but only costs half the price of Porsche 718 or even one-third, I believe that the market size will increase ten or twenty times.”
In August, Evergrande Group officially released its new energy vehicle brand, Hengchi Motors. Along with this announcement, a news broadcast style advertisement was also launched, which was as stunning as Chairman Xu Jiayin’s Hermes belt years ago. The high emotional intelligence (EQ) interpretation is serious, regular, grand, and powerful, with a high-end tone that is unforgettable; the low emotional intelligence (EQ) interpretation is that the outdated style from 20 years ago makes people unable to look straight…
One month later, Evergrande held a mind-blowing brand propaganda meeting. Xu Jiayin gave an impromptu speech for more than 20 minutes and officially shouted out the development route of Evergrande Motors – “buy, merge, encircle, develop, and do it well”. In addition to setting a grand development route, all of the top 60 global suppliers were also present, and they collectively signed strategic cooperation agreements with Evergrande while sitting at an unprecedentedly long table.
In the following two months, Evergrande acquired Guoneng Automobile, battery company CNAE, Taite Mechanical and Electrical, and British company Protean; jointly established a company with Swedish supercar manufacturer Koenigsegg aimed at producing top-level new energy vehicles in the world; and signed contracts with 15 world-renowned automobile designers from Germany, Italy, the United States, France, Japan and other countries, requiring them to design a variety of car models for the next few years.In November, Evergrande announced an investment budget of 45 billion yuan over three years for Hengchi: 20 billion yuan in 2019, 15 billion yuan in 2020, 10 billion yuan in 2021, with an annual output target of 5 million vehicles achieved in 10 to 15 years. Including investments in whole vehicle production plants, Evergrande’s planned investment is expected to reach 300 billion yuan.
What is this concept? SAIC Volkswagen, which ranked first in domestic sales in 2018, had annual revenue of only 259.301 billion yuan.
The following month, Sailing, which received more than 6 billion yuan in investment, shyly announced the total sales of MaiMai in the first 11 months — 12 vehicles. The annual output for 2019 was also announced — around 1,800 vehicles.
Many people have already regarded Sailin MaiMai as a “pit product” that falls into the sewer, and considers Wang Xiaolin, who casually mentions “back when I was on Wall Street”, as a “Wall Street cynic” who lacks coins.
Byton’s first production prototype car, the M-Byte, has finally rolled off the line. It will become Byton’s flagship car, and also a huge exclamation point!
Whether it is Byton or Sailin, both prove with practical actions the new concept of “burning money is glorious, and mass production is not worthy”, and let countless investors have a kind of “car production is useless” despair and realization.
Departure
In 2019, in addition to Dieter Zetsche, the global CEO of Daimler officially retiring, two well-known figures in the domestic automotive industry also left one after another.
In April, Zheng Jie, the first Chinese female executive to enter the top management of a global automotive group, left the Jeep brand and the automotive industry, transferring to the hotel industry. Before she left, the Jeep brand accumulated over one million users in China.
In September, An Tiecheng, who was dubbed the “savior of DS” and the “captain of the firefighting squad” by the media, left Dongfeng Citroen and was transferred to CQC.
Six months after Zheng Jie left Jeep, and one month after Antiecheng left Dongfeng, a big news suddenly broke in the automotive industry: FCA Group, where Jeep is located, and the stronghold of French cars PSA announced a merger.
In December, the two sides officially confirmed the merger, and a new chapter in the history of the global auto industry was written with the birth of the fourth largest automotive group in the world with annual sales of 8.7 million vehicles.
At the same time, a wave of layoffs in car companies around the world seemed to be imminent, causing panic among people.
Audi announced that it will cut 9,500 jobs before 2025, while Daimler will cut at least 10,000 jobs in the next two years. Previously, international first-line car companies such as BMW, GM, Nissan and others have all announced layoffs plans.
A veteran car company that has been relatively secluded, finally could not survive the winter of 2019.On December 23, FAW Xiali issued 14 announcements in a row, declaring that its asset restructuring plan with China Railway Wuchang Group Co., Ltd. has been approved by the board of directors and the supervisory board.
FAW Xiali, which has not produced new cars for several consecutive years and has relied on “selling, selling, and selling” to survive, has finally exited from the A-share market, bidding farewell to an era that no longer belongs to it.
Compared with the Volkswagen Beetle, the complete withdrawal of Xiali is more worthy of Chinese people’s lamentation. It carries the true car emotions and era memories of a generation of Chinese people. Previously, it was the national “divine car” with continuous sales championship for 18 years, the first domestically produced car exported to the United States, and its past reputation was so great that it was called one of the “Four Heavenly Kings” along with Santana, Jetta, and Fukang.
Many people still remember the “Huaxia Deli” advertisement and the first red two-cylinder small car that rolled off the assembly line in the workshop of Xiali factory in Tianjin in 1986. Li Ruihuan, the then mayor of Tianjin, gave it a good name.
In addition to Xiali, many local car companies such as Lifan, Cheetah, Haima, and Zotye in the corners have also repeatedly tested the bankruptcy red line, relying on selling qualifications or land or the forced blood transfusion from local governments to struggle on.
Collapse
In 2019, more than 90% of the domestic new car makers found cheap land, favorable policies, and substantial financial support in second- to fourth-tier cities.
However, many new car makers who once have money and land and held a large number of preferential policies also fell in 2019. Many brand names were scolded by investors and employees on various websites until the collapse of their capital chain, and then the world knew them slightly.
On January 1, Guo Jin Automobile first burst the truck.
They released an announcement that the entire manufacturing department will be on vacation from January 2, 2019, without year-end awards or benefits, and will resume work on March 15, 2019. At the same time, the company began unscrupulously defaulting on wages, and a large number of Guo Jin employees chose to quit and let the company be exposed.
In the same month, GreenWheel Motors which failed to pay the 27 million euros project payment to the whole vehicle design supplier and Italian I.DE.A company, forced its employees to take a two-month vacation. The employees only received January salary, and those who wanted to ask about the relevant arrears were either kicked out of the working group by management or received no response.
YunDoo Motors began to force employees to take two months off because of no business to do. Previously, the factory had about 700 to 1,000 employees, but soon only 200 to 300 remained to persist in working.
In February, the Future Mobility Motor failed to pay the various supplier accounts and temporarily ceased paying wages to employees.In May, Borgward Auto was exposed on Zhihu for failing to pay salaries, causing a stir. Some employees revealed that the “year-end bonus” mentioned on Zhihu was actually the company’s promise to make up for previously owed salaries… How can you say “we’re all in the same boat” when sailors can’t even have enough to eat?
In June, data showed that FOTON Motor only sold a total of 12 vehicles in the first five months. China Gold Automotive began rotating shifts after producing fewer than 30 cars with no clear production tasks.
In July, employees of Huatai Auto stuck the four characters “Pay My Salary” on the door of the chairman’s office. As of January 2019, the group had owed its entire staff over 1000 employees four months of salary from September to December of the previous year.
Qingnian Auto also began giving most of its employees vacation time, and the few remaining with base salary were deducted for various reasons.
In November, Hangzhou Qingnian Auto, a subsidiary of the Qingnian Auto Group, which had caused huge social conflict due to the “hydrogen car,” announced its bankruptcy.
According to information released by the People’s Court Announcement Network, after paying off the project funds and other priority debts, Hangzhou Qingnian Auto had only 214 million yuan available for bankruptcy distribution. After subtracting debts, employee salaries, taxes, etc., the amount available for the normal bankruptcy claims was only 205 million yuan, with a liquidation rate of 28.47%.
In addition to these pure Chinese new forces, self-owned brands such as Yixiang, Bisu, Huansu, and Hanteng, which had flourished through unconventional means, all collapsed in 2019.
Reform
In 2019, more traditional self-owned brands seeking to survive began searching for their turning points.
In August, Aiways Auto, Changan Auto, and Jiangling Motors Group completed a three-party mixed-ownership reform, and the new Jiangling Holdings was officially established.
Unlike previous acquisitions like Baowo by Shenzhou or Guanzhi by Baojun, this was the first time a state-owned automaker had completed a privatization of the controlling stake through mixed ownership reform. Although it seemed like a minor acquisition, it finally settled Aiways Auto’s production qualification and gave more self-owned brands hope.
In December, Chery launched the first shot of “passenger car mixed-ownership reform.”
On the 4th, Chery Holding Group Co., Ltd. and Chery Automobile Co., Ltd. successfully completed the capital increase and share expansion project, and Qingdao Wudaokou New Energy Vehicle Industry Fund became the new shareholder of Chery Holding and Chery Automobile.
More than ten days later, Chery Automobile’s operating entity officially changed, with 29 senior executives quitting and 10 new executives from investment firms joining, while Yin Tongyue remained as Chery Chairman.This year-long mixed reform has finally brought “China’s Huangpu Military Academy of Auto Companies” back on track from the edge of crisis. Yin Tongyue has finally obtained a large amount of non-system funds and greater room for maneuver, allowing him to deeply influence Chery’s governance structure and establish a top-down efficient operation system.
Since then, Yin Tongyue’s long-concealed entrepreneurial attributes, including ambition, sense of responsibility, and desire to win, gradually returned. “The success of the Chery capital increase and share expansion project is a milestone in Chery’s efforts to build an internationally renowned brand,” he said.
Transformation
In 2019, the market share of domestic independent brands hit record lows several times, dropping to 36 percent.
On March 3, the CCTV Finance Channel’s program “Dialog” caused a sensation in the auto industry. Guest Dong Mingzhu spoke out about China’s auto manufacturing industry: “The precision of Chinese cars is not enough. Without precise molds, you cannot achieve such delicate running-in and matching, resulting in a gap. So, China’s cars are somewhat crudely made.”
Countless industry insiders felt full of arrogance and malice.
In fact, the so-called rough production is actually a result of the overall shrinkage of the low-priced car market – low-priced and low-quality auto companies such as Yinxiang, Bisu, Hanteng, SWM, etc. have long been miserable. However, several old independent/domestic brands such as Great Wall, BYD, Geely, SAIC, etc. opened up different paths in 2019 and demonstrated great endurance.
On June 5, at 12:06, the Long March 11 rocket CZ-11 WEY was launched from the rocket launch platform in the Yellow Sea, successfully sending seven satellites into the 600 km high orbit. This not only opened China’s first successful sea-based rocket launch but also established a precedent for cooperation between China’s auto companies and the Chinese aerospace industry.
On the same day, Great Wall Motor’s fully-owned manufacturing plant in Russia, Tula Plant, officially completed construction and commenced production. The factory covers four major production processes: stamping, welding, painting, and final assembly. It has an investment of $500 million and a planned annual capacity of 150,000 units. At the same time as the factory was officially put into operation, the brand’s most important SUV, Haval F7, was also simultaneously produced at the factory.
Of course, this factory has even greater significance – it is the first complete vehicle factory invested by a Chinese brand overseas. Before that, Chery, JAC, Geely, and other brands, who had been struggling overseas for many years, had factories, but they were mainly focused on assembling KD parts.
In just one day, Great Wall Motor reached a new stage in altitude and range that independent/domestic brands had never reached before. On the 24th of the same month, BYD’s global design center officially opened at the brand’s global headquarters in Shenzhen, and the stunning e-SEED GT concept car was launched. Since acquiring Europe’s Aegean in 2016, BYD has finally completely shaken off its overly negative image and entered the ranks of high-end vehicle manufacturers.# Professional Translation of the Markdown Text
Mr. Wang Chuanfu said, “This is a new starting point for interpreting the electric aesthetic of Chinese culture, and also a turning point for BYD’s products from the ‘technology’-driven to ‘technology + design’ driven.”
In mid-July, BYD and Toyota signed a contract to jointly develop pure electric car models for sedans, low-floor SUVs, and power batteries required for the above products. The car model will use the Toyota brand and is planned to be launched in the Chinese market before 2025.
On September 10th, Hongqi, a subsidiary of FAW, brought two latest concept cars, Hongqi S9 and Hongqi E115, to the 68th Frankfurt Motor Show. This is also the first time that China’s premier brand has made its debut at the “Olympics of the automotive industry” by the Rhine.
Hongqi seems to be smashing the internal barriers accumulated for 60 years, not only in the rapid rise of intelligent technology and brand building, but also in sales. Although it did not achieve the small sales target of 110,000 units set that year, it has achieved nearly 200% growth.
In December, the last round of the 2019 WTCR World Touring Car Cup officially ended. Despite many unfavorable factors such as severe BoP restrictions and poor qualification results, the Lynk & Co team still won the annual championship of the 2019 WTCR World Touring Car Cup with 628 points, leading the second place by 34 points.
There is also a self-owned brand worth mentioning, which is SAIC. It was Wang Xiaoqiu of SAIC who said in March that “Survival is more important than anything else for self-owned brands this year.” Subsequently, almost all SAIC models have reduced prices. Among them, the price of MG HS has dropped by 40%, and the related projects of Roewe Marvel have also been temporarily shelved.
But this is only a part of what we can see. MG’s total sales volume was 298,000 units in 2019, and it has been the first in the sports car brand for three consecutive years. In addition, the overseas sales totaled 139,000 units for the whole year, a year-on-year increase of 90%, ranking first among Chinese automakers exporting a single brand. In 2019, SAIC’s total vehicle exports and overseas sales reached 350,000 units, accounting for 33% of the total overseas sales of Chinese auto companies, with a significant increase in growth rate.
In the past, the overseas business of Chinese automakers generally showed small and dispersed scale and liked to join the liveliness in markets with weak local automotive industrial bases such as the Middle East, South America, and Africa. However, in 2019, self-owned brands led by SAIC began to enter the Asian-European markets such as Thailand, India, the United Kingdom, Norway, and Germany, especially new energy vehicles. The full-year sales in Europe exceeded 14,000 units, and the average unit price increased significantly.
The lone wolf car companies have started a new phase of fighting head-on against joint ventures.
Black Swan
It is placed as the last paragraph of the main text because these two “small things” in 2019 cannot be forgotten.In April, at the Xi’an Lixing 4S dealership, a female car owner sat on the roof of her car arguing with a salesperson due to an oil leakage issue with her new car.
In the recording of her rights defense, the female car owner’s questioning was logical and convincing: “I am an educated person, and I have a graduate degree. This incident has brought tremendous shame to my decades of education.” “I bought a car for 660,000 yuan, and before even driving one kilometer, I had to change the engine and accept this extra warranty.” In addition, this recording also exposed the “financial service fee”: for example, during the sales process, Xi’an “Lixing” aggressively recommended installment loans, and privately collected financial service fees without prior notification, requiring payment through WeChat transfer and without providing an invoice.
Finally, the 4S dealership replaced her car with a new one and refunded the extra fee of 15,575 yuan. Xi’an Lixing Automotive Co., Ltd. was fined RMB 1 million in accordance with the law. More importantly, the hidden rule of irrational charges in the entire automobile industry was brought to the table. The State Administration for Market Regulation, together with relevant departments, launched a special campaign to investigate related illegal activities that infringe on consumer rights in the domestic automobile sales industry.
In October, Luckin coffee launched a promotion activity. As long as the same mobile phone user consumes three items through the Luckin APP or Mini Program every day, they can get one chance to spin the wheel to win the use of a Baowo BX5, which is the grand prize.
In December, Baowo’s most typical “Chinese-style advertisement” in recent years, “Hao Gui”, was launched on various advertising screens of Focus Media.
With the “magic brainwashing” of Lang Yongchun and Hu Ge, Baowo made “good and expensive” the last internet celebrity buzzword of the auto circle in 2019 and entered the public’s vision with great force. The two leading brothers repeatedly emphasized “good” and “expensive”, “only good can be expensive, and only expensive can be good”, as if planting a bug in your ear, making countless viewers automatically open a three-day internal circulation.
Synchronized with the crazy marketing was high-density promotional subsidies, making people think that Baowo and Luckin had seemingly endless money to burn.
Everyone still remembers what happened next.
Epilogue
In September 2019, Mr. Ma, aged 55, officially retired.
On December 21, at the annual meeting of the Zhejiang Chamber of Commerce held in Shanghai, he exclaimed, “Yesterday alone, I received five phone calls asking to borrow money, and in the past week, more than ten friends wanted to sell their property. It really is not easy.”
Chinese people are familiar with Mr. Ma’s speeches, which are usually powerful and intense. They once caused the emotional management of a CCTV anchor to lose control. But if this paragraph were placed in the spring of 2022, no one would doubt Mr. Ma, this old comrade.Looking back at the year 2019, which was described by Wang Xing as “possibly the worst in the past decade but the best in the next decade” – indeed, the overall market share of domestic brands has decreased by one third, a dozen or so new car-making forces have entered the final round, joint venture brands have gradually lost their advantage, and industry personnel have begun to worry about their livelihood… But it is still worth commemorating and applauding for the Chinese automotive industry.
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.