Article by: Yi Han Wu
Edited by: Xianzhi Wu
On November 7th, BAIC Blue Valley (Beijing Automotive Industry Holding Co., Ltd. Blue Valley) confirmed that the Vice President of BAIC New Energy and President of JH Automobile, Qiu Feng Wang, resigned due to personal reasons.
Qiu Feng Wang, who has a background in automotive media, officially joined BAIC New Energy on October 21, 2020 as the Vice President of the ARCFOX division, in charge of JH brand marketing and communication business. Later, after the former president of the division, Li Guo Yu, joined Xiaomi, Qiu Feng Wang fully took over the ARCFOX division, serving as President and transitioning from a technical official to a marketing official. Subsequently, during Qiu Feng Wang’s tenure, the JH brand continued to excel in entertainment marketing.
Qiu Feng Wang’s departure has raised curiosity about who will take over JH. Currently, there are reports that the person taking over is likely Fan Jingtao, the current Vice President of BAIC New Energy and Executive Director of JH Automotive. However, some reports suggest that BAIC may appoint a traditional automotive industry professional to take the helm, such as Dai Kangwei, a graduate from Beijing Institute of Technology’s Automotive Department and the current Vice President of BAIC New Energy’s research institute and general manager of BAIC Blue Valley. However, these are all speculations from the outside world.
Tech Giants Can’t Pull It Off
JH Automobile is a brand created by BAIC Blue Valley in collaboration with Daimler, Magna, and Huawei. JH Automobile used Huawei’s full-stack intelligent driving and cabin solutions for its second car, the Alpha S. However, during its collaboration with Huawei, JH Automobile was unable to deliver its products on time, which has been repeatedly testing the market’s patience.
In 2021, JH Automobile delivered only 4,993 vehicles, and its total delivery for the first 9 months of 2022 was only 9,800 vehicles. In contrast, WEY, another brand relying on Huawei, delivered over 10,000 vehicles per month in Q3 of 2022. The gap between the two is apparent.
Actually, in June 2021, WM Motor (also known as JiHuo) collaborated with Baidu to develop the fifth generation of Robotaxi. In October 2022, WM Motor officially delivered 200 units of the fifth generation Apollo Moon for shared autonomy to Baidu Apollo. However, this did not substantially help WM Motor’s sales.
Even with the support of two technology giants, Huawei and Baidu, WM Motor failed to take advantage in the market, falling even behind new players in the second tier, losing its edge. Furthermore, rather than focusing on automobile sales, WM Motor shifted its focus to entertainment projects, marketing nostalgia, which makes its path increasingly difficult.
The Unserious WM Motor
In 2021, BAIC Newergy held an immersive experience event called “WM Action” in more than 10 cities including Beijing, Shanghai, Guangzhou and Shenzhen. The activity used a plot combined with cinematic feel to have participants complete test drives in a role-playing form. It is rumored that the event cost nearly 20 million yuan.
In April and May of this year, WM Motor exclusively sponsored concerts by Chinese artists Cui Jian and Luo Dayou, respectively, each at a cost of over ten million yuan. In April, it also sponsored Beijing Guoan Football Club. On July 18, just two days after BAIC BluePark announced its fund-raising plan, WM Motor’s official WeChat account announced the exclusive title sponsorship of the rock concert “You have to be good”, among other entertainment-related events. In addition, WM Motor invited entertainment celebrities to endorse its products.
According to financial data, for the past few years, BAIC BluePark’s sales expenses have exceeded 1 billion yuan, with advertising and exhibition expenses growing year by year. In 2021, its sales expenses reached 1.671 billion yuan, a YoY increase of 65.83%. Advertising and exhibition costs accounted for about 736 million yuan, a YoY increase of 98.92%, representing 44% of sales expenses and the main cause of the increase. R&D expenses reached 1.208 billion yuan, a YoY increase of 24.14%.According to the data, BAIC Blue Valley has increased its investment in marketing and development, but the importance of development is far less than that of marketing.
Looking at the financial data for the first three quarters of this year: BAIC Blue Valley’s sales expenses reached 1.466 billion yuan, a year-on-year increase of 43.44%; the R&D expenses were 627 million yuan, a year-on-year decrease of 3.77%.
BAIC Blue Valley has lost more than 15 billion yuan in less than three years from 2020 to the end of the third quarter of this year. Despite such losses, ARCFOXx, which is vigorously spending money on marketing, is not well received in the market. The sales volume in the first three quarters of 2022 was only 9,800 units, achieving only 25% of the annual sales target.
ARCFOXx pays much more attention to marketing than to product development, with a serious deviation in focus and even some sense of reversing the primary and secondary.
Some industry insiders analyzed that consumers focus on practical issues such as cost-effectiveness, product safety, quality, configuration, and after-sales service when buying a car. If companies use these marketing expenses for research and development, product upgrades, and subsidizing car prices from the customer’s perspective, perhaps the result would not be so bleak.
In the face of the situation, what direction will ARCFOXx take under the new leadership? Will it turn towards development, deepening technological research, or continue on the old road of marketing, or perhaps open up a new path? Someone needs to turn the tide.
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.