Introduction: JD.com, the Key to Skyline’s Comeback
For a new energy vehicle brand, how can it become famous and win the favor of consumers without NIO’s Haidilao-style service, IDEAL ONE’s precise catering to customer needs, XPeng’s expertise in assisted driving, and the social visibility and online influence of the three leaders, namely Li Bin, Li Xiang, and He XPeng?
This is the question that Skyline and its founder Zhang Hailiang have been thinking about. Because since the launch of Skyline ME7, it has not become a representative work to make Skyline Cars famous without the endorsement of bigwigs, technological highlights, or significant cost performance.
Now, with the background of the marriage between Skyline Cars and JD.com, Skyline Cars can obtain the ecological resources of JD.com’s online and offline sales and service full marketing chain, increase its visibility and exposure by drawing traffic through the network and stocking physical stores, and launch a new product, ME5, with customized JD.com.
Skyline Cars’ second mass-produced model, Skyline ME5, was officially launched on July 13, with two models priced at RMB 149,900 and RMB 159,900, respectively. The new car features an extended-range hybrid system, with a comprehensive cruising range of 1012 km.
Will Skyline ME5 achieve the same success as IDEAL ONE with the extended-range system? Will JD.com be the antidote to Skyline ME5’s marketing shortfalls?
Learning from Others to Secure a Foothold
Skyline Cars’ new car ME5 has a cruising range of 1012 km, which exceeds the range of pure electric cars and meets the needs of some consumers for driving experience while eliminating worries about range anxiety, as its extended-range hybrid system is the main feature. It can be seen that Skyline Cars hopes to create a blockbuster after the success of IDEAL ONE.
Moreover, the top configuration of ME5 is priced at only RMB 159,900, half the price of IDEAL ONE. Different from IDEAL ONE, ME5 is a compact SUV, with a selling price of around RMB 150,000. This shows that Skyline Cars’ executives hope that ME5 will develop with an apparent disparity in pricing and body size from IDEAL ONE, and it can be said that they hope to avoid IDEAL ONE’s sharpness and claim a share of extended-range vehicles beyond pure electric vehicles. But whether the effect is optimistic or not remains to be verified by market consumers.
ME5 is Skyline’s second car, after the pure electric SUV, Skyline ME7. In June, ME7 recorded sales of only 187 units, ranking ninth in the Chinese new energy vehicle brand sales list for June. In terms of ranking, it is still acceptable, at least surviving in the past two or three years of the brand’s great elimination, and able to rank in the sales list.
However, compared with other brands, its appearance is a bit unattractive, with sales figures of less than 200 vehicles, even less than the scraps of top brands such as NIO. Looking at the figures alone, it can be said that the NIO brand is on the edge of the new force of the industry.
In order to embrace the trend of new energy vehicles, or to take a bite of the sizeable future new energy market cake, major traditional and new energy vehicle manufacturers have joined forces for development in 2021.
Baidu announced a cooperation with Geely to make cars, while Xiaomi announced a high-profile entry into the automobile market. Blue and green factories in the mobile phone industry also reportedly produced cars, and Huawei even launched the Alpha S, an automatic driving product co-developed with BAIC, stunning the audience.
Then, they cooperated with Xiaokang Motors to launch the SF5, which is equipped with Huawei’s self-developed three-electric technology and became a member of Huawei Select, which was displayed and sold directly in Huawei phone stores across the country. They also announced that they will release new cooperative products with Changan and GAC.
NIO is no exception. To change the situation of a single product struggling to support sales, NIO chose to work with JD.com. With this strategic cooperation, NIO uses its own production and manufacturing qualification capabilities to produce and launch the new model ME5, while JD.com uses its marketing ecosystem to connect online and offline sales channels, attract customers online, and promote ME5’s features, even displaying it in JD.com’s physical stores with the possibility of allowing offline consumers to experience the product’s quality and feel and conduct test drives in the original 4S store.
But can NIO really increase its sales volume by partnering with JD.com to transform online traffic into actual sales figures?
The Survival of the Fittest
First of all, ME5’s appearance design is aesthetically pleasing, at least 7 out of 10 in my opinion, which is above average and competitive with most of its peers in the same level.
Secondly, at a price point of around 150,000 RMB, there aren’t many competitors that offer extended-range electric vehicles with a range of over 1,000 kilometers under the hood. The SF5 with the Huawei halo is priced between 210,000 and 250,000 RMB, the Lynk & Co 06 Electric PLUS costs more than 300,000 RMB, while the Song PLUS DMI, which is the only new energy vehicle that has a similar price and no range anxiety, is also an option.
The ME5 may not necessarily receive a flood of orders even if it increases its exposure through JD’s online drainage and offline stores. On the other hand, the SF5 from Xiaokang Sailing Technology, with support from Huawei and massive attention at the Shanghai Auto Show, garnered over 3,000 orders in just two days. It seems like Xiaokang Sailing Technology hopped aboard Huawei’s bandwagon, and all of a sudden, what was once deemed unremarkable magically transformed into a phoenix.
From the data compiled by the dcdapp-sales sales database, sales were quite weak in the first five months of 2021. Nevertheless, in June, wholesale sales rose significantly and reached 1,097 units after the Shanghai Auto Show, seemingly boosted by Huawei’s assistance.
SF5 from Xiaokang Sailing Technology and even the Alpha S from Zeekr could all experience a surge in sales with Huawei’s support. The author of this article believes that under the powerful branding of a domestic product and Huawei’s software and hardware technology, success would come so much easier. On the other hand, creating a significant result by combining JD and Skywell requires more effort.
As of late, Byton Auto, which impressed Chinese consumers with an impressive center console screen, has declared bankruptcy and is undergoing reorganization. As the number of new energy vehicle brands in China dwindles with more than a few consumer choices and market capital declined, brands like NIO, Xpeng, and Li Auto are taking over the first echelon. Following them are the likes of NIO and Zero Run with brands like WmAuto and Skywell. In today’s context where national subsidies decrease yearly, if companies seek to profit like before by shifting B consumers with one hand and another, they are without a doubt going to become cannon fodder in China’s market volatility.
In the cut-throat market, only the fittest survive. Consequently, many new energy vehicle companies made changes and efforts in 2021. NIO is building a manufacturing kingdom in partnership with Hefei suppliers. Xpeng launched the P5, which features a more affordable price and increasingly mature assisted driving capacity, taking charge of the market in numerous advanced driving systems in China. In terms of sales volume, despite complaints from old customers during the upgrade, the new upgraded Li Auto ONE, which boasts higher quality and a competitive price, continues to increase sales but remains strong among consumers.
As for the protagonist of this article, Skyworth Automobile has launched its second model, the ME5, and has changed its course from pure electric to extended range electric vehicles. What is the reason for this change? Is it because of the vast market prospects of extended range electric vehicles or because they realized that they cannot succeed solely on the pure electric route?
In my opinion, choosing the extended range electric vehicle route is a reasonable decision, but whether it will be accepted by the market is yet to be seen. The sales performance report released at the beginning of the month will be the most powerful evidence of success or failure.
Conclusion
There is no success without reason, and no failure without cause. Currently, the Chinese new energy vehicle market is like an open education examination. As long as your product can accurately capture the psychological and practical needs of consumers, consumers will naturally vote for you.
To become the last brand standing in this new energy vehicle market, it is still necessary to continuously explore consumers’ needs and create unique products, services, and brands.
Skyworth ME5 must not only make consumers accept the transitional power form of extended range electric vehicles but also get consumers to accept a new brand that does not have any celebrity endorsements. They can only hope for cooperation with Jingdong. Through good product quality, high-quality after-sales service, accurate online traffic promotion, and high visibility of offline stores, they can make consumers quickly familiarize themselves with the Skyworth brand, establish brand credibility, and potentially increase sales.
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.