Looking back at 2020, the sudden COVID-19 epidemic at the beginning of the year caused another setback in China's auto market, which had been mired in negative growth, coupled with the sudden rise of new forces in car-building, adding to the hardship of traditional car companies. ButGreat Wall Motor(HK:02333/SH:601633) is a special case: since July last year, Great Wall's Hong Kong stock market capitalization has soared, rising 386.6% for the whole year. In the wailing field of traditional fuel cars, there is a sense of "I will kill a hundred flowers after I blossom."

The main reason is that since July last year, Great Wall's industrial actions have been continuous: in July 2020, three major technology platforms such as "Lemon", "Tank" and "Coffee Intelligence" were released; in the second half of the year, a large wave of blockbuster models were launched one after another, including Harvard's third generation H6, Harvard Dog, WEY luxury SUV Tank 300, and pure electric brand Ola White Cat.

Looking back to this year, the performance of the Great Wall is also remarkable:

• In February, Great Wall Motor completed its strategic investment in Horizon, an automotive smart chip company (add: Horizon is a star in the primary market of automotive chips).

• On March 29, Great Wall Motor released the hydrogen energy strategy and brought the specification-level "hydrogen power system" panoramic solution-hydrogen lime technology.

• At the Shanghai auto show in April, the company brought a number of bright models: the Harvard family's new SUV, the Great Wall full-size pickup, the Great Wall's first all-electric supercar and the pure electric SUV, as well as the WEY full-size off-road vehicle tank and the flagship Mocha.

Great Wall Motor has a dazzling variety of new cars and technologies, and it no longer looks like the independent car brand that lives on SUV, nor is it "the same teenager" as it used to be. Looking at the essence through many changes, we clearly feel that the Great Wall everywhere under the "midlife crisis" is starting out again.

01、Make a fortune in the past

【1The growth history of Great Wall Motor

When it comes to Great Wall cars, you will naturally think of SUV,. After all, Great Wall has won the first place in SUV sales in China for 11 years in a row. The most interesting thing to talk about is the H6 of the Harvard family of the Great Wall, which is as well-known as the "miraculous car" Wuling Hongguang. From its official launch in 2011, the Harvard H6 successfully overtook Honda's CRV and Volkswagen Touguan to become the top SUV seller in 2013. it has been the No. 1 SUV in China for eight consecutive years, and the car has made Great Wall a household name.

Great Wall in the SUV field to achieve today's success is not plain sailing, in terms of seniority, Great Wall is one of the earliest private enterprises to build cars, its history can be traced back to 1984. At first, Great Wall was only qualified for the production of pickup trucks. In 1996, it launched the popular Great Wall style Picadir. With its excellent appearance and friendly price, Great Wall became the top pick-up truck in China two years later. Relying on the good performance of pickups, the Great Wall successfully dug up the first bucket of gold in the automobile industry.

Under the background at that time, due to China's rapid economic development, ordinary people had a great demand for cars, but the state only supported FAW, FAW, SAIC and other state-owned enterprises to produce cars, and private enterprises were not allowed to get their hands on this piece of fat meat. So at that time, the car market was almost dominated by joint venture brands, shutting out private enterprises such as the Great Wall, which had an urgent desire to build cars.

On the other hand, Geely's four cars finally entered the product announcement of that year's automobile manufacturing enterprises in 2001. Li Shufu of Geely successfully got the first car manufacturing license of private enterprises and began his dream of building cars.

Wei Jianjun, the head of Great Wall Motor, is eager to see Li Shufu's new car go on sale one after another, and his backward younger brother has become famous, but he can only produce pickup trucks. In desperation, Wei Jianjun decided to go abroad. After many visits to overseas markets, he boldly introduced SUV models. In 2002, the year after Geely got the license to build a car, Great Wall built China's first economical SUV Saifu based on its experience in making pickup trucks. At that time, China's SUV market was still in its infancy, and Saifu easily entered the top three of the national SUV market sales that year.

But the Great Wall never gave up the idea of producing cars, and finally got a "birth permit" in 2007, even though it was six years later than Geely. Since then, the Great Wall has made great efforts to lay out the car field, building an annual production base of 200000 cars, and the first car, the Great Wall Spirit, has also been successfully put on the market.

But the good times did not last long, the Great Wall Spirit was sued by Fiat for infringement, and the two sides went to court. In the end, the Great Wall Spirit was convicted of infringement, and the production of the first car was stopped after less than a year on the market. Later, the Great Wall successively launched two main cars, C30 and C50, hoping to turn the situation around. unfortunately, the car market was already a red sea, and brands such as Geely, BYD, Changan and Chery had an early menstruation. In the end, the C30 and C50 of the Great Wall were only produced for four years before the "pause button" was pressed.

Unintentionally, Great Wall Motor, which stumbled in the car business, is living a healthy life in the SUV market, and SUV sales have repeatedly hit record highs. Great Wall Motor simply gave up car production to specialize in SUV production. In the following years, Great Wall Automobile gathered the "whole family" from Harvard H1 to Harvard H9.

【2】"betting"SUVSuccess

From 2010 to 2016, China's SUV market ushered in a golden period of development, and people began to admire the SUV, with large space and high chassis, with a compound annual growth rate of 37.6% over the past six years. Great Wall's initial bet on SUV also made it one of the biggest beneficiaries of SUV market dividends.

Great Wall's SUV sales began to grow by leaps and bounds in 2010, reaching an all-time high of 933000 in 2016, in sharp contrast to the success of the SUV.

【3] preconceived

There is another reason why the SUV of the Great Wall is now the leader. At the beginning of the 21st century, independent brands such as Changan, Chery and Geely obtained the car production qualification before Great Wall, and the focus has always been on the car field. However, they underestimated the Chinese people's love for the SUV and the penetration speed of the SUV, and it was only after many years of car production that their first SUV was launched one after another.

But at this time, Harvard has been in the SUV field for many years, and has gained high market recognition, coupled with its large overall sales, scale advantages bring lower bicycle costs, Geely, Changan and other car companies will inevitably be unable to compete with the cost-effective Great Wall Motor.

It is worth mentioning that the Great Wall, which started with pickups, has quietly made pickups number one in the country. In particular, in 2020, Great Wall pickup sales of 225000 vehicles, the market share reached an all-time high, accounting for 46%. According to the calculation, the Great Wall pickup has been the No. 1 in domestic and export sales for 23 years in a row.

02、Midlife crisis

But behind these glossy numbers lies a cluster of crises.

【1】SUVThe leading position is unstable.

China's automobile market has entered the stock game stage, with the total domestic passenger car market exceeding 24 million units in 2017, and its development has slowed down. However, the negative growth for three consecutive years from 2018 to 2020 has reduced the scale of production and sales to 20 million vehicles. Similarly, domestic SUV sales reached a peak of 10.13 million vehicles in 2017, and then declined for three consecutive years. Domestic SUV penetration has gone through a period of rapid growth and entered a stable period.

Although China's economy is still growing rapidly, and in an all-round way,Let go of the third childIt will help ease the decline of China's newborn population. But there is no doubt that China's auto market will not experience the rapid growth of 10 years ago again. To sum up, the peak of the industry is over.

Like other industries, the slowdown in growth is followed by the deterioration of the pattern, and the domestic SUV market has evolved from a leader in the Great Wall to a situation of separation among heroes.

First of all, independent brands have made efforts in the field of SUV, the number of SUV models on the market is increasing day by day, and the market competition is intensified. Secondly, the price of the joint venture brand is falling, which is constantly approaching the sales price of the independent brand. The SUV market, on which the Great Wall depends for survival, is constantly being hit.

Sales of the Great Wall SUV have been falling since 2017. Sailing against the current, not to advance is to fall behind. In February this year, Harvard H6 sales were surpassed by Changan CS75, and in April, Harvard H6 sales were overtaken by Honda CR-V. Honda CR-V maintained a high growth rate of 77.9% compared with last year, while Harvard H6 grew by only 9.6%.

【2Profit decline

From 2011 to 2016, thanks to SUV market dividends, Great Wall performed well in net sales, much higher than Geely, which makes cars. The turning point came in 2017, when Great Wall's net interest rate was cut in half, and has been around 5% for the last three years.

Look at Geely's performance, after all, the car and SUV walk on two legs, and the net interest rate is relatively more stable. However, in the face of the recession of the entire auto industry after 2018, Geely's gross profit margin has also fallen, which is inevitable.

Then let's take a look at the return on equity of Great Wall Motors, which performed very well before 2016, but since 2017, the data has not been very good.

In a word, betting on SUV needs to be split in two.When you encounter the industry dividend period, you can really concentrate on doing big things and make the Great Wall earn more profits than its peers, but when the dividend fades, the one-legged Great Wall looks a bit laborious.

【3The failure of high-end brand

In the face of the background of automobile inventory, how to make the brand high-end, how to break through the brand and price upward, and how to increase the market share and profit is a problem in front of every independent brand car company.

In the long run, high-end brand is also the only way for every car company, such as Buick and Cadillac, Ford and Lincoln, Toyota and Lexus. High-end brands tend to have better premium power, which is one of the important ways for car companies to obtain excess profits. Take Volkswagen Group, for example. Volkswagen's high-end brands Audi and Porsche contribute more than 60% of the group's operating profit.

In fact, Great Wall Automobile is not without efforts in this area, but is the first car company in China to try to turn the brand into a high-end car company. As early as 2015, the Great Wall launched the Harvard H8, which sells for more than 200000, and the luxury SUV, is known as "domestic bully", which appeared on Expendables 3 that year. Unfortunately, the Harvard H8 has been in the doldrums since it was launched, and production stopped less than three years after it was put on the market.

In the final analysis, the SUV of Great Wall has always been cost-effective, and the middle-and low-end brand image has formed a fixed impression among consumers, who would want to associate Great Wall cars with luxury.

Drawing on the failure of Harvard H8, Great Wall established another high-end brand in 2017. This time simply take the helmsman Wei Jianjun's surname, launch the "WEY" brand, still positioning high-end luxury SUV, Great Wall once again to the high-end march.

At first, the sales trend of the WEY brand was remarkable, with 86000 units in the year it went public, and in the second year, sales increased sharply to 139000 units. But the good times didn't last long, with sales shrinking to 100000 in 2019 and just 79000 in 2020. The WEY brand has been messing around for three years, and sales have returned to their original starting point.

It is worth mentioning that Geely, another representative of the independent brand, is also actively laying out the high-end brand-Lecker, which has seen steady growth in sales since its first car was launched at the end of 2017, with sales of 175000 vehicles in the past year, an increase of about 37 per cent year-on-year. As of April this year, Lectra's sales had exceeded 500000. This time, the Great Wall lost again.

【4The domestic pickup market is lukewarm

As mentioned above, the pickup of the Great Wall has always been the first in China. However, the growth of this market is almost sluggish. Since the market size of China's pickup truck reached 400000 in 2012, it has been changing around 400000 vehicles, and there is no big breakthrough.

At this point, some people will come forward and say that the lifting of pick-up trucks is a trend and there is room for the future. In fact, since 2016, China has first started the pilot lifting of pickup bans in Yunnan, Liaoning, Hebei, Henan, Hubei and Xinjiang. now a large number of cities have relaxed or lifted pickup restrictions, but judging from the growth rate in recent years, the pickup market is still lukewarm.

Compared with cars, pickup is a typical major carbon emitter. Now major countries around the world are advocating carbon neutrality, cars are actively moving towards electrification, and the electrification of pickups is also a general trend. You see Tesla's electric pickup truck Cybertruck is already on the way of mass production. Even if the pickup market is fully liberalized, it is difficult to guarantee that Geely, BYD, Changan and other car companies will not come in, the cake will be so big, whether the Great Wall can maintain its leading position in the industry is a question.

03、Adversity leads to prosperity

【1] vehicle model upgrade

The first is to increase the main models of Great Wall. In the past, only Harvard H6 was the main model of Great Wall. From 2020 to now, Great Wall has launched the third generation of Harvard H6, Harvard Big Dog, Harvard Red Rabbit and other models to expand the force.

The second is the high-end of the Great Wall pickup, although the pickup market space is limited, but through the introduction of high-end models, to thicken bicycle profits. Great Wall Gun, a high-end pickup truck under the Great Wall, has achieved good results. In 2020, it sold more than 110000 vehicles.

Finally, the WEY brand made a comeback after trial and error. The WEY brand unveiled a new model, Mocha, at this year's Shanghai Auto Show, which uses all the intelligent technologies of Great Wall, including specification-grade Qualcomm 8155 chips, gauge-grade 5G+V2X, and gauge-grade laser radar lights. I can see that Great Wall has high hopes for it, but the new car is not yet on the market, and it is up to users to decide whether the WEY brand can succeed or not.

In particular, it should be pointed out that in the second half of 2020, the Great Wall launched profitable mid-and high-end models one after another. As a result, the net interest rate in 2020 shrouded by the epidemic not only did not fall like Geely, but even slightly increased. From this point of view, the high-end development of the Great Wall is beginning to bear fruit.

【2"walking on multiple legs" in the field of new energy

Under the wave of electrification, traditional car companies are actively arranging new energy, and the mainstream is pure electric route. Great Wall Motor is no exception, but this time it no longer walks on one leg and adopts three technical routes of pure electric + hybrid + hydrogen fuel, which is a more comprehensive layout among domestic car companies.

In 2018, the Great Wall launched the pure electric brand Euler, which is strategically positioned as a "feminized" car brand, which is a precedent in the global electric car brand. According to the data released by Great Wall Motors, Euler has sold more than 70% of its models are female customers, which seems to be a bit of a "bet".

In 2020, Great Wall launched the "lemon hybrid DHT" technology with full speed range and full scene.

In March 2021, Great Wall released its hydrogen energy strategy and launched "hydrogen lime" technology. According to its plan, by 2021, Great Wall will launch the world's first C-class hydrogen fuel cell SUV,. By 2022, Great Wall will launch its first fuel cell service fleet during the Winter Olympic Games.

What needs to be poured cold water and calm is that the competition in the field of new energy vehicles is already extremely fierce, not only the traditional car companies and the new forces of car construction, but also the major Internet giants are also focusing on layout, and the competition in the future will become more and more fierce. This time there is no industry dividend to speak of, whether the new energy vehicles of the Great Wall can find a way out, but also strive for real strength.

【3Global layout

As we all know, China is the largest automobile market in the world. In fact, China's auto market only accounts for 1 / 3 of the global market, overseas has more market space to expand, the global layout will be one of the important ways for domestic auto companies to continue to grow.

In this respect, BYD can be said to be the pioneer of its own brand. Today, BYD's cars have been exported to 56 countries around the world, not only passenger cars, but also buses and buses. There is also a rising star Xiaopeng Motor, which exported a batch of pure electric vehicles to Europe in September last year.

The difference is that the former Great Wall followed the CKD (full parts Export) model, in which parts were exported abroad and then local workers were hired to assemble the whole car and resell it. The disadvantage is that the cost is high, the added value is low, and it is at the bottom of the value curve. Now the Great Wall is speeding up the layout of overseas vehicle factories, overseas "R & D-production-sales" one-stop, to achieve value transition.

In 2019, Great Wall built a complete car plant in Russia, and last year it bought two GM plants in India and Thailand. At present, Great Wall already has three complete vehicle factories overseas, together with assembly plants in Ecuador, Malaysia, Tunisia, Bulgaria and other places, the global layout of Great Wall has begun to take shape.

04、Conclusion

In the past 40 years, China's automobile industry has undergone earth-shaking changes from scratch, from the early introduction of technology to independent research and development. Today, self-brand car companies have become the backbone of China's automobile industry, and they can even go out to sea to compete with overseas car companies.

Today, in the context of the new four modernizations and globalization, self-brand car companies are facing a new crisis. We are glad to see that in the face of the crisis, they are still actively changing themselves and starting again in line with the trend, such as the Great Wall, Geely, BYD and other independent brands, and the story of the second spring after middle age is still being written.