Text丨Business Data School, Author|Liu Junhong
In the recent continuous and anxious "supervision battle" of Zhou Hongyi, the founder of 360 and the shareholder of Nezha Automobile, Nezha Automobile (hereinafter referred to as Nezha) still couldn't stand it after all.
On June 26, Nezha submitted IPO documents on the Hong Kong Stock Exchange through its parent company, Hezhong New Energy, and urgently hoped to become the fifth new car-making force to land on the Hong Kong stock market. With the disclosure of business data, Nezha's "veil" has also been lifted.
Overall, Nezha's business situation is not ideal. From 2021 to 2023, Nezha Automobile has been in a state of large losses. Among them, the loss in 2021 will be 4.84 billion, the loss in 2022 will be 6.67 billion, and the loss in 2023 will be 6.87 billion, with a cumulative loss of 18.4 billion yuan in three years.
The "continuous bleeding" on the business side may also be attributed to "losing money and making money" in exchange for price. However, sales data shows that Nezha's car is also "not easy to sell". In 2023, Nezha will see a decline in sales, with a total of 127,000 cars sold, a year-on-year decrease of 16%. By 2024, Nezha's sales situation has not improved. According to the company's announcement statistics, from January to May 2024, Nezha will deliver a total of 43,000 vehicles.
Fortunately, with the "high-priced" model (priced at 150,000~220,000) that will be delivered at the end of 2022, Nezha S will gradually increase in volume in 2023, maintaining Nezha's total revenue in 2023, and finally recording 13.6 billion yuan, an increase of only 4% year-on-year.
The large losses in successive years and the unfavorable sales growth eventually led to the situation that Nezha was about to face "capital exhaustion". According to the data as of April 2024 (unaudited), Nezha's current account is -1.55 billion yuan (cash and equivalents + financial lease spot part + trading financial assets - borrowings).
With such a current situation, it is no wonder that the "Internet veteran" Zhou Hongyi recently broadcast Nezha's factory, discussed changing Nezha's name, and "did his best" to build momentum for Nezha. Nezha Automobile CEO Daniel Zhang felt "a lot of pressure", continuously complained on Weibo, and finally lamented at the 2024 China Automotive Blue Book Forum, "Because he is sometimes out of control, the Weibo account was taken away by colleagues in the public relations department."
There is no doubt that Nezha has come to the most critical moment.
01 Once a dominant, now it is eager to go public
Once upon a time, Nezha also "turned over the river and the sea".
As a member of the new car-making force at the same time as "Wei Xiaoli", Nezha clearly recognized in the early stage of development that "scale" is the "life and death line" to gain a firm foothold. On the eve of the outbreak of China's new energy vehicles, Nezha chose to quickly enter the market competition in the form of launching low-cost cars.
The symbol of Nezha's official entry into the market is the A0 and A-segment SUVs (Nezha V and Nezha U) launched in 2020. In the price range of 50,000~100,000 and 100,000~150,000 occupied by the two models respectively, with Chinese consumers' love for SUVs and the "precise grasp" of pure electric cost-saving in household scenarios, Nezha has avoided most of its opponents in the subdivision track.
According to the best-selling list of new energy SUVs compiled by the Passenger Association in 2021, Nezha V ranked fifth with annual sales of 49,646 units, second only to BYD Tang (50,116 units). In 2022, Nezha V and Nezha U will both enter the top ten sales of new energy SUVs with data of 96,000 and 51,000 respectively. The Nezha brand is even more powerful than the three "Wei Xiaoli" with an annual sales volume of 150,000 units.
Behind the success of sales, although there is Nezha's sales strategy of "selling cars at a loss". But reflected in the financial data, it is Nezha's business indicators that are "thriving". According to the prospectus, Nezha will record a total revenue of 13 billion yuan in 2022, a year-on-year increase of 156%. Gross loss also dropped rapidly from 34.4% in 2021 to 22.5% in 2022.
However, after completing the first wave of sales accumulation, Nezha was immersed in the path dependence of past successful experiences. As Daniel Zhang publicly reflected at the beginning of this year, "There are many reasons why 2023 will not do well, and the new and old products will not be connected well and the rhythm will be chaotic; The price of new products on the market is too high, and although the adjustment is in place in the second half of the year, it has lost the opportunity." In 2023, Nezha will go downhill in 2023 when the Chinese auto market "started involution".
To put it simply, Nezha's biggest problem in 2023 lies in product capabilities and positioning.
It is reflected in the product, first of all, the product iteration of "insufficient sincerity". In the second half of 2023, Nezha will rename Nezha V and Nezha U as Nezha AYA and Nezha X, which are now sold, respectively. In the renaming operation of the automobile industry, which means a facelift, the upgrade and iteration of Nezha's new model is not obvious, and even Nezha is considered to belong to the same series in the prospectus.
Taking Nezha U and Nezha X as an example, the new Nezha X only changed the appearance of the "front face", increased the length of the car by 70mm, gave the cockpit to Qualcomm Snapdragon 8155 chip, and added small functions such as Bluetooth key and rain-sensing wipers. But the price started from the original 118,800 yuan to 126,800 yuan.
In the extremely sensitive price segment of 100,000~150,000 consumers, Nezha raised prices while almost "changing the soup without changing the medicine" to upgrade the attitude, so that although Nezha later made price adjustments, consumers still made a choice with real money. Sales data shows that Nezha X and Nezha AYA maintained several thousand sales months before delivery, and then "fell headlong".
The same problem as Nezha's low-cost car also appears in the Nezha S launched by Nezha at the end of 2022. In terms of product design ideas, Nezha hopes to use Nezha S, which is positioned as a B-class coupe, to once again use the concept of cost performance to impact the mid-to-high-end price segment (20+ million). But in this competition on the B-class sedan track, Nezha was a little in a hurry.
First of all, there is the issue of consumer brand perception. For a long time, Nezha has been showing people with the image of low-cost cars (and online car-hailing). Now entering the mid-to-high-end market, consumers need time to accept. Secondly, Nezha S's cost-effective strategy is too thin. Comparing Tesla Model 3 and BYD Han upwards, Nezha S does not have enough brand and technical advantages. Compared with the dark blue SL03, the starting price of Nezha S199,800 is not as extreme as the dark blue 168,900. After seeing that Nezha S's sales volume could not break through the 3,000 mark for a long time, Nezha launched a (small) facelift, additional allocation, and price adjustment of the "three-board axe".
In the end, the problems from product capabilities and positioning also fell back to Nezha's financial statements.
The loss of product power led to Nezha's sales of 127496 units on the premise that its sales expenses would nearly double in 2023, a year-on-year decrease of 16%. The total revenue is under the high pricing of Nezha S, and it will be maintained for the time being.
In 2023, Nezha will record revenue of 13.556 billion yuan, an increase of only 4% year-on-year. However, because of the high cost and low sales volume of Nezha S, it is difficult to dilute the cost of automobile production, and the average cost of sales of a single vehicle in 2023 will increase by 17,000 yuan compared with 2022.
Perhaps, as He Xiaopeng, chairman of Xpeng Motors, said in an internal letter at the beginning of the 2024 New Year, "this year is the first year for Chinese auto brands to enter the 'sea of blood' competition, that is, the first year of the knockout competition." Nezha, who made a mistake in 2023, will not be far from the brink of elimination if it cannot be listed as scheduled.
02 With limited long-term capabilities, Southeast Asia is the last hope?
In fact, in the new energy (intelligence) to the automobile has not changed in a century, capital is quite tolerant of new players.
Due to the long-term investment of the automobile industry, the health of the financial structure is not an absolute criterion for judging the strength of a new car-making force. After all, not every brand can have a "safety cushion" like GAC and Geely, which provides sufficient capital, technology and manufacturing to Aion and Zeekr.
Capital is more interested in ability and long-term value.
Looking back at the players who have been listed from the perspective of the rearview mirror, Tesla has cashed in the "growth lever" of the new energy penetration space with its initial leading position. Xpeng Motors adheres to intelligent positioning, benchmarks its intelligent driving capabilities against Huawei, and its car-making capabilities have been recognized by the public. With the accurate observation of the automobile market, Ideal has discovered a new "refrigerator color TV sofa" car culture. NIO has been investing in battery swapping infrastructure for a long time, and now it has also received cooperation from six traditional Chinese car manufacturers, including Changan, Geely, and Chery.
However, for Nezha, the direction it adheres to and the long-term value it shows are not stable so far.
In terms of the launch of new products, Nezha still stays at the level of "focusing on low prices", and the product labels and barriers are not clear enough.
In April, Nezha released the 150,000-level C-class SUV - Nezha L. On this car, Nezha clearly referred to the ideal car and shouted the slogan of "refrigerator color TV sofa, more ideal home". Although the starting price of 125,900 is indeed half of the ideal L6, compared with products in the same price segment, the advantages of Nezha L are not obvious.
Take Leap C10 and Chery Shuxiangjia as references. As an extended-range smart car, the main advantages of Nezha L are fast charging (about one-third faster than Leap and Chery, 30%-80% power), a slightly larger central control screen (15.6 inches, equivalent to a PC game laptop screen) and a refrigerator. In other parts, such as the size of the car, the intelligent driving level (L2), the seat and other configurations, there is not much difference.
On this basis, as 2024 has entered the stage of intelligent competition of automobiles, although the intelligence of the price segment of hundreds of thousands of yuan is slightly slower, Nezha's current intelligent reserves may not be enough to support its short-term landing of high-end automotive intelligence (smart cabin + intelligent driving).
In the face of intelligent driving competition, Nezha has united a number of intelligent driving suppliers to jointly land. Among them, Nezha S adopts SenseTime's high-speed NOA solution, and Nezha L cooperates with MINIEYE. However, according to the prospectus, the current parking success rate is only 85% (almost the level of Huawei in 2021). Perhaps, Nezha's high-end intelligent driving will still need a period of iteration before it can officially get on the car.
On the cockpit on the other side, with the blessing of the 360 model, Nezha took the lead in landing the cockpit large model functions such as 360 intelligent brain, AI search and digital human on models with a price range of less than 200,000 yuan. However, in the overall design of the smart cabin, functions such as device interconnection, multi-modal control, and integrated cockpit intelligence are limited by the computing power of the Qualcomm Snapdragon 8155 chip, and Nezha's current performance is not much different from other products of the same level.
From this point of view, it is almost impossible for the current Nezha to complete the "turnaround" with new products and intelligent product strength. Further reference to the Nezha S, whose sales have "collapsed", and the plan that it is expected that new products will be launched again in 2025 (possibly the fourth quarter). This means that in the next year, Nezha may only have one product for the mainstream consumer market, Nezha L.
As a result, the only thing Nezha can "bet" on is to enter the overseas market. Take advantage of China's manufacturing to "fight high-dimensional and low-dimensional" and copy its starting path in the Chinese market.
At present, Nezha's factories in Thailand and Indonesia have been completed and put into production. As of December 31, 2023, Nezha has arranged or set up a total of 100 sales (after-sales) outlets overseas. In addition, Nezha AYA will also achieve the first place in the number of small pure electric vehicles in Southeast Asia in 2023.
In terms of revenue proportion, although Nezha's current overseas revenue only accounts for 12%. But in the face of going overseas, Daniel Zhang has confidently set a goal, "in 2026, sales will account for about 65% of the domestic market, 35% of the foreign sales, 650,000 units out of 1 million will be sold in China, and every model will have overseas products."
However, considering the current plans of Chinese car companies to "join the Great Voyage". Nezha Automobile once again relies on the competition model of low-cost cars, and under the competition of BYD, SAIC, and Great Wall Motors, it may just repeat the "story" of the Chinese market from 2020 to 2023.
It is speculated that brand A is BYD, brand B is SAIC MG, and brand F is Great Wall Motor
In any case, it's better to see growth than not to see it.
Perhaps the Southeast Asian market and this IPO will give Nezha a "lotus incarnation", just like the opportunity for Leapmotor to gradually get rid of operating low-cost cars after its listing.
But before that, Nezha still needs to work harder to find the answer sheet that can prove himself.