Zero, which is still suffering huge losses, will fight a price war again: transform into an ideal "replacement" and be Uniqlo in the automobile industry

High beams

2024-07-01 09:23The official account of Tencent Auto's "High Beam" column

Tencent Auto "High Beam"

Author: Guo Yifei Editor: Yang Hao

The price war is becoming increasingly fierce, and Leapmotor, known as the "price butcher", (09863. HK) has released a new product in an attempt to stir up the 6-seater SUV market.

On the evening of June 28th, Leap C16 was officially launched, which was equipped with an 800V high-voltage platform for the first time, and was equipped with LiDAR + NVIDIA Orin X intelligent driving chip, 8295 Qualcomm car machine chip, rear "sofa" + "color TV", etc., and provided two power forms of pure electric and extended range, with a price range of 155,800 yuan-185,800 yuan.

At present, the market segment has become an incremental market for various car companies, including the 6-seat medium and large extended-range SUV market, and they are aiming at the ideal L8/L9 and the M7/M9. However, the cheapest starting price of the latter four products is also more than 270,000 yuan, in comparison, the latest listed Leap C16 is jokingly called "half-price ideal L8".

Regarding the ideal "replacement", in the dialogue session of the press conference, Zhu Jiangming, founder and chairman of Leapmotor, told the media including Tencent Auto's "High Beam" that he did not mind this statement: "Some users who are used to buying Zegna and Chanel may buy products like C16 when they occasionally buy Uniqlo, but after he uses it, he finds that it is no different, and he may become a loyal fan of Leapmotor at this time." ”

"Uniqlo of the automotive industry", which is still not profitable

With more than 8 years of car manufacturing, as a new force in car manufacturing, Leapmotor has 4 models, including the mini car T03, the sedan C01 and C11, and the C10 two 5-seater SUVs, with the latter three prices ranging from 100,000 yuan to 200,000 yuan.

Zhu Jiangming, who is "determined to be the Uniqlo of the automobile industry", said that Leapmotor adheres to cost pricing, gives the optimized profit margins to users, and ensures some small profits, low brand premiums, and high product value.

In terms of product line, he said that the current focus on the C series is a price segment centered on 150,000 yuan, which should be done deeply and thoroughly, occupying a relatively large market share, and striving to achieve monthly sales of 30,000 units in this price band; The pA series focuses on the 100,000 yuan level, and next year will release 3 models of the B series, with a price range of 10-150,000 yuan; In 2026, it will focus on three products of the T series, with a focus on 200,000 yuan.

It is worth noting that the C16, which is the same as the C11 and C10, is also an SUV, and the price range is also 10-200,000 yuan.

According to the statistics of the China Association of Automobile Manufacturers, in 2023, the sales of models with 10-200,000 yuan will account for 44% of China's passenger car market. Among the new energy SUV competitors in this track, including BYD Song/Yuan PULS, GAC Aion Y, Geely Galaxy L7, etc.

"Our front line is not so long, the user base is more focused, and after the scale is larger, the competitiveness is more advantageous." Zhu Jiangming believes that if both the high price and the low price are different, the users and products are different, the front line will be very large, and Leap should make the highest configuration and the best quality products at the same price.

Under the wave of new energy, the vertically integrated supply chain has become a powerful tool for car companies to reduce costs, especially led by Tesla and BYD. In this regard, Leapmotor also hopes to break its wrists.

Zhu Jiangming said that Leapmotor adheres to global self-development, and the core components that account for more than 60% of the vehicle cost are developed and manufactured by themselves, including batteries, electric drives, intelligent driving, cockpits, etc., and even include lights, bumpers, etc., in addition to technological innovation and optimized design, in addition to styling, design, interior and exterior decoration related parts, the generalization rate of parts and components of the same platform model of Leapmotor has reached 88%.

For example, he said, for example, two products created on the same platform, C16 and C10 front and rear lights, dashboards, and front seats are exactly the same, and the 8295 chip is not only used in the cockpit, but also includes L2 assisted driving, and integrates audio, parking, surround view and other functions, which contribute greatly to cost reduction.

However, due to the fact that the scale effect has not yet been formed, and the product price is low, Leapmotor has not achieved profitability at present.

According to the financial report, in the third quarter of 2023, the gross profit margin of Leap turned positive for the first time, at 1.2%, and the annual gross profit margin was 0.5%. This is mainly due to the fact that the main model has changed from the mini car T03 to the three higher-priced C series models, which have accounted for more than 73% of sales, an increase of 29 percentage points year-on-year, but the net loss for the year is still as high as 4.216 billion yuan.

However, with the decline in sales and the promotion of old models, in the first quarter of 2024, its gross profit margin fell back to -1.4%, and compared with the new car-making forces in the same period, the gross profit margin of Wei Xiaoli was 20.6%, 12.9%, and 4.9% respectively. In 2024, Leaprun's gross profit margin target is between 5% and 10%, and it hopes to achieve overall profitability in 2025.

Zhu Jiangming judged that in the next three years, the industry price war will continue, the competition is fierce and the same as now, because the market pattern has not yet been determined, it is expected that the new energy process will be basically completed in three years, when the market share of pure fuel vehicles will drop to less than 10%, more hybrid, plug-in hybrid and pure electric models.

In the marketing system, the strategy of going overseas is the key

The strategy of going to sea is an important battle for zero running out of involution.

After spending 1.5 billion euros to acquire a 20% stake in Leapmotor, Stellantis Group, the world's fourth-largest automaker, also established a joint venture with Leapmotor International. The latter will use the asset-light model and the global sales network of Stellantis Group to go overseas with the help of Leaprun products.

According to the plan, Leapmotor International will first start sales in 9 European countries in September 2024, expand its sales outlets in Europe to 200 by the end of the year, and enter the markets of India and Asia-Pacific, the Middle East and Africa, and South America from the fourth quarter. Among them, the T03 and C10 models will be the first to go overseas, and the overseas sales target of 100,000 units will be achieved in 2025.

On June 20, Stellantis Group said that it had successfully assembled the Leapmotor T03 model at the company's plant in Tychy, Poland.

With the EU's countervailing investigation of Chinese-made electric vehicles settled, it plans to impose temporary countervailing duties from July 4, and if there are no variables, Leapmotor will face the dilemma of increasing the tariff rate to 31%. Under this haze of going overseas, the outside world is generally concerned about whether Leaprun will use the global manufacturing resources of Stellantis Group to carry out localized manufacturing to cope with tariff challenges.

In this regard, Cao Li, senior vice president of Leapmotor, said that overseas is very sensitive to China's vehicle overseas policy, and for Chinese car companies, there will indeed be great obstacles and challenges to go overseas, and Leapmotor has certain advantages, we can use the manufacturing resources of Stellantis Group, which also has to combine policy and economy, "At present, it is true that a few T03 models are assembled in overseas factories to see the adaptability and feasibility of assembly, and it is currently in the evaluation stage, and it is not said when it will be necessary to go overseas for production."

For the global model of C16, Cao Li added that the demand for 6-seater models in Europe, South America and even the Middle East is not as great as in China, especially in Europe, so there is no overseas version of C16 for the time being, and we are also discussing whether there will be opportunities in some regions, so once it is established, when the opportunity is ripe, the overseas version can be launched at any time.

In terms of intelligent driving, in March 2024, Leapmotor will launch high-speed NOA assisted driving, but the high-end intelligent driving function in urban areas has not yet been launched.

Zhu Jiangming said that Leap is more likely to follow the strategy in the field of intelligent driving, and the current performance of the first echelon products is not very satisfactory, and it does not make it easier for users, especially in urban areas, where the high speed is relatively better, and it is difficult to open a big gap, and the level of intelligent driving will become more and more mature in the next 3-5 years. "We have invested more manpower since last year, and currently have a team of more than 400 people, static BEV will be on the car in July, dynamic BEV will be on the car in October and November, and will gradually move closer to the first echelon, and the progress of intelligent driving will be faster and faster in the next 1-2 years."

He revealed that next year, Leapmotor will release the first A-class product of the B series, which is also an SUV, which may be equipped with lidar and high-computing power intelligent driving chips, priced at 100,000 yuan, and will first be unveiled at the Paris Motor Show in October this year.

The price ceiling of 200,000 yuan is difficult to break through in the short term, and sales have become a breakthrough. According to Zhu Jiangming's plan, in 2024, the annual target sales volume of Leap is 250,000-300,000 units.

In the first five months of 2024, Leapmotor delivered a total of 66,580 vehicles, a year-on-year increase of 112%. Among them, 18,165 vehicles were delivered in May, ranking fourth among the new car-making forces, second only to Ideal, Huawei Hongmeng Zhixing and NIO.

"We are probably ranked 7-9 in the whole brand, and I believe that with the blessing of C16, our ranking will move forward, and the sales volume is more expected." Zhu Jiangming said.

To this end, Leap decided to use the marketing system. According to the 21st Century Business Herald, in May, Leapmotor merged the original three sales departments (channel sales department, industry sales department, and retail management team) into one "sales department", and the person in charge reported to Xu Jun, the former senior executive of Huawei and the chief operating officer of Leaprun, and the three departments formed a joint force to sell cars together.

Zhu Jiangming said that this year's marketing focus is to adjust the structure, and appropriately increase the number of outlets, to open a 4S store in the automobile city, as a display, sales, delivery service outlets, and in its surrounding business districts or supermarkets to develop N small city display stores, are the same business entity, reduce the number of investors, and strive to increase from 500 to 800 by the end of this year, in addition to increasing the sinking of outlets, with the fastest speed to develop the city without outlets, as well as the fourth and fifth tier cities with a certain scale.