The M9 is a key shot for domestic new energy brands to enter the luxury car market.
Under the tide of technological innovation, BBA (Mercedes-Benz, BMW, Audi) is facing unprecedented challenges in the luxury car market.
China's luxury car market has experienced a golden growth period since 2010, with the market size growing from 300,000 units to 2.52 million units in 2020, an expansion of more than 8 times. BBA was the winner of this decade, with a market share of 94.03% at one point.
However, with the technological change of new energy and intelligence, brand barriers are being broken by technological innovation.
Domestic high-end brands such as Wenjie, Ideal, Weilai, etc., have begun to occupy a place in the high-end market with the blessing of intelligent technology. These brands not only compete with BBA in terms of product power, but also show strong competitiveness in intelligent and electrified technologies.
In particular, the launch of the M9 at the end of 2023 marks an important breakthrough for domestic new energy brands in the high-end market. With Huawei's technology accumulation and innovation strength, the M9 has been recognized by consumers. According to the latest statistics, the cumulative number of Wenjie M9 jointly built by Huawei and Cialis has exceeded 100,000 units in half a year.
In May, with a delivery volume of 15,875 units, the M9 ranked first in the domestic auto market in terms of sales of luxury cars of more than 500,000 yuan, regardless of body form or energy form. In the past June, HarmonyOS delivered 46,141 vehicles, of which the delivery volume of the M9 continued to increase, reaching 17,241 units, and the new M7 delivered 18,493 units.
The M9 has not only achieved remarkable results in terms of sales, but also achieved a qualitative leap in brand influence, and even influenced consumers' perception of "luxury cars".
In the face of competition from new energy vehicles, BBA had to adopt a strategy of exchanging price for volume, and the terminal price reduction of some models even exceeded 120,000 yuan. However, this strategy does not translate for long-term stable growth, but may destroy the brand moat that luxury cars have built up for a long time. In contrast, domestic high-end brands are gradually winning the recognition of consumers through continuous technological innovation and product upgrading.
Huawei's investment and efforts in the automotive market have cooperated with a number of car brands through the smart car model, and launched a number of high-end models, including the Wenjie M9. These models are not only equipped with Huawei's most advanced intelligent technology, but also demonstrate excellent quality in terms of design, performance, and safety. Huawei's upcoming Double 9 flagship combo – the M9 and the S9 – could become a new benchmark in the luxury market.
With the continuous improvement of the domestic retail penetration rate of China's new energy passenger vehicles, the competition in the automobile market has shifted from increment to stock-based, and the innovation ability of the demand side has become the key. With its deep accumulation of intelligent technologies, Huawei is empowering its partners through the smart car model to promote the next round of comprehensive growth of China's automotive industry. In this transformation of the automotive industry, which is dominated by intelligence and electrification, Huawei and its partners are becoming an important force in promoting the progress of the industry.
Technological change dissolves brand barriers
Since 2010, China's annual GDP has entered the range of more than 40 trillion yuan, and the luxury car market has also entered a golden period of growth. In just ten years, China's luxury car market has grown from 300,000 units in 2010 to 2.52 million units in 2020, more than eight times the original size.
German luxury cars Mercedes-Benz, BMW, and Audi (BBA) are the absolute winners of this decade. Although their market share has also experienced fluctuations, from 94.03% in 2012 to 78.58% in 2017, it has since rebounded, rising to 81.13% in 2019, and has always dominated the majority of the luxury car market.
BBA has never lacked challengers, Cadillac, Jaguar Land Rover, and Volvo have all launched attacks on first-tier luxury brands through domestic production. These second-tier automakers appeal to consumers with different needs by offering different product features and designs than BBAs, such as Land Rover's emphasis on sportiness and driving feel, and Volvo's emphasis on safety.
Second-tier car companies can share with BBA, but they can't shake their position. Because gasoline vehicles have built a technical moat with the engine as the core, BBA can also make huge profits by relying on the scale of sales and brand effect, and turn to invest in next-generation technologies.
More difficult than technology is the brand, BBA has a history of more than 100 years, represents the culture of craftsmanship and engineers made in Germany, and occupied the minds of consumers earlier. They also continue to be favored by Chinese consumers for their customer service and after-sales support.
When second-tier luxury brands seek to sell at high prices in market segments, domestic independent brands focus on developing the low-end market, and gradually have the ability to benchmark with Japanese and Korean cars through low prices and continuous improvement of quality. However, due to brand reasons, it is difficult for domestic brands to sell for more than 300,000 yuan.
An executive of an independent brand once told us that before the emergence of technological changes, even if the product strength is not lost, the price of domestic cars is still more than 50,000 yuan lower than that of joint venture brands, which is a brand barrier.
In the new energy period, a turning point has emerged, and new energy vehicle companies represented by Tesla have risen, they have no assets and brand baggage, and through the blessing of intelligent technology, they can directly sell models to more than 300,000. Domestic brands Wenjie, Ideal, and NIO have also followed Tesla's lead and began to launch high-end models. The supply side of domestic luxury models is gradually enriched, impacting the ranking system of fuel luxury cars.
In the face of competition from new energy vehicles, the first-tier luxury brands Audi, BMW, and Mercedes-Benz chose to exchange price for volume last year. But second-tier luxury brands such as Cadillac and Lexus have been hit harder. Their price reduction strategy has failed, and despite offering a 16% reduction in terminal price, they have lost both volume and price overall.
Since last year, the second-tier luxury car companies have shown a declining trend, and in order to maintain their sales in China this year, BBA has to continue to increase discounts. Although there is no official price reduction, the terminal price reduction of some BBA models exceeds 120,000 yuan. In some areas, Mercedes-Benz C-Class, BMW 3 Series and Audi A4L have landed prices below 300,000 yuan.
Exchanging price for volume does not exchange for long-term stable development, but may dissolve the brand moat that has been built up for a long time by luxury cars. "This year is the time window to loosen the BBA market, and the release of the M9 is a turning point, firing the first shot for domestic new energy brands to seize the BBA market." An industry insider commented.
Question M9.
At the end of 2023, the M9 will be officially launched, with a starting price of 469,800 yuan. After only half a year on the market, the cumulative number of Wenjie M9 exceeded 100,000 units, ranking first in the sales of luxury models of more than 500,000 yuan. In May, the M9 delivered 16,000 units in a single month, surpassing the Audi A6L, Mercedes-Benz E-Class, and even more than twice as much as the BMW X5.
The M9 has set a new sales record for luxury brand models in the Chinese market. This car is of great significance to Huawei's automotive business. The M9 is Huawei's most important model, which has taken the longest research and development time and invested the most resources. In the eyes of Huawei people, it represents a significant significance: to enhance the brand height of Wenjie and show Huawei's strength in empowering automobiles.
The M9 is Huawei's 0-to-1 definition, R&D, and production car, which took nearly 3 years to equip with almost all of Huawei's current mass-produced technologies, including Huawei's Turing platform, Giant Whale's 800V high-voltage battery platform, Huawei's ADS 2.0, and HarmonyOS Cockpit 4.0. Before the release, Yu Chengdong, executive director of Huawei, chairman of the terminal BG, and chairman of the car BU, said that the M9 is "a leading generation in technology" and is the "king of science and technology".
With the hot sales of the M9, the overall sales volume and price level of the Wenjie brand have been significantly improved. The average terminal price of the Wenjie brand has reached about 400,000 yuan. Sales continue to grow even when the average price increases, a trend that is particularly rare in the luxury car market. At present, the overall average price of the Wenjie brand has surpassed that of Audi and BMW, and is closely following Mercedes-Benz.
With an investment of tens of billions in five years, good technology has met high-net-worth consumers
In China's fiercely competitive new energy market, it has cultivated consumers with the highest acceptance and requirements for intelligence. Compared with the past, the car purchase orientation of new energy consumers has begun to change, and users pay more attention to whether the vehicle can meet the needs of specific use scenarios, and are willing to pay for products with intelligent and technological attributes.
As early as 2012, Huawei began to experiment with the automotive business, gradually turning its technology accumulation into product capabilities. As early as 2012, Huawei established the IoV Lab and began to provide in-vehicle communication modules for car companies. Five years ago, Huawei established the Intelligent Vehicle Solution (BU) and announced its entry into the automotive market as a supplier.
Over the past five years, Huawei has invested tens of billions of yuan in R&D every year, accumulated more than 7,000 R&D personnel, and established five solutions: intelligent driving, intelligent cockpit, intelligent vehicle control, intelligent vehicle cloud, and in-vehicle optics, all of which focus on the intelligence of vehicles.
M9 cockpit.
Among the five major solutions, Huawei has invested the most in intelligent driving. In the past two years, the technical difficulty in the intelligent driving industry has been the implementation of urban NOA. The industry has undergone rapid technological changes, from high-precision maps to light maps to map-free mode, and from writing rule code on a line to introducing "end-to-end" self-learning large models.
In addition to the necessary sensors and chips on the vehicle side, if you want to train a good intelligent driving product, you need to have a large number of available driving data and training chips. Huawei's advantage lies not only in the thousands of intelligent driving R&D engineers, but also in the 1.8 EFLOPS training platform, which has higher computing power than the new power car companies that also focus on intelligence.
In terms of intelligent cockpit, Huawei's self-developed HarmonyOS cockpit is equipped with Huawei's self-developed software and hardware integrated solution. Compared with car companies, mobile phone manufacturers have more experience in in-cabin interaction, applications, and ecosystems, and Huawei can provide users with a smooth, intelligent, and secure in-vehicle digital experience.
M9 interior.
Huawei's continuous investment in intelligent technologies has been recognized by consumers, especially in the active safety of intelligent driving, and the development of forward, sideways, and backward active safety technologies. According to a recent user research report released by Jayland Road, Huawei's intelligent driving and intelligent cockpit have become an important factor for users to buy a car, bringing users a superior luxury experience and intelligent enjoyment.
In order to implement Huawei's investment in the automotive intelligent business, Huawei has tried three models, from providing parts to helping car companies define products and sales, and Huawei's participation has been deepened.
Smart car is one of the most effective cooperation models. In September last year, the sales of the new M7 in cooperation between Huawei and Celis exploded, and the four car brands in which Huawei is deeply involved were announced one after another.
Due to the explosion of smart cars, "intelligence" has gradually improved its position in consumers' car purchase decisions, and car BU orders have also begun to surge. Dongfeng Lantu, Mengshi, Changan Deep Blue, GAC Trumpchi, Great Wall, Leap, Li and Audi have all cooperated with Huawei in the form of parts.
However, compared with the parts model, smart cars can help car companies define models and empower marketing, and sell through Huawei channels to help car companies sell better. This is equivalent to Huawei's smart car positioning as a Tier 0 car, and working with car companies to do a good job of the Wenjie brand and improve the influence of Wenjie in the hearts of consumers.
Huawei's investment and efforts in the automotive market over the past five years have been translated into the product strength of the M9. The M9, which carries Huawei's 20 years of technology accumulation, has also encountered its own golden market cycle and high-net-worth users.
The average price of the M9 has exceeded 500,000 yuan, and the consumer groups of more than 500,000 luxury cars are generally people who can invest more than 10 million yuan. According to the 2023 China Private Wealth Analysis Report, the number of individuals in China with investable assets of more than 10 million continues to increase, reaching 3.16 million in 2022. The number of high-net-worth families/people in China is still growing steadily, with a year-on-year increase of 21% in 2022, which is the main expansion force of luxury cars.
According to the research report of Soochow Securities, in terms of model purchase behavior, this group of people is conservative as a whole and cares very much about brand power From the perspective of age structure, in 2023, 51% of China's high-net-worth individuals are over 40 years old. Huawei's long-term positioning in the high-end mobile phone market has formed brand power in the minds of consumers, which can realize the transfer of brand power in the luxury car market.
The average age of M9 owners is 37.3 years old, which is higher than the market average. Among them, 30% of car owners are over 40 years old. The average annual household income after tax is 920,000, much higher than the market average of 300,000. Luxury brands are the main source of trade-in purchases, accounting for about 5 percent.
Huawei's Double 9 flagship combination has become a new benchmark in China's luxury market
The luxury car market is being reshaped by smart technology. Huawei is an important player in this group and will launch more products in the future. Huawei has invested in technology for many years, and it is a more suitable choice to sprint to high-end brands.
At the 16th China Automotive Blue Book Forum 2024, Yu Chengdong, Executive Director of Huawei, said: "At present, all the cars we make below 300,000 yuan are loss-making, and 300,000 yuan is almost the break-even point, and it is heading for more than 290,000 yuan. We don't compromise on product quality in order to reduce costs. ”
"There are many manufacturers who want to cooperate, but the manpower is limited and the energy is limited, so we can only cooperate with four companies for the time being to make four smart car models. There are many companies that use our products and solutions to do their own work, and we want to use Huawei's more than ten years of user-facing capabilities to empower car companies. Yu Chengdong said.
Huawei's Smart Car Model has cooperated with a number of car brands to launch the M5, M7, and M9. In cooperation with Chery Automobile, the first car is the S9 for the medium and large pure electric sedan; It is proud of the world with JAC.
At present, the "Four Realms" are no longer increasing, and Huawei is empowering to build a model room for business success. Yu Chengdong, executive director of Huawei, revealed that the car BU has reduced its losses year by year from a loss of 10 billion yuan in the past year, and has shrunk from a loss of 6 billion yuan last year, and is expected to turn a profit this year. At present, both Zhixuan and Cialis have achieved a turnaround.
Xiangjie S9.
The smart car model is expected to produce more than 12 models, covering various segments such as sedans, SUVs, and MPVs. Through the smart car model, Huawei helps partners improve product competitiveness and promote its own technology application and market expansion in the field of smart vehicles.
As a new paradigm for high-tech luxury SUVs, the M9 has successfully replaced the SUVs of traditional luxury brands such as the BBA and become the new darling of the market. Since its launch, it has won high recognition from the market for its excellent technology configuration and luxury experience. The M9 is equipped with Huawei's HarmonyOS intelligent cockpit, providing users with an unprecedented intelligent connected experience. At the same time, the M9's design concept, power performance and safety equipment are at the top of the list of luxury SUVs.
This was followed by the addition of the Xiangjie S9, which further enriched Huawei's layout in the high-end sedan segment. The S9 not only inherits Huawei's intelligent genes, but also makes in-depth optimizations in comfort, quietness, and driving experience, providing consumers with a true high-tech luxury sedan.
The launch of Huawei's Double 9 flagship portfolio is a reflection of Huawei's continuous innovation and breakthroughs in intelligent vehicle technology. Both the M9 and the S9 are equipped with advanced intelligent driving assistance systems, including automatic driving, automatic parking, intelligent obstacle avoidance and other functions, which greatly improve the convenience and safety of driving.
With the launch of the Xiangjie S9, the vacancy of the flagship sedan has been filled, and the product matrix of HarmonyOS Zhixing will be further improved, and the M9 will form a "double 9 flagship" combination with it, which is undoubtedly an important layout of HarmonyOS Zhixing in the field of new energy.
At present, the overall automobile market has shifted from increment to stock, and is also tilting towards the demand side. At present, the domestic retail penetration rate of China's new energy passenger vehicles has exceeded 50%, and the further improvement of the penetration rate requires not only policy support, but also the company's own innovation ability, taking the change of user demand as the anchor point, and using the experience innovation that can bring actual benefits to users, so as to drive China's auto industry to achieve the next round of comprehensive growth.
In addition to the price war, the automobile market also needs a value war, and needs good products and good technology. The new M7 has completely changed the market pattern and the perception of users and the industry with market performance, and the M9 brings higher added value with more extreme technology and experience, which can leverage a broader market space and bring greater imagination.
In the development of China's automotive market, electrification and intelligence are seen as two key stages. In the electrification stage, independent brands represented by BYD have emerged with three-electric system technology; In the new stage of intelligence, cutting-edge technologies such as intelligent driving, intelligent networking, intelligent cockpit, and AI large models will lead the further optimization and upgrading of the industry.
The intelligent automobile brand represented by Wenjie is promoting the development of China's automobile industry in the direction of higher added value and stronger competitiveness with its innovative strength.
Title image source: Wenjie