Introduction

On the big stage of dreams, if you have a dream, come here. Who will be the next dream chaser?

It's the end of August, and everyone is paying attention to the Chengdu Auto Show. Either it's the collision between the identity of an A-class auto show and the reality of a car mall, or the conflict between popular new energy vehicles and power rationing, or having an authentic local hot pot after wandering around the auto show...

In short, from exhibitors to potential buyers and media, everyone has paid great attention to this grand event in the automotive industry. Yes, the author also started this issue of "Car Talk" after walking over 20,000 WeChat steps on the first media day and staying up late in Chengdu.

While continuously observing the Chengdu Auto Show, another thing also piqued the author's interest, which was the half-year reports released by major companies.

As we all know, according to relevant provisions of the "Measures for the Administration of Information Disclosure of Listed Companies", all listed companies are obligated to publicly disclose their financial reports for the first half of the year to the public within two months after the end of the first half of each fiscal year, i.e., between July 1 and August 30 of each year. The end of August is precisely the deadline for the release of half-year reports.

Among the many financial reports, Seres' half-year report piqued the author's interest and prompted a closer examination.

Recently, Seres Group Co., Ltd. announced its half-year financial report. The data showed that in the first half of this year, Seres' operating revenue was 65.044 billion yuan, representing a 489.58% increase from 11.032 billion yuan in the same period last year. The net profit attributable to shareholders of listed companies was 1.625 billion yuan, achieving a turnaround from a loss to a profit year-on-year. This is also the first time in six years that Seres has achieved profitability in a half-year period.

The key to its success undoubtedly lies in Seres' successful partnership with Huawei to establish the AITO brand, demonstrating that choice is often more crucial than effort.

It's worth noting that Seres once faced severe financial difficulties, teetering on the brink of bankruptcy.

Its predecessor, Dongfeng Xiaokang, struggled in an increasingly competitive automotive market. Due to limited success in the passenger car segment and reliance solely on commercial vehicles that were unable to generate profits, the company suffered consecutive losses, including a loss of 1.729 billion yuan in 2020. Although Seres attempted to turn things around with the launch of FengGuang MINIEV, it failed to alter Dongfeng Xiaokang's fate.

Faced with difficulties in the market, Seres struggled to save oneself until it forged a partnership with Huawei, marking a significant turnaround.

In 2021, Seres and Huawei embarked on a cross-industry collaboration. Seres became Huawei's first partner in its Smart Selection program, and the jointly launched AITO M7 and AITO M9 models quickly gained popularity, becoming new favorites in the new energy vehicle market. The success of the AITO series transformed Seres from an obscure company into a competitive emerging force.

Based on the half-year performance forecast released in July last year, Seres' half-year revenue was expected to reach 63.9 to 66 billion yuan, representing a nearly 500% year-on-year increase. Net profit was projected to reach 13.9 to 17 billion yuan. Notably, the AITO M9 sold over 110,000 units in the first half of the year, becoming the sales champion among vehicles priced above 500,000 yuan, even surpassing the BMW 5 Series.

Seres' turnaround success is inextricably linked to its partnership with Huawei. The latter's strengths in intelligent technology, hardware and software integration, and marketing channels complemented Seres' needs, and the two companies jointly drove the success of the AITO brand through their complementary advantages.

Based on its successful turnaround with Huawei, some netizens joked, "Seres should really thank Huawei for this."

The AITO series played a pivotal role in Seres' turnaround from a loss to a profit. The data showed that in the first half of this year, Seres produced and sold 203,900 and 200,900 new energy vehicles, respectively, representing year-on-year growths of 349.24% and 348.55%. Among them, the AITO brand delivered over 180,000 units in the first half of the year.

Looking back at the development of the AITO series, it took just 28 months to reach 400,000 units, making it the fastest Chinese new energy brand to achieve this milestone. Moreover, it took only 13 months to go from 100,000 to 400,000 units, demonstrating the market recognition and brand influence of AITO.

Based on its market performance, the Seres management confidently stated when discussing the pricing of the AITO M9, "The higher the price of the AITO M9, the greater the number of orders. Many cars see no increase in sales even after price reductions. Seres does not compete on price but on brand value, as a brand is what gives value."

After reading these remarks, some netizens commented, "Dongfeng Xiaokang is so tough; this guy is amazing too."

Of course, after continued success, Seres was not content with the status quo and decided to invest in acquiring the AITO trademark.

In July this year, Seres announced in a public notice that it intended to acquire 919 registered or pending AITO-related text and graphic trademarks, as well as 44 related design patents, held by Huawei Technologies Co., Ltd. and its affiliates, for a total purchase price of 2.5 billion yuan. A supplementary notice revealed that the market value of the AITO trademark and other targeted assets amounted to 10.233 billion yuan.

In response to this acquisition, Huawei stated that after transferring the AITO-related trademarks to Seres, it would continue to support Seres in manufacturing and selling AITO vehicles successfully.

For Seres, the 2.5 billion yuan investment in changing its name represents an exchange for brand value, which will boost the sales of subsequent products and strengthen the brand power of future AITO products. Recently, the author discovered that the name of Seres Automobile Sales Co., Ltd. has been changed to Chongqing AITO Automobile Sales Co., Ltd.

Moreover, selling the AITO trademark is not only a testament to the success of Huawei's Smart Selection program but also provides a significant infusion of funds for the development of new projects. Besides AITO, Huawei's "Four Realms" strategy also includes Zhide, Xiangjie, and Zunjie, and the success of AITO will serve as a blueprint for the development of the latter three realms.

Currently, Huawei's collaboration with Beijing Automotive Group (BAIC) under the Xiangjie brand has yielded the first executive-class luxury flagship sedan, the Xiangjie S9, which received 8,000 pre-orders within 20 days of its launch, marking a new milestone. Additionally, collaborations between Huawei and Chery Automobile (Zhide brand) and JAC Motor (Aojie brand) hold immense potential for future growth.

After acquiring the AITO trademark through cooperation, Seres' partnership with Huawei continues to evolve.

On August 25, Seres signed an investment agreement with Huawei, whereby Seres would acquire a 10% stake in Huawei's Yinwang through a cash transaction valued at 11.5 billion yuan. This investment, alongside Huawei and other strategic partners, will support the company's future development. This equity investment marks an escalation in the comprehensive "business + equity" cooperation between Seres and Huawei, ushering in a new era of partnership.

A week earlier, AITO also acquired a 10% stake in Huawei's subsidiary Yinwang for 11.5 billion yuan. After witnessing the fruitful results of this collaboration, it's understandable why others might be tempted to follow suit. Notably, as a token of appreciation for Huawei's agreement to invest, AITO has reciprocated by appointing Huawei's Princess Yao Anna as the "Global Intelligent Driving Experience Center" for AITO.

AITO was the first brand to acquire a stake in Yinwang, but it won't be the last. Witnessing Seres' turnaround, it would be dishonest to say that others aren't envious. Huawei has already established a platform - "The Big Stage of Dreams, Come If You Have a Dream" - inviting the next dream chaser to step forward with their 11.5 billion yuan investment.