Introduction

Market conditions are rapidly evolving, and all past achievements no longer hold sway. Aion must respond with all its might, with no shortcuts available.

With the hybrid vehicle market fully activated, the pure electric vehicle (PEV) segment is facing significant challenges. On one hand, many consumers have been won over by the flexibility of hybrid vehicles, which can run on both gasoline and electricity, leading to a diversion of demand away from PEVs. On the other hand, the intense price war is causing significant distress to PEV manufacturers, who are already grappling with high costs.

Given these developments, how should PEV manufacturers respond in 2024?

In the past two months, we have seen Geely's J Lynk & Co and XPeng boldly enter the PEV SUV and sedan markets below RMB 150,000. NIO has also made significant inroads into this segment with its second brand, NIO Life, leveraging its unique battery-as-a-service model. This suggests that other automakers must accelerate their efforts to defend their positions, regardless of any difficulties they may face.

In the entry-level PEV market, Aion, which consistently ranks among the top sellers, is often overlooked. Some may argue that its success over the past few years is merely due to being an early entrant or dominating the business-to-business (B2B) market. While this assessment may hold some truth, especially considering that the AION S and AION Y contribute significantly to its sales figures, it is only partially accurate.

However, as market competition intensifies this year, I do not believe that Aion will remain complacent in its past achievements.

Since the beginning of 2024, fluctuations in sales have made Aion acutely aware of the rapidly changing market landscape. Subsequently, the launch of the second-generation AION V (Bullylong) and the impending release of the new RT model, along with other upcoming vehicles, have provided Aion with valuable competitive advantages.

The current automotive market has no room for complacency. It rewards those who approach the market with respect and humility.

New vehicle launches to bolster defenses against competitors are imperative

This year's market environment has been challenging. The relentless and indiscriminate price war that has permeated every segment of the market has been universally acknowledged by automakers.

For Aion, the continuously declining baseline in the new energy vehicle market is a significant headache, both in terms of sales and market buzz. To overcome this passivity, Aion must navigate a critical path of action and mindset throughout the year.

The sudden but timely arrival of the second-generation AION V, marketed under the banner of "Intelligent Driving Equality," has been a strategic move.

Aion has long relied heavily on the AION S and AION Y for its growth. These two models are seasoned veterans in Aion's lineup. Moreover, to support the development of its premium brand Hyperion, Aion diverted resources last year. Given these realities, Aion faces a tight timeline to maintain its market position.

With the launch of the second-generation AION V at a more market-friendly price point, Aion has regained some face. For two consecutive months, Aion has prominently featured the strong sales of its new vehicles in its marketing efforts. These actions have laid a solid foundation for Aion's future development. However, the deeply reshaped market landscape still leaves all players in a state of intense competition.

Despite the initial success of its new vehicle launches, Aion faces formidable competition. In the RMB 100,000-150,000 PEV segment, formidable new entrants have emerged. Xiaopeng's MONA03 and Geely's J Lynk & Co E5 are prime examples of these disruptors, and their growing sales figures speak volumes about their impact on established players.

The second-generation AION V's monthly sales approaching 10,000 units have not only helped Aion maintain its market position but also reversed the sales decline of the first-generation AION V. These new models have significantly benefited Aion's parent brand. In this context, Aion cannot afford to let its guard down.

Last month, Aion officially launched pre-sales of its new RT model, priced between RMB 119,800 and RMB 169,800 for its four variants. At first glance, the RT appears poised to succeed the AION S. However, in my view, there are fundamental differences in the target audiences for the B2B-focused AION S and the RT, also known as "Velociraptor."

Within Aion's strategy, the RT aims to collaborate with the second-generation AION V to expand Aion's existing market reach, rather than replacing either model.

In other words, Aion has benefited from the blue ocean market's recognition and sales growth. Simultaneously, it has continued to push forward without complacency.

As a state-owned enterprise, Aion is under immense pressure but remains resolute. This is a sentiment echoed internally at Aion, but when "competition" becomes the norm across the industry, rigorous self-discipline is the norm.

By the end of September, GAC Aion had sold a cumulative total of 226,800 vehicles. Amid the current tumultuous times, entering a full state of readiness is a must for Aion in the fourth quarter. Regardless of whether Aion can steal the show at the Guangzhou Auto Show in November, it must shore up its defenses on all fronts.

Confront competitors head-on and seek opportunities abroad

During this rapid product launch phase, from the second-generation AION V to the AION RT, Aion has responded vigorously to competitor attacks over the past six months.

Earlier, concerns lingered that the popularity of Geely's J Lynk & Co E5 would pose a challenge to the AION Y, while Xiaopeng's MONA03 threatened to disrupt the AION S's market position. Fortunately, after adjusting its internal operations to parallel manage its Aion and Hyperion brands, Aion has demonstrated a positive attitude towards introducing new products.

During an internal meeting, Aion's General Manager Gu Huinan remarked, "In the A-segment, the largest segment in the automotive market, there is room for multiple champions and competitors." While acknowledging the formidability of current competitors, Aion's confidence remains unshaken.

Recent rumors suggest that Aion is poised to introduce a new small PEV, potentially positioned below the AION Y. If this plan materializes, Aion's expanding product lineup could help it emerge from its B2B roots and capitalize on the new car effect to address recent sales fluctuations.

This year has been particularly challenging for Aion, as domestic market turmoil has intensified. Those familiar with Aion understand that stepping out of its comfort zone, engaging in price wars, and going head-to-head with newcomers requires significant courage from this state-owned enterprise.

Amid the current landscape, where the PEV market is no longer advancing rapidly due to the rise of hybrids and is increasingly crowded with capable models, many argue that established automakers with past advantages are facing disturbances. From Aion's perspective, however, since challenges are inevitable, entering a full state of readiness is crucial to breaking the stalemate.

Over the past nine months, while strategically introducing new vehicles in response to domestic market developments, Aion has also prioritized expanding into overseas markets.

Put simply, as the potential of the domestic market is being fully exploited, Aion, which already has a substantial customer base and recently acquired GAC MITSUBISHI's Changsha plant, needs to find a new path forward through international expansion.

"In the next 3-5 years, either excel or exit the game," said Xiao Yong, Deputy General Manager of Aion, candidly highlighting the risks in the new energy vehicle market. I believe that with this determination and to alleviate market tensions, Aion has been busy in the international arena in 2024.

In the first half of the year, Aion made significant strides in the international arena, mirroring the efforts of leading domestic new energy vehicle makers. The opening of its Rayong factory in Thailand, along with the establishment of distribution channels across Southeast Asia, has sparked envy among competitors. Aion's ambitious plan to establish seven global production and sales bases in Central Asia, West Asia, the Americas, Africa, and Europe over the next 1-2 years underscores its commitment to expanding its international presence.

With less than a quarter remaining in 2024, Aion RT is still in the final stages of preparation for its official launch, leaving uncertainty in the industry. At the brand level, Aion and Hyperion continue to hone their synergy. In terms of market dimensions, from navigating domestic marketing to initial forays into overseas markets, Aion, known for its cautious approach, is gradually finding its footing.

Fortunately, the short-term market turbulence has spurred Aion into action. Led by its management, the company has rallied its entire team to generate buzz around its new vehicles. Combined with the boldness of its new offerings in confronting competitors, Aion has demonstrated a fighting spirit and injected new vitality into its efforts to maintain stability in these challenging times.