Editor | Qianqian

Reviewer | Songwen

Leapro's third-quarter report is out, and it's a bit awkward, but the embarrassment is for its competitors.

Sales are up, reaching 86,200 vehicles in the third quarter, a 61.7% increase from the second quarter and a 94.4% increase from the same period last year; revenue is up, reaching RMB 9.86 billion in the third quarter, an 83.9% increase from the second quarter and a 74.3% increase year-on-year; gross margin is up, with a third-quarter gross margin of 8.1%, a significant improvement from the second quarter's 2.8%.

So, the embarrassment refers to competitors. After all, looking around at the third-quarter reports of various automakers – price wars are raging, competition for new cars in the industry is intensifying, coupled with overall sluggish auto sales, and there is an abundance of talk about immense pressure.

Because of this, whenever there is a media interview, staff members always warn in advance, 'Please try not to ask about poor performance… Try to ask more about future plans and highlight the bright spots.' At these moments, both the media and staff can only smile awkwardly at each other. On the one hand, objective writing and well-intentioned reminders are the responsibilities of both parties; on the other hand, the sluggish auto market in 2024 has indeed created a foundation for mutual understanding. Against this backdrop, when seeing a company with impressive performance, it is always shocking and inevitably leads to comparisons – when Leapro becomes the 'neighbor's kid,' other automakers naturally feel more awkward.

The author does not intend to praise one and criticize the other, as everyone hopes for the industry to prosper. So, let's objectively dissect what Leapro has done right.

1. The neighbor's kid?

Making money from selling cars.

Ideally, this should be common sense, but unfortunately, in the past few years, it has shifted from being a given to being a courtesy. This is partly due to the sluggish auto consumer market, where automakers are accustomed to trading price for volume, leading to thinner and thinner profits in the automotive industry; some cross-industry automakers have even decided to lose money first and make money later, just to survive in the market.

In contrast, Leapro's automotive gross margin also rebounded by 5.3% quarter-on-quarter to 8.1% in the third quarter, surpassing the expectations of many star brokerages; specifically, the average selling price of Leapro vehicles rebounded by RMB 14,000 quarter-on-quarter to RMB 114,000 in the third quarter.

The increase in average selling price, rise in sales, and substantial quarter-on-quarter increase in gross margin have allowed Leapro to significantly reduce its losses. Operating profit increased by RMB 530 million quarter-on-quarter to -RMB 700 million, and operating profit margin increased by 16% quarter-on-quarter to -8% in the quarter, with the turning point not far off.

As shown by the above data, in today's market environment, this is quite enviable.

What allows Leapro to achieve this?

Because of a 'stupid thing' from an outsider's perspective – betting on in-house R&D. Leapro founder Zhu Jiangming recalls the nine years of car making, feeling that he has faced challenges many times, with recurring questions being, how can Leapro make cars? How can Leapro make good cars? How can Leapro sell well? He has always insisted on one thing, which is to hold core technology and achieve independent R&D in key areas. Look, the results are gradually showing.

Compared to other automakers that mostly still use supplier solutions, with high costs, insufficient personalized experiences, and low cross-company communication efficiency. These are not issues for Leapro.

Leapro has always adhered to independently developing all key software and hardware in the core systems and electronic components of smart electric vehicles. The company produces and supplies its own three-electric core components and some controllers, with strong vertical integration capabilities in the supply chain. Currently, the self-developed and manufactured parts account for about 60% of the BOM.

This self-development capability is like planting peanuts; it is usually buried in the soil, and only when it is time to harvest can the results be seen. Indeed, self-developed technology allows Leapro's products to better respond to consumers' personalized needs and reduces costs, making consumers willing to buy. Because of this, economies of scale further reduce the input costs of self-development, achieving a dual-wheel drive. Not to mention that self-development can achieve external supply, which is even more of an entrepreneurial spirit. The whole body is a treasure, just like peanuts.

All of this is reflected in the popular model C16. Just four months after its launch, C16 has become the sales champion among 6-seater SUVs priced under RMB 500,000, ranking at the top of the third-party platform's list of medium and large new energy SUVs.

C16 is equipped with 800V throughout, making it the first automaker to bring 800V down to the RMB 160,000 price range for a 6-seater family SUV. Its pricing is significantly lower than competing models, covering the gap in the RMB 150,000-200,000 home SUV market, thereby forming differentiated competitiveness.

The secret to C16's success is simple: good technology, reliable products, and affordable prices. Consumers are not stupid and will naturally vote with their feet. The logic is universal, but not everyone can achieve it. Otherwise, there wouldn't be only one Leapro.

2. Selling one popular car is not enough!

Being strong in one area is not true strength; being strong everywhere is.

The same is true for car manufacturing. The popularity of one model can lead to temporary success, but only a series of popular models can ensure sustained success, as it tests the systematic capabilities of the enterprise.

In the just-concluded October, Leapro maintained its rapid development momentum, with sales reaching 38,177 units and net new orders exceeding 40,000 in October. Among them, the net new orders for C11, C10, and C16 all exceeded 10,000 units, continuing the rapid and steady sales growth seen in the third quarter.

The C series models performed particularly well in the third quarter of 2024, with the C16, C10, and C11 achieving excellent results in their respective market segments.

C16 has become the sales champion among 6-seater SUVs priced under RMB 500,000 just four months after its launch, ranking at the top of the third-party platform's list of medium and large new energy SUVs. The success of C10 and C11 lies not only in their excellent product capabilities but also in Leapro's precise grasp of user needs, making them the preferred choice for preserving the value of new energy medium SUVs.

Following the C series, Leapro will launch the B series models in both domestic and international markets. The B10 focuses on the RMB 100,000-150,000 market, aiming to fully meet the needs of young people globally for intelligence, fashion, fun, and quality. The launch of B10 marks a further enrichment of Leapro's product line and will inject new momentum into the company's sales growth in 2025.

B10 is special; it is the first global model under Leapro's B platform and made its debut at the Paris Motor Show. When it was unveiled, Zhu Jiangming of Leapro, Carlos Tavares of Stellantis Group, and Xin Tianshu of Leapro International, the three CEOs, all stood on stage to support the new car.

It's quite a big deal, but B10 deserves it.

B10 is the first global product after Leapro and the Stellantis Group established a global strategic partnership. The two parties collaborated on multiple dimensions such as styling, quality, and chassis for B10 to make the car more suitable for global user needs. Especially in chassis tuning, Leapro collaborated with the Maserati team to make B10 excel in driving feel.

Just like Leapro's down-to-earth and reliable brand genes. Zhu Jiangming hopes that B10 will be a product for young people worldwide, providing them with a personalized product experience. Based on this, Leapro is expected to offer a more affordable price that young people will love. Zhu Jiangming has revealed that the price of B platform vehicles will be between RMB 100,000 and RMB 150,000.

As a product where 1+1＞2, B10 is seen by consumers as a Maserati for young people. This adds a solid foundation to Leapro's 2025 performance.

Why can Leapro offer something that is both useful and affordable? The reason is still the same: solidly focusing on in-house R&D. B10 is built on the LEAP 3.5 architecture platform, which has been introduced for less than a year and a half, marking impressive speed.

From C to B, Leapro is gradually replicating its success, which is far more important than the popularity of a single model. Because from this, we can see that Leapro's trials of new technologies and models, such as in-house R&D technology, platform-based car manufacturing, and international car sales, are gradually being validated and yielding positive returns.

From the perspective of parents, comparing their own children with the neighbor's kid and making improvements where necessary can help their own child grow; from the child's perspective, attitudes vary. Some only feel jealousy, some only lament insufficient objective conditions, but others will try to summarize and make progress the next time.

The innovative path taken by Leapro up to now is precisely worth summing up by Chinese automakers and using as a reference for themselves.