Bought a house from Evergrande, drove a WM Motor car.

As automakers go bust, some spectate, while others suffer.

Those who spectate are the 'waiting party,' glad they didn't rush into buying a new car; those who suffer are ordinary citizens who spent their hard-earned money supporting automakers that went bust, now left with a pile of unsellable scrap metal.

In recent years, nothing has been worse than buying a house from Evergrande and driving a WM Motor car. With unfinished buildings in front and unfinished cars behind, how can car owners rescue themselves in such situations? Which brands should be approached with caution when purchasing a car?

Automakers face trials, car owners suffer

In recent years, more and more niche automotive brands have disappeared from the Chinese market. According to incomplete statistics, over the past five years, more than 40 automotive brands have officially exited the Chinese market, gone bankrupt, restructured, or ceased operations.

According to the 'Measures for the Administration of Automobile Brand Sales,' after a car brand exits the market, the manufacturer must still ensure a 10-year supply of spare parts. Automakers have an obligation to properly handle follow-up maintenance work for sold vehicles before going bankrupt and exiting the market.

However, in reality, when a brand and its dealers are on the brink of survival, they have no time for anything else, and regulations and requirements become difficult to enforce. Even if a group takes over after-sales issues later, consumers are significantly more likely to encounter shortages of spare parts, especially for models with lower ownership.

After WM Motor announced its bankruptcy in October last year, its dealers and after-sales service stores also gradually withdrew from the market. One car owner said, 'I now have to find a third-party platform for vehicle maintenance and repairs. That's not the most troublesome part; it's nearly impossible to find original car accessories.'

It's not just WM Motor owners who are experiencing this headache. Owners of Tianma, Leiding, Aichi, and other automakers that have gone bust or are on the verge of bankruptcy have had similar experiences.

In early April, the taillight of an Aichi U5 car owner's vehicle was cracked. They went to the store immediately and were told that they could help contact the manufacturer to retrieve the part, but it was uncertain whether the part could be obtained, and normal maintenance fees would still need to be paid. As of now, the car's taillight has not been repaired. This is considered a better situation; at least the store is still in normal operation. Most automakers that have exited the market don't even have stores anymore, leaving car owners with nowhere to go for maintenance.

The 'lifetime warranty' promised by automakers has also become a dead letter with their bankruptcy.

From 2020 to 2024, within five years, new energy automakers that have gone bust include WM Motor, HiPhi, Aichi, Tianma, Byton, NIO, Yudo, Free Tech, Leiding, Hanlong, Lifan, Bojun, Thalys, and Qiantu, among others.

Hopon Auto and HiPhi X Auto are also struggling on the 'life or death' line. And those automakers with monthly sales below 1,000 vehicles may sooner or later be crushed by the wheel of time.

Currently, over half of these bankrupt automakers no longer have after-sales service centers. A small portion have had their after-sales services taken over by partners, while the rest have chosen to establish dedicated after-sales service teams after exiting the market to protect car owners' rights.

Car owners can only huddle together for warmth. For example, some bankrupt automakers have dedicated car owner mutual aid groups where accessories can be purchased. It's more convenient if owners can install them themselves; if not, they can go to any roadside repair shop for replacement, only needing to pay some labor costs.

Image source: Baidu Post Bar

However, not all new energy automakers that have gone bust or are on the verge of bankruptcy are 'slacking off.' For example, HiPhi began live streaming sales in March this year and stated that all income from live streaming sales would be used for frontline after-sales service to protect car owners' rights.

Compared to traditional fuel vehicles, another drawback of new energy automakers going bust is that all functions relying on network services will fail. Bluetooth keys, in-car functions, and apps will be unusable, turning smart cars into 'idiotic' ones instantly. Multiple WM Motor owners have stated that the WM Motor companion app has long been a facade, with functions like the in-car system and remote mobile control unusable.

The once-proud OTA also instantly turned into a flaw. Nowadays, new energy automakers rely on OTA to firmly grasp after-sales, user data, maintenance, and other discursive powers in their hands. Once a thunderstorm strikes, users and automakers can only 'rise and fall together.'

Which brands should be approached with caution when purchasing?

The Wall Street Journal reported that in 2018, there were over 487 electric vehicle manufacturers in China. In 2023, He Xiaopeng, CEO of Xpeng Motors, stated that only around 50 new force automakers are still operating normally. Some industry insiders even predict that the number of major players in the Chinese market is limited and will not exceed five.

Choosing a new energy vehicle now is like choosing a property a few years ago; one careless move could result in an 'unfinished car.' So, which brands should be approached with caution when purchasing a car?

Currently, Hopon, HiPhi X, and Nezha are the most at risk. In October this year, a Nezha Automobile employee posted on a job recruitment app that 'Nezha Automobile can no longer pay salaries and owes a lot of money to suppliers. I advise everyone to be cautious when buying Nezha cars.' At the same time, it was revealed that Nezha Automobile had initiated large-scale layoffs, potentially affecting up to 70% of its workforce.

On November 10, Nezha Automobile responded that it was building a more centralized and efficient organizational structure through measures such as streamlining business, focusing on core competencies, organizational optimization, and salary and performance reforms. The latest news shows that 18.22 million shares held by Nezha Automobile have been frozen.

Nezha is still struggling, while Hopon and HiPhi X can be said to have been prematurely disqualified. As early as June this year, multiple car owners reported that almost all sales channels for Hopon Automobile in Shanghai had ceased operations, including unattended mall experience centers and branch offices. Media reports claimed that Hopon Automobile had laid off all employees at its Shanghai branch and owed severance payments to laid-off employees. Currently, only around 50 people remain at Hopon Automobile's Guangzhou headquarters to maintain the company's basic operations.

Image source: Nezha Automobile's official website

HiPhi X Automobile has also been exposed by its own employees for severe staff turnover and delayed salary payments. Someone claiming to be from HiPhi X's R&D department stated that the chassis R&D department had a high turnover rate, with only a dozen employees remaining on the job.

For now, it's best to avoid purchasing cars from these three automakers; otherwise, the outcome may be the same as for WM Motor owners, who can only huddle together for warmth.

Which brands can be purchased with confidence?

Which brands are the safest to choose?

First is BYD. Regardless of one's opinion of BYD, it cannot be denied that BYD is at the forefront of the global new energy vehicle industry, with monthly sales of almost 500,000, enough to compete with ten others. Even Yu Chengdong has said that BYD is one of the few giants that will survive in the future. On November 18, it was announced that the 10 millionth new energy vehicle had officially rolled off the production line. When it comes to stability in the new energy vehicle industry, no one can compete with BYD.

Next are the other 'Big Five' giants: Great Wall, Geely, Changan, and Chery, as well as their sub-brands and collaborative brands such as Zeekr and Lynk & Co. At least with these major manufacturers as a backstop, consumers don't need to worry about after-sales issues.

Then there are state-owned enterprises and joint venture brands, such as Beijing Automotive Group, Guangzhou Automobile Group, and their collaborative and sub-brands.

Regarding new forces, HarmonyOS Intelligent Connected Vehicle and Xiaomi Automobile are backed by large groups, have strong sustained output capabilities, and are currently in good financial health with strong momentum. Especially HarmonyOS Intelligent Connected Vehicle, with the official announcement of Huawei's Mate 70 series, its bundling with automobiles can be seen as one of Huawei's future strategies. In fact, as long as Huawei is still around, HarmonyOS Intelligent Connected Vehicle is unlikely to disappear.

Image source: HarmonyOS Intelligent Connected Vehicle's official website

NIO, XPeng, and Li Auto may seem prosperous, but it's hard to say what the future holds, especially since several of them faced funding crises last year in this fiercely competitive market. From a profitability perspective, only Li Auto is currently profitable, but its product strategy is a 'clone,' making it prone to issues where one model's problems can affect the entire lineup.

XPeng's downward market penetration strategy is starting to bear fruit, but the long-term outlook is uncertain. It's unclear how far the MONA model can go, and with XPeng's current core competitiveness in intelligence yet to capture users' minds, it's being overshadowed by HarmonyOS Intelligent Connected Vehicle. With current monthly sales of 20,000, it's far from being considered 'safe.'

NIO's battery swap stations are a heavy asset model, posing a significant test to cash flow. The company is currently in continuous loss, with increased market competition pressure and operating costs being one of the main reasons. Although NIO had a good battle, it has yet to achieve economies of scale.

In summary, NIO, XPeng, and Li Auto each have their own hidden dangers. Users who are not in a hurry are advised to wait and see, as the 'waiting party' never loses. For those with immediate needs, Li Auto is the first choice.

For other brands, prioritize the top-selling ones. Firstly, these are voted for with consumers' money. Secondly, higher sales volumes attract third parties to produce accessories. Even if automakers go bust in the future, it will be easier to find replacements for repairs.

Final Thoughts

The impact of this wave of bankruptcies is like a stone thrown into water, sending ripples throughout the entire market.

Admittedly, in an elimination contest, automakers' exits are unavoidable. However, the consumer panic and trust crisis in new force automakers induced by public opinion will not easily disappear. Amidst the vast wave of automotive electrification, has the corresponding consumer protection system kept pace? As the penetration rate of new energy vehicles continues to increase, the group of new energy vehicle owners is also growing. Since it's inevitable that some automakers will be eliminated, how to safeguard consumers' rights and interests is currently a top priority.

Cover image source: Hopon Automobile

Source: Lei Technology