Strategic Contraction

Facing the changes and competitive pressures in the automotive market, many automakers are adjusting their businesses to reduce costs, refocus on core businesses, and enhance competitiveness.

Recently, SAIC Motor's premium new energy brand Feifan Auto, after three years of independent operation, decided to reintegrate into the Roewe brand due to poor market performance.

Geely Auto also announced in October that Geometry would be officially merged into Yinhe, and Geely New Energy will focus on building the Yinhe brand, with Geometry becoming Yinhe's series of intelligent compact cars.

Geely's strategic adjustment aligns with the "Taizhou Declaration" issued on September 20. Li Shufu, Chairman of the Geely Holding Group, stated that the group would shift from strategic expansion to strategic focus and integration, closing down and consolidating some businesses, avoiding blind expansion, promoting deep integration and efficient fusion of internal resources, further clarifying the positioning of each brand, streamlining equity relationships, reducing conflicts of interest and duplicate investments, and improving resource utilization efficiency.

In the early stages of Chinese brands' full-force development of new energy transitions, to quickly seize market share and compete in the high-end market, automakers generally adhered to a multi-brand strategy, emphasizing that multi-brand competition drives development. However, as market competition intensifies, investment increases, and profit margins become increasingly unbalanced, automakers are beginning to show a trend of strategic contraction, once again changing the strategic thinking of "making more children to fight better".

Prior to Geely and SAIC Motor's strategic contraction, Changan Auto and Great Wall Motor have also integrated their sub-brands.

From 2013 to 2014, after years of rapid sales growth, the market share of Chinese automotive brands continued to decline, and many automakers also underwent brand integration, returning to a single brand sequence. Although the current situation is different, the pattern of "united we stand, divided we fall" seems to have become a market rule. The brand matrix of automakers has once again entered an adjustment period.

Strategic Focus

Due to sales pressure this year, many joint venture brands have been embroiled in layoffs. Although Chinese brands have generally seen rapid sales growth, their multi-brand operation strategy has also led to "internal friction" and "burden" in their development.

Take SAIC Motor and Feifan Auto as an example. Feifan Auto and IM Motors are both under SAIC and are positioned as premium new energy brands. However, whether in terms of branding, design, or batteries, electric drive systems, intelligent driving, after-sales services, etc., Feifan seems unremarkable. Although it is listed alongside IM Motors as a "twin," compared to IM Motors' status as the "firstborn," Feifan Auto, which has changed its name several times, always seems to lag behind. Moreover, their main products, selling points, and levels of differentiation are almost identical, eventually leading to internal friction and competition between the two. Additionally, SAIC also has sub-brands like Roewe and MG, making Feifan's position increasingly awkward.

It is worth mentioning that Feifan Auto was originally part of SAIC Motor's "make more children to fight better" strategy. In 2020, Roewe launched a new logo "R," forming a dual-logo combination with the "Lion Logo." The "R" logo represents Roewe's mid-to-high-end new energy models. In October 2021, SAIC Motor announced that the R brand would operate independently, with a registered capital of 7 billion yuan, and was officially renamed "Feifan Auto." At that time, SAIC Motor stated that the independence of Feifan Auto would help accelerate the expansion into the mid-to-high-end smart electric vehicle market.

However, after three years, only more than 50,000 new vehicles were sold. Feifan Auto's reputation among new energy brands is relatively low. Its reintegration into SAIC Motor seems inevitable. In fact, as early as 2023, there were rumors of Feifan Auto's imminent integration into SAIC Motor, which Feifan Auto denied at the time. At the beginning of this year, Feifan Auto also stated that it would further deepen its "asset-light" strategy, but the product layout and business pace would remain unchanged. Now, it seems that Feifan Auto's awkward position had long determined its fate.

According to reports, after the announcement of the integration, 35 Roewe dealerships and 12 Feifan dealerships have been integrated into Roewe-Feifan dealerships. Meanwhile, the opening of dual-authorized Roewe-Feifan dealerships is accelerating. As of October, 72 dual-authorized dealerships have opened, and it is expected that the goal of 100 fully integrated dealerships will be achieved by the end of this year.

It is understood that in addition to channels, the integration of Feifan and Roewe will also involve repositioning the brands and product lines. The Roewe brand currently sells both fuel vehicles and new energy vehicles, with a relatively cluttered product line. The integration of Feifan Auto will help Roewe streamline and optimize its new energy vehicle product line, thereby enhancing the market competitiveness of its products.

The Geometry brand is a premium pure electric vehicle brand launched by Geely in 2019, with high expectations from Geely. Compared to Feifan Auto's failure, Geometry's development has been relatively stable. From January to August this year, Geometry sold a cumulative total of 108,200 vehicles, a year-on-year increase of 14%. In October, after merging Geometry's sales with Geely Yinhe series, the total sales reached 63,492 vehicles, a year-on-year increase of over 83%.

'The Taizhou Declaration is not strategic contraction but strategic focus,' said Gan Jiayue, CEO of Geely Auto Group. The integration of Geometry into Geely Yinhe not only expands the product category of intelligent compact cars for Yinhe but also empowers these cars with Geely Yinhe's industry-leading electrification and intelligent system capabilities, enhancing product competitiveness.

Accelerated Integration

In addition to Geely and Changan, Changan Auto and Great Wall Motor have also realized that the path of multi-brand development is becoming increasingly challenging in the current market environment.

In the view of industry insiders, multi-brand and multi-product sequences were relatively common in the Chinese market in the past, stemming from the thinking of "making more children to fight better" and the aspiration of Chinese brands to enter the high-end market through new brands. However, under increasingly fierce market competition, automakers can more efficiently participate in new market competitions by merging resources from multiple brands and sequences and reducing complex organizations and processes.

At the beginning of this year, Changan Auto merged its Changan Auto, Changan UNI series, CS series, Yida, Yidong, Lumin, and other brands and product sequences to create "Changan Attraction."

In 2023, Great Wall Motor launched the "ONE GWM" brand strategy. Under the guidance of this new strategy, Great Wall Motor began to comprehensively integrate advantageous resources from product planning, communication efficiency, channel effectiveness, user services, and other dimensions to enhance brand potential. Among them, WEY and Tank were integrated, as were Ora and Saloon, improving resource synergy through organizational and channel integration.

At the beginning of October, the Ora Auto App announced that it would officially cease operations and migrate to the Great Wall Motor App by the end of this year.

Wei Jianjun, Chairman of Great Wall Motor, once stated at the company's shareholders' meeting, 'For those with particularly severe losses, Great Wall Motor will moderately reduce sales, leveraging our strengths. For those with no or minimal losses or higher profits, we will vigorously promote them.'" "Great Wall's multi-brand strategy is not simply having multiple brands but a brand strategy based on categories. This strategy is based on research into consumer preferences and market opportunities. The multi-brand strategy is not static but dynamically changing in the long term, although it will not be adjusted back and forth within a short period." said a relevant responsible person from Great Wall Motor.

Against the backdrop of reshaping the market landscape, cost reduction and efficiency enhancement have become top priorities for automakers. Strategic contraction and brand integration may be unavoidable in the development strategies of most enterprises in the future.

This article is originally created by China News Auto. Welcome to share. If media outlets wish to reprint this article, please indicate the author and source at the beginning of the text. Any media or self-media producing videos or audio scripts based on any content of this article will be held legally responsible.