Understanding the nature of business, hitting the core of enterprises

Author|Xiao Yuheng

On the morning of November 21, it was rumored online that SAIC Motor's SAIC Volkswagen supplier had defaulted on the salaries of internal employees due to poor business operations, and it was suspected that employees were demanding their salaries in inappropriate ways.

Currently, the above news has been "404" on multiple online platforms, making it difficult to distinguish between true and false. But it is certain that SAIC Volkswagen and its parent company, SAIC Motor, are not having an easy time.

Currently, SAIC Motor is also trying to save itself, but it is not favored by the outside world.

01

SAIC Volkswagen may have one million units of idle capacity

Recently, there have been reports that Volkswagen may lay off 30,000 employees in Germany to become more competitive in the shrinking European automotive market.

There are also reports that SAIC Volkswagen is planning to close its factory in Nanjing, Jiangsu next year. This factory is primarily responsible for producing multiple models under the Passat and Skoda brands, with an annual production capacity of 360,000 vehicles.

Subsequently, SAIC Volkswagen stated: "Based on the enterprise's strategic planning and in response to market trends, the enterprise makes adjustments to the production base, which is a normal and necessary business practice. This adjustment is not only a positive response to current trends but also an active planning and investment for future development."

SAIC Volkswagen also explained that all production work at the Nanjing factory is currently operating normally, and there is sufficient production capacity for the entire Passat lineup, with normal production and sales. It's just that based on market demand and product planning, SAIC Volkswagen has many new products to launch in the future, including brand-new fuel products and new energy products. Based on the new product spectrum, the production base must also make corresponding plans.

However, SAIC Volkswagen's sales are indeed not good.

From 2020 to 2023, SAIC Volkswagen's sales were 1.5055 million, 1.242 million, 1.3208 million, and 1.215 million units, with year-on-year growth rates of -24.79%, -17.5%, 6.35%, and -8.01%, respectively.

Recently, the production and sales report released by SAIC Motor showed that SAIC Volkswagen produced 896,000 vehicles and sold 885,600 vehicles in the first 10 months, down 5.35% and 7.01% year-on-year, respectively.

SAIC Motor's 2023 annual report showed that SAIC Volkswagen's designed production capacity reached 2.088 million units.

The utilization rate of SAIC Volkswagen's production capacity in the first 10 months was only 51.49%. If the current production and sales levels do not change, the company will have about 1 million units of idle capacity throughout 2024.

02

Feifan Auto's average monthly sales are only 642 units

SAIC Motor is also making efforts to boost sales and performance.

Feifan Auto is a new energy vehicle brand under SAIC Motor, with the English name RISING AUTO, representing continuous progress and extraordinary achievements. Since its inception, it has carried the hopes of SAIC Motor for the future of new energy vehicles.

In April 2018, the SAIC Roewe brand launched its first product to enter the mid-to-high-end pure electric SUV market, the Roewe MARVEL X, priced between 268,800 and 308,800 yuan.

At that time, the Roewe MARVEL X chose a high-profile approach to enter the automotive market, benchmarking the Tesla Model 3 in performance and rivaling BBA in luxury.

However, the market response was not good, with the Roewe MARVEL X selling only 3,419 units in 2018 and declining to just over 2,000 units in 2019.

In May 2020, SAIC Motor launched the new R logo based on the original lion logo and soon made it an independent brand, SAIC R, parallel to Roewe and MG in organizational structure.

In October 2021, SAIC Motor announced that the R brand would be named Feifan Auto and established Feifan Automobile Technology Co., Ltd. to operate the new brand as an independent company, achieving independent operation and self-financing and becoming a new brand parallel to SAIC Passenger Vehicle Company.

Recently, Feifan Automobile Technology Co., Ltd. underwent industrial and commercial changes, with Shanghai Ruyuan Automobile Technology Partnership (Limited Partnership) officially withdrawing from the shareholder list and SAIC Motor taking 100% ownership. Meanwhile, Wang Xiaoqiu resigned as the company's legal representative and chairman, replaced by Wang Jun.

However, data shows that Feifan Auto's cumulative sales in 2023 were 21,400 units, with monthly sales of less than 2,000 units.

In the first nine months of 2024, Feifan Auto's cumulative sales were 5,775 units, with an average monthly sales of only 642 units. Among them, the cumulative sales of Feifan F7 were 2,142 units, and the cumulative sales of Feifan R7 were 3,633 units.

An industry insider commented that Feifan Auto's independent operation has not been successful, and there are not many opportunities for it to regain market favor after returning to SAIC Motor.

03

The AUDI brand may compromise brand premium

SAIC Motor has also made a big move recently - a new cooperation with Audi.

On November 8, Audi officially launched a new brand, "AUDI." Based on the intelligent digital platform jointly developed by Audi and SAIC Motor, the new brand replaces the four-ring logo with a four-letter logo, combining classic Audi genes with Chinese innovation.

According to the plan, the new brand AUDI will launch three new models within the next three years, almost one per year, with the first model expected to be launched in 2025.

Markus Duesmann, Chairman of the Management Board and Technical Development Director of Audi AG, said, "By launching this new brand focused on electric and intelligent connected models, Audi will actively embrace more Chinese customers who pursue technological trends and further open up new growth paths in China."

Dr. Axel Strotbek, President of Audi China, explained, "The new luxury electric brand AUDI adopts a new AUDI letter logo, which pays homage to the first-generation Audi and borrows the Latin meaning of 'listen' to demonstrate the brand's philosophy of listening to users' voices, reinforcing our commitment to the brand's core of 'Vorsprung durch Technik.'"

It is understood that in May 2024, SAIC Motor and Audi formally signed a cooperation agreement, and the two parties officially began jointly developing a new platform focused on the Chinese market, the "Intelligent Digital Platform," with Song Feiming from Audi serving as the project's CEO.

However, some market views believe that Audi's traditional four-ring logo represents a profound historical heritage, excellent quality assurance, and a high-end brand image, with a high brand premium effect. If the AUDI brand cannot continue to enjoy the premium of the Audi brand in its development process, its path forward will inevitably become increasingly difficult.

There are also views that luxury brands represented by Audi have begun to "awaken," and when century-old luxury brands also begin to catch up with new forces, it also means that a new ranking competition is about to begin.

END

Editor | Xiao'er

Typesetting | Wu Yue

Chief Editor | Lao Chao

Images sourced from the internet