Introduction | Lead

Nezha Auto may be enduring its chilliest winter yet in 2024. During this year's traditional 'golden September and silver October' sales period, while other leading new energy vehicle (NEV) companies witnessed a surge in sales, Nezha Auto saw a decline amidst NEV startups. Now, Nezha Auto grapples with more than just sluggish sales; even vehicle deliveries have become problematic, signaling a critical juncture for the company.

Produced by | Heyan Yueche Studio

Written by | Cai Jialun

Edited by | He Zi

1784 words in total

3-minute read

Over the past six months, Nezha Auto has been beset by a relentless stream of negative news. Initially, monthly sales plummeted significantly. For instance, in October, Nezha Auto's domestic retail sales stood at 6,022 units, marking a 40.32% year-on-year decline. Subsequently, in November, it was reported that the company had initiated large-scale layoffs internally. Concurrently, Nezha Auto's suppliers, including Efort Intelligent Equipment and Dongfeng Technology, filed lawsuits against Hezhong Automobile, and the company is grappling with numerous intricate debt issues, leaving it vulnerable amidst fierce competition from peers.

As a pioneer in the NEV industry, established alongside NIO, XPeng, and Li Auto, will Nezha Auto follow in the footsteps of HiPhi's decline?

△Nezha Auto at its most critical juncture

Nezha Auto Struggles with Deliveries, Payroll, and Repayments

Despite having a significant following, most consumers interested in purchasing Nezha vehicles now hesitate. Some customers have placed orders but have yet to receive their cars, prompting numerous complaints about delayed deliveries and non-refundable deposits. Some 4S stores attributed the delays to parts shortages hindering vehicle production.

Furthermore, multiple companies have sued Nezha Auto for defaulting on supplier payments. FDS Holding's subsidiary Beijing D&S, Efort Intelligent Equipment, Dongfeng Yanfeng, and others have filed complaints against Nezha Auto's parent company, Hezhong Automobile, with the total amount involved exceeding 100 million yuan. Nezha Auto has plunged into its deepest debt crisis since inception. To date, Nezha Auto has incurred losses totaling 17 billion yuan, and the company's persistent losses suggest it may be beyond redemption.

△Nezha Auto has been continuously losing money since its inception

In early October this year, Nezha Auto employees posted online that the company had failed to pay salaries on time, sparking heated discussions. At the time, Nezha Auto attributed the delay to salary structure adjustments. However, just half a month later, Nezha Auto implemented a salary reduction plan for all R&D personnel, accompanied by widespread layoffs. In less than a year, Nezha Auto has laid off nearly 3,000 employees, accounting for 42.8% of its total workforce. Despite laying off almost half its staff in a short period, Nezha Auto shows no signs of improvement. Currently, offline stores are closing in waves, further confirming Nezha Auto's precarious situation. Since then, Nezha Auto has fallen into a vicious cycle: the closure of offline stores has made consumers hesitant to purchase Nezha products – the Nezha factory lacks orders and cannot deliver vehicles – and supplier repayments seem distant.

△Nezha Auto's offline stores are closing in waves

Zhang Yong Steps Down as CEO; Can the Founder Save Nezha Auto?

Back in July this year, at the Guangzhou new car centralized delivery ceremony, Nezha Auto CEO Zhang Yong personally delivered brand-new Nezha L vehicles to 100 local car owners, making the event lively and bustling. This was not the first time Zhang Yong attracted media attention for Nezha Auto. Previously, he was quite active on social media, frequently posting dynamic news related to Nezha Auto and interacting with Hongyi Zhou, often appearing together in live broadcasts.

However, after Nezha Auto announced a salary reduction plan in mid-October, Zhang Yong's Weibo account went silent, sparking endless speculation in the media. On December 6, Nezha Auto announced that Zhang Yong would no longer serve as the company's CEO, turning previous rumors into reality. Nezha Auto's founder and chairman, Fang Yunzhou, took over as CEO and immediately announced six major reform measures in a company-wide letter. It remains uncertain whether Fang Yunzhou can turn the tide, but the reform measures he announced provide insight into Nezha Auto's future development direction, emphasizing a focus on overseas markets and moderate competition domestically, indicating that Nezha Auto intends to prioritize overseas business.

△Nezha Auto will focus on overseas markets

Can Going Overseas Save Nezha Auto? Although Nezha Auto has laid a solid foundation in overseas markets, the current situation remains challenging. Domestic NEV companies have successively embarked on the Great Voyage era, and Nezha Auto's most important market, Thailand, has seen the entry of BYD, Great Wall Motors, SAIC Motor, and other automakers. Moreover, Thai car sales have declined for 18 consecutive months, with October sales hitting a record low. Nezha Auto ranked third with 1,122 units sold in a single month but was still overshadowed by BYD and SAIC Motor. In addition to Southeast Asia, the European market is also a destination for domestic automakers going overseas. However, many autonomous vehicle companies have entered the European market before Nezha Auto, and with the European Union continuing to impose tariffs, Nezha Auto's ambitions to enter the European market may not be realized.

Commentary

Previously, Nezha Auto swiftly captured the 150,000-yuan NEV family car market by focusing on the low-end segment. However, as domestic NEV models continue to drop in price, Nezha Auto's low-price advantage has vanished. Relying on affordable models, Nezha Auto's gross profit margin cannot be increased, leading to sustained losses over the long term, while the launch of high-end models remains a distant prospect. After tightening its belt, Nezha Auto now faces challenges with supplier payments and delivery issues, making it increasingly difficult to extricate itself from its predicament. For those who have strongly supported Nezha Auto, will the company fulfill its promises and continue to deliver vehicles? Can the Nezha Auto brand survive?

(This article is originally created by Heyan Yueche and may not be reproduced without authorization)