Great Wall Motor, navigating a turning point.

Tired of the "endless internal competition" game, Great Wall Motor embarked on a path of internal development. In a fiercely competitive market where automakers struggled to boost sales, Great Wall Motor opted for strategic contraction to preserve profits. To the astonishment of outsiders, this approach yielded remarkable results.

Recently, Great Wall Motor released its 2024 financial report, revealing a revenue of 202.2 billion yuan, up 16.73% year-on-year, and a net profit of 12.69 billion yuan, a surge of 80.76% year-on-year. Notably, this marked the first time since 2016 that Great Wall Motor's net profit surpassed the 10 billion yuan mark, with both revenue and net profit reaching new heights.

Following the financial report's disclosure, Great Wall Motor's share price briefly surged at the opening but quickly retreated.

This reflects the current state of the automotive industry. Earlier in the year, Great Wall Motor had already disclosed a financial report forecast, hinting at the return of net profit to the 10 billion yuan level. The share price performance indicated relatively pessimistic market expectations.

Amidst competitors burning cash to seize market share, Great Wall Motor, holding the banner of "profit preservation," has indeed taken a different path. However, this approach carries its own set of risks.

Sales Conundrum

Despite Great Wall Motor's impressive 2024 financial report, there were underlying "flaws" in its performance.

The most notable flaw was the sales issue. According to sales data, Great Wall Motor delivered 1.2345 million vehicles in 2024, a mere 0.37% increase year-on-year. While sales did grow positively, the growth rate was significantly low. In comparison, total domestic auto sales in 2024 were 31.436 million, up 4.5% year-on-year, and industry leader BYD sold 4.27 million vehicles, a 41% year-on-year increase. Great Wall Motor's sales growth rate lagged not only behind BYD but also the industry average.

By 2025, Great Wall Motor's sales had already started to decline. According to the company's production and sales data, cumulative sales from January to February fell by 9.28% year-on-year. Specifically, in February, Great Wall Motor sold 77,900 vehicles, up 9.65% year-on-year, but this was dwarfed by BYD's sales of 322,800 vehicles and Geely's sales of 205,000 vehicles.

So, what accounts for Great Wall Motor's relatively weak sales performance?

This is a direct consequence of Great Wall Motor's "profit preservation" strategy.

In the era of new energy vehicles, "burning cash to capture market share" has become an almost indispensable stage for automakers. Even BYD, which reported non-recurring profits of only 585.6 million yuan and 230.5 million yuan in 2018 and 2019 respectively, once teetered on the brink of losses. Losses are even more prevalent among new players like Li Auto, which incurred losses of 2.439 billion yuan, 151.7 million yuan, 321.5 million yuan, and 2.012 billion yuan from 2019 to 2022.

In contrast, Great Wall Motor, which places paramount importance on profits, has avoided the "cash-burning" stage, maintaining a net profit consistently above 5 billion yuan.

Great Wall Motor's aversion to loss-making operations is partly due to its own reluctance to engage in unprofitable ventures. At the 2024 annual general meeting of shareholders, Wei Jianjun stated that Great Wall Motor "does what it should do and avoids what it shouldn't," moderating sales for heavily loss-making models while vigorously promoting profitable or slightly loss-making ones. Additionally, Great Wall Motor still primarily focuses on fuel vehicles, with fuel vehicle sales accounting for over 70% of total annual sales. While this approach helps maintain profits, it has also slowed Great Wall Motor's transition to new energy vehicles.

Taking February's data as an example, in the new energy vehicle sales rankings, the top five were all traditional Chinese brands: BYD, Geely, Wuling, Chery, and Changan, with BYD selling up to 318,000 vehicles. In contrast, Great Wall Motor sold only 15,121 new energy vehicles in February, with a total of 37,374 vehicles sold in the first two months, ranking outside the top 13.

According to data from the China Association of Automobile Manufacturers, new energy vehicle production and sales exceeded the 10 million mark for the first time in 2024, reaching 12.888 million and 12.866 million respectively, up 34.4% and 35.5% year-on-year. The proportion of new energy vehicles in total new vehicle sales reached 40.9%, an increase of 9.3 percentage points from 2023. Amidst the new energy wave, Great Wall Motor, heavily reliant on fuel vehicles for sales and lagging behind in the transition to new energy, cannot escape the dilemma of declining sales.

Sustainability of High Profits

Analyzing the financial report data, two key factors contributed to Great Wall Motor's significant net profit increase:

First, Great Wall Motor proactively cut a large number of loss-making models and concentrated its efforts on high-end models.

A closer look at the 2024 sales data reveals that sales declined for three of Great Wall Motor's five major brands: Haval sold 706,200 vehicles, down 1.25% year-on-year; Great Wall Pickup sold 177,100 vehicles, down 12.47% year-on-year; and Ora sold 63,272 vehicles, down 41.69% year-on-year. In contrast, WEY and Tank, the higher-end brands, achieved growth, with WEY selling 54,728 vehicles, up 31.55% year-on-year, and Tank selling 231,000 vehicles, up 42.12% year-on-year.

From a brand positioning perspective, Haval, Great Wall Pickup, and Ora are lower-end brands, while WEY and Tank are higher-end. Overall, while the sales of the five major brands offset each other, and Great Wall Motor's overall sales did not increase significantly, the proportion of high-end models in its sales mix increased significantly in 2024. Media statistics indicate that Great Wall Motor sold 309,600 vehicles priced above 200,000 yuan in 2024, a substantial increase of 37.13% year-on-year, directly boosting the company's profits.

However, Great Wall Motor's strategy of relying on high-end models to raise overall prices and maintain high profits may become unsustainable after 2025.

Data shows that entering 2025, sales of Great Wall Motor's five major brands have diverged significantly. The cumulative sales of the primary high-end brand "Tank" in the first two months of this year were 24,607 vehicles, down 18.6% year-on-year, clearly indicating a sales slowdown. Meanwhile, the cumulative sales of another key high-end brand, WEY, were 8,650 vehicles in the first two months, up 44.17% year-on-year, but the volume remains small.

Essentially, the key to selling higher-end models lies in brand power. In the past, Great Wall Motor enjoyed strong brand power, but as sales continue to decline, brand power naturally wanes year by year.

In addition to shifting its product mix towards high-end models, another crucial factor in Great Wall Motor's net profit surge was the robust growth in overseas sales. Statistics show that Great Wall Motor's overseas sales in 2024 reached 453,141 vehicles, up 43.39% year-on-year, with the growth rate of overseas sales significantly outpacing the overall growth rate of the company's total vehicle sales. Currently, Great Wall Motor has over 14 million global users.

However, following the "peak" of overseas expansion in 2024, Great Wall Motor's international growth also began to falter in 2025. Media statistics indicate that Great Wall Motor sold 31,068 vehicles overseas in February and 59,084 vehicles from January to February, an increase of only 3.7%. In the same period in 2024, Great Wall Motor's overseas sales grew by 91.9%. Comparatively, the pace of Great Wall Motor's overseas expansion has slowed significantly this year.

Overall, whether focusing on high-end models or expanding overseas, the "magic weapons" that significantly boosted Great Wall Motor's net profit in 2024 may falter in 2025. From this perspective, despite the significant net profit increase in 2024, Great Wall Motor still faces a long road ahead amidst declining sales.