Great Wall Motors (GWM) reported that its overseas business revenue jumped 66% as it released its 2019 annual report at the end of March 2020. The financial report stated that total operating income reached 96.21 billion yuan (down 3.04% year-on-year); net profit attributable to shareholders of the parent company pegged at 4.497 billion yuan (down 13.64% year-on-year); even as R & D costs went up 55.8% year-on-year.
The company’s sales performance for 2019 went against the auto industry’s downtrend, increasing 1.45% year-on-year at 1.0586 million. This is an impressive performance against the industry’s figures of 9.2% decrease in domestic auto production and sales and a 9.6% reduction in passenger car market production and sales.
Its pickup truck business reached 164,800 (up 12.73% year-on-year) even as SUV sales registered a 3.6% decrease with 852,000 units; while business sales reached 41,500 units (up 210.05% year-on-year). Obviously, new energy and allied businesses aside from SUV and pickup trucks have driven the sales performance of the company.
It is worthy to note that GWM’s R & D expenses have increased to 2.716 billion yuan, a hefty 55.8% increase year-on-year. Its overseas revenue, on the other hand, went up to 5.522 billion yuan, an impressive 66.6% increase year-on-year.
Over-development: the key to GWM’s success
The increase in R & D costs is partly owed to the company’s adoption of the “over-development” concept, an important foundation for GWM’s eventual rapid development. The company traces its roots to the establishment of HYCET Technology Co. Ltd. In February 2018; and the subsequent establishment of SVOLT Technology Co., Ltd., Nobo Automotive Systems Co., Ltd., and Exquisite Automotive Systems Co., Ltd in June 2018. This was followed by Weishi Energy Technology Co., Ltd. In April 2019. Honeycomb Easy launched 4N20 engines, 9DCT transmissions, 6001 series electric drives, and other powertrain technology products in June 2019. By November 2019, Weishi Energy launched its third-generation fuel cells.
As part of advancing a global layout, Great Wall Motors adopted a “5-2-1” globalization strategy in January 2019; then signed a strategic framework agreement with BRABUS, Germany for the WEY brand by March. Mid-2019, its Tula factory in Russia officially went into production; while the Spotlight Automotive project with BMW was announced before the yearend. This 2020, Great Wall Motors has already acquired GM plants in India and Thailand, a crucial step in its plans to dominate the Southeast Asian markets.
SUV and high-end brand need more attention
While the company has posted sales performance that went against the industry’s downtrend last year, it still has room for improvement: mainly in its SUV and high-end brand segments. As reported in its latest financial report, Great Wall’s SUV business suffered a 3.6% decline year-on-year in 2019. Sales of the Haval H6 have also declined even as the brand sold a total of 769,000 units last year. WEY, the company’s high-end brand, dipped in sales after a promising start in 2018 when it sold a record 140,000 units. How Great Wall Automobile will plan its next moves in the face of a sluggish economy and increased competition among Chinese brands will determine how well it can replicate its great performance in 2019.